UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-01545
Eaton Vance Special Investment Trust
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, Massachusetts 02110
(Address of Principal Executive Offices)
Maureen A. Gemma
Two International Place, Boston, Massachusetts 02110
(Name and Address of Agent for Services)
(617) 482-8260
(Registrant’s Telephone Number)
December 31
Date of Fiscal Year End
June 30, 2017
Date of Reporting Period
Item 1. Reports to Stockholders
Eaton Vance
Balanced Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Balanced Fund
Table of Contents
Performance | 2 | |||
Fund Profile | 3 | |||
Endnotes and Additional Disclosures | 4 | |||
Fund Expenses | 5 | |||
Financial Statements | 6 | |||
Board of Trustees’ Contract Approval | 31 | |||
Officers and Trustees | 34 | |||
Important Notices | 35 |
Eaton Vance
Balanced Fund
June 30, 2017
Performance1,2
Portfolio Managers Charles B. Gaffney, Vishal Khanduja, CFA, and Brian S. Ellis, CFA
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 04/01/1932 | 04/01/1932 | 6.46 | % | 7.84 | % | 9.74 | % | 5.40 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | 0.38 | 1.66 | 8.46 | 4.78 | ||||||||||||||||||
Class B at NAV | 11/02/1993 | 04/01/1932 | 6.03 | 7.08 | 8.91 | 4.60 | ||||||||||||||||||
Class B with 5% Maximum Sales Charge | — | — | 1.03 | 2.08 | 8.63 | 4.60 | ||||||||||||||||||
Class C at NAV | 11/02/1993 | 04/01/1932 | 6.17 | 7.15 | 8.93 | 4.62 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 5.17 | 6.15 | 8.93 | 4.62 | ||||||||||||||||||
Class I at NAV | 09/28/2012 | 04/01/1932 | 6.59 | 8.11 | 10.00 | 5.52 | ||||||||||||||||||
Class R at NAV | 05/02/2016 | 04/01/1932 | 6.36 | 7.71 | 9.69 | 5.37 | ||||||||||||||||||
Class R6 at NAV | 05/02/2016 | 04/01/1932 | 6.62 | 8.30 | 10.04 | 5.54 | ||||||||||||||||||
S&P 500 Index | — | — | 9.34 | % | 17.90 | % | 14.62 | % | 7.18 | % | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond Index | — | — | 2.27 | –0.31 | 2.21 | 4.47 | ||||||||||||||||||
Blended Index | — | — | 6.48 | 10.33 | 9.64 | 6.40 | ||||||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class B | Class C | Class I | Class R | Class R6 | ||||||||||||||||||
Gross | 1.01 | % | 1.76 | % | 1.76 | % | 0.76 | % | 1.26 | % | 0.72 | % | ||||||||||||
Net | 0.98 | 1.73 | 1.73 | 0.73 | 1.23 | 0.69 |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Balanced Fund
June 30, 2017
Fund Profile4
Asset Allocation (% of total investments)
Fixed Income Allocation (% of total investments)
Equity Investments Sector Allocation (% of total investments)
See Endnotes and Additional Disclosures in this report.
3 |
Eaton Vance
Balanced Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | S&P 500 Index is an unmanaged index of large-cap stocks commonly used as a measure of U.S. stock market performance. Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of domestic investment-grade bonds, including corporate, government and mortgage-backed securities. The blended index consists of 60% S&P 500 Index and 40% Bloomberg Barclays U.S. Aggregate Bond Index, rebalanced monthly. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class I and Class R is linked to Class A and the performance of Class R6 is linked to Class I. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. |
3 | Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 4/30/18. Without the reimbursement, performance would have been lower. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Fund invests in one or more affiliated investment companies (Portfolios). References to investments are to the aggregate holdings of the Fund, including its pro rata share of each Portfolio in which it invests. |
Fund profile subject to change due to active management. |
Important Notice to Shareholders
Effective June 27, 2017, the Fund is managed by Charles B. Gaffney, Vishal Khanduja and Brian S. Ellis. |
4 |
Eaton Vance
Balanced Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense Ratio | |||||||||||||
Actual |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,064.60 | $ | 5.02 | ** | 0.98 | % | |||||||
Class B | $ | 1,000.00 | $ | 1,060.30 | $ | 8.84 | ** | 1.73 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,061.70 | $ | 8.84 | ** | 1.73 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,065.90 | $ | 3.74 | ** | 0.73 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,063.60 | $ | 6.29 | ** | 1.23 | % | |||||||
Class R6 | $ | 1,000.00 | $ | 1,066.20 | $ | 3.53 | ** | 0.69 | % | |||||||
Hypothetical |
| |||||||||||||||
(5% return per year before expenses) |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,019.90 | $ | 4.91 | ** | 0.98 | % | |||||||
Class B | $ | 1,000.00 | $ | 1,016.20 | $ | 8.65 | ** | 1.73 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,016.20 | $ | 8.65 | ** | 1.73 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,021.20 | $ | 3.66 | ** | 0.73 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,018.70 | $ | 6.16 | ** | 1.23 | % | |||||||
Class R6 | $ | 1,000.00 | $ | 1,021.40 | $ | 3.46 | ** | 0.69 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. The Example reflects the expenses of both the Fund and the Portfolios. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
5 |
Eaton Vance
Balanced Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Investment in Core Bond Portfolio, at value (identified cost, $334,309,790) | $ | 332,700,103 | ||
Investment in Stock Portfolio, at value (identified cost, $452,591,782) | 515,627,191 | |||
Receivable for Fund shares sold | 1,113,757 | |||
Total assets | $ | 849,441,051 | ||
Liabilities | ||||
Payable for Fund shares redeemed | $ | 2,918,636 | ||
Payable to affiliates: | ||||
Administration fee | 27,975 | |||
Distribution and service fees | 290,116 | |||
Trustees’ fees | 125 | |||
Other | 720 | |||
Accrued expenses | 161,839 | |||
Total liabilities | $ | 3,399,411 | ||
Net Assets | $ | 846,041,640 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 761,350,706 | ||
Accumulated net realized gain from Portfolios | 23,934,610 | |||
Accumulated distributions in excess of net investment income | (669,398 | ) | ||
Net unrealized appreciation from Portfolios | 61,425,722 | |||
Net Assets | $ | 846,041,640 | ||
Class A Shares | ||||
Net Assets | $ | 341,129,630 | ||
Shares Outstanding | 38,412,076 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 8.88 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 9.42 | ||
Class B Shares | ||||
Net Assets | $ | 4,460,203 | ||
Shares Outstanding | 501,162 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 8.90 | ||
Class C Shares | ||||
Net Assets | $ | 260,566,098 | ||
Shares Outstanding | 29,227,544 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 8.92 | ||
Class I Shares | ||||
Net Assets | $ | 215,517,510 | ||
Shares Outstanding | 24,258,485 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 8.88 | ||
Class R Shares | ||||
Net Assets | $ | 243,869 | ||
Shares Outstanding | 27,509 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 8.87 | ||
Class R6 Shares | ||||
Net Assets | $ | 24,124,330 | ||
Shares Outstanding | 2,714,871 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 8.89 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
* | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
6 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends allocated from Portfolios (net of foreign taxes, $28,639) | $ | 5,592,004 | ||
Interest allocated from Portfolios | 4,800,931 | |||
Expenses allocated from Portfolios | (2,477,091 | ) | ||
Total investment income from Portfolios | $ | 7,915,844 | ||
Expenses | ||||
Administration fee | $ | 168,907 | ||
Distribution and service fees | ||||
Class A | 437,718 | |||
Class B | 24,839 | |||
Class C | 1,294,569 | |||
Class R | 576 | |||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 29,979 | |||
Transfer and dividend disbursing agent fees | 309,768 | |||
Legal and accounting services | 28,135 | |||
Printing and postage | 43,552 | |||
Registration fees | 74,876 | |||
Miscellaneous | 10,419 | |||
Total expenses | $ | 2,423,588 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 59,405 | ||
Total expense reductions | $ | 59,405 | ||
Net expenses | $ | 2,364,183 | ||
Net investment income | $ | 5,551,661 | ||
Realized and Unrealized Gain (Loss) from Portfolios | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 19,970,542 | (1) | |
Foreign currency transactions | 15,671 | |||
Net realized gain | $ | 19,986,213 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 26,975,541 | ||
Foreign currency | 1,277 | |||
Net change in unrealized appreciation (depreciation) | $ | 26,976,818 | ||
Net realized and unrealized gain | $ | 46,963,031 | ||
Net increase in net assets from operations | $ | 52,514,692 |
(1) | Includes $2,527,998 of net realized gains from redemptions in-kind. |
7 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 5,551,661 | $ | 8,729,724 | ||||
Net realized gain from investment and foreign currency transactions | 19,986,213 | (1) | 10,621,070 | |||||
Net change in unrealized appreciation (depreciation) from investments and foreign currency | 26,976,818 | 13,322,455 | ||||||
Net increase in net assets from operations | $ | 52,514,692 | $ | 32,673,249 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (2,939,765 | ) | $ | (5,207,604 | ) | ||
Class B | (21,071 | ) | (43,342 | ) | ||||
Class C | (1,199,052 | ) | (1,649,388 | ) | ||||
Class I | (2,025,800 | ) | (2,819,484 | ) | ||||
Class R | (1,704 | ) | (709 | ) | ||||
Class R6 | (125,373 | ) | (38 | ) | ||||
From net realized gain | ||||||||
Class A | — | (1,391,967 | ) | |||||
Class B | — | (20,049 | ) | |||||
Class C | — | (941,910 | ) | |||||
Class I | — | (801,354 | ) | |||||
Class R | — | (665 | ) | |||||
Class R6 | — | (26 | ) | |||||
Total distributions to shareholders | $ | (6,312,765 | ) | $ | (12,876,536 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 34,355,709 | $ | 154,022,911 | ||||
Class B | 235,175 | 626,982 | ||||||
Class C | 29,151,962 | 146,628,925 | ||||||
Class I | 83,774,601 | 195,784,259 | ||||||
Class R | 51,528 | 185,492 | ||||||
Class R6 | 25,008,026 | 6,973 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 2,636,949 | 5,982,495 | ||||||
Class B | 17,702 | 53,111 | ||||||
Class C | 1,130,198 | 2,404,058 | ||||||
Class I | 1,809,157 | 3,189,483 | ||||||
Class R | 1,704 | 1,374 | ||||||
Class R6 | 125,373 | 64 | ||||||
Cost of shares redeemed | ||||||||
Class A | (90,406,787 | ) | (91,325,418 | ) | ||||
Class B | (658,708 | ) | (1,495,099 | ) | ||||
Class C | (38,533,036 | ) | (37,346,869 | ) | ||||
Class I | (93,828,399 | ) | (69,620,243 | ) | ||||
Class R | — | (7,437 | ) | |||||
Class R6 | (983,316 | ) | (23 | ) | ||||
Net asset value of shares exchanged | ||||||||
Class A | 724,226 | 2,043,030 | ||||||
Class B | (724,226 | ) | (2,043,030 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | $ | (46,112,162 | ) | $ | 309,091,038 | |||
Other capital — | ||||||||
Portfolio transaction fee contributed to Portfolio | $ | (94,760 | ) | $ | (324,831 | ) | ||
Portfolio transaction fee allocated from Portfolio | 101,298 | 290,734 | ||||||
Net increase (decrease) in net assets from other capital | $ | 6,538 | $ | (34,097 | ) | |||
Net increase in net assets | $ | 96,303 | $ | 328,853,654 | ||||
Net Assets | ||||||||
At beginning of period | $ | 845,945,337 | $ | 517,091,683 | ||||
At end of period | $ | 846,041,640 | $ | 845,945,337 | ||||
Accumulated undistributed (distributions in excess of) net investment income included in net assets | ||||||||
At end of period | $ | (669,398 | ) | $ | 91,706 |
(1) | Includes $2,527,998 of net realized gains from redemptions in-kind. |
8 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 8.410 | $ | 8.190 | $ | 8.460 | $ | 8.460 | $ | 7.570 | $ | 6.910 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.064 | $ | 0.114 | $ | 0.088 | $ | 0.090 | $ | 0.077 | $ | 0.096 | ||||||||||||
Net realized and unrealized gain | 0.478 | 0.261 | 0.139 | 0.703 | 1.491 | 0.694 | ||||||||||||||||||
Total income from operations | $ | 0.542 | $ | 0.375 | $ | 0.227 | $ | 0.793 | $ | 1.568 | $ | 0.790 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.072 | ) | $ | (0.123 | ) | $ | (0.116 | ) | $ | (0.110 | ) | $ | (0.101 | ) | $ | (0.130 | ) | ||||||
From net realized gain | — | (0.032 | ) | (0.381 | ) | (0.683 | ) | (0.577 | ) | — | ||||||||||||||
Total distributions | $ | (0.072 | ) | $ | (0.155 | ) | $ | (0.497 | ) | $ | (0.793 | ) | $ | (0.678 | ) | $ | (0.130 | ) | ||||||
Portfolio transaction fee, net(1) | $ | 0.000 | (2) | $ | (0.000 | )(2) | $ | — | $ | — | $ | — | $ | — | ||||||||||
Net asset value — End of period | $ | 8.880 | $ | 8.410 | $ | 8.190 | $ | 8.460 | $ | 8.460 | $ | 7.570 | ||||||||||||
Total Return(3) | 6.46 | %(4)(5) | 4.60 | %(4) | 2.65 | %(4) | 9.62 | % | 20.96 | % | 11.50 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 341,130 | $ | 374,579 | $ | 293,994 | $ | 197,190 | $ | 171,322 | $ | 159,831 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 0.98 | %(4)(8) | 0.98 | %(4) | 1.05 | %(4) | 1.14 | % | 1.14 | % | 1.16 | % | ||||||||||||
Net investment income | 1.48 | %(8) | 1.38 | % | 1.05 | % | 1.02 | % | 0.93 | % | 1.31 | % | ||||||||||||
Portfolio Turnover of the Fund(9) | 2 | %(5) | 11 | % | 2 | % | 17 | % | 9 | % | 2 | % |
(1) | Computed using average shares outstanding. |
(2) | Amount is less than $0.0005 or $(0.0005), as applicable. |
(3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(4) | The administrator of the Fund reimbursed certain operating expenses (equal to 0.01%, 0.03% and less than 0.005% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016 and 2015, respectively). Absent this reimbursement, total return would be lower. |
(5) | Not annualized. |
(6) | Includes the Fund’s share of the Portfolios’ allocated expenses. |
(7) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(8) | Annualized. |
(9) | Percentage is based on the Fund’s contributions to and withdrawals from the Portfolios and excludes the investment activity of the Portfolios. |
9 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2017
Financial Highlights — continued
Class B | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 8.430 | $ | 8.200 | $ | 8.470 | $ | 8.470 | $ | 7.570 | $ | 6.910 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.031 | $ | 0.051 | $ | 0.025 | $ | 0.024 | $ | 0.015 | $ | 0.041 | ||||||||||||
Net realized and unrealized gain | 0.477 | 0.266 | 0.139 | 0.702 | 1.501 | 0.692 | ||||||||||||||||||
Total income from operations | $ | 0.508 | $ | 0.317 | $ | 0.164 | $ | 0.726 | $ | 1.516 | $ | 0.733 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.038 | ) | $ | (0.055 | ) | $ | (0.053 | ) | $ | (0.043 | ) | $ | (0.039 | ) | $ | (0.073 | ) | ||||||
From net realized gain | — | (0.032 | ) | (0.381 | ) | (0.683 | ) | (0.577 | ) | — | ||||||||||||||
Total distributions | $ | (0.038 | ) | $ | (0.087 | ) | $ | (0.434 | ) | $ | (0.726 | ) | $ | (0.616 | ) | $ | (0.073 | ) | ||||||
Portfolio transaction fee, net(1) | $ | 0.000 | (2) | $ | (0.000 | )(2) | $ | — | $ | — | $ | — | $ | — | ||||||||||
Net asset value — End of period | $ | 8.900 | $ | 8.430 | $ | 8.200 | $ | 8.470 | $ | 8.470 | $ | 7.570 | ||||||||||||
Total Return(3) | 6.03 | %(4)(5) | 3.87 | %(4) | 1.88 | %(4) | 8.78 | % | 20.19 | % | 10.65 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 4,460 | $ | 5,313 | $ | 7,992 | $ | 10,022 | $ | 11,770 | $ | 10,966 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 1.73 | %(4)(8) | 1.73 | %(4) | 1.80 | %(4) | 1.89 | % | 1.89 | % | 1.91 | % | ||||||||||||
Net investment income | 0.72 | %(8) | 0.62 | % | 0.29 | % | 0.27 | % | 0.18 | % | 0.55 | % | ||||||||||||
Portfolio Turnover of the Fund(9) | 2 | %(5) | 11 | % | 2 | % | 17 | % | 9 | % | 2 | % |
(1) | Computed using average shares outstanding. |
(2) | Amount is less than $0.0005 or $(0.0005), as applicable. |
(3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(4) | The administrator of the Fund reimbursed certain operating expenses (equal to 0.01%, 0.03% and less than 0.005% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016 and 2015, respectively). Absent this reimbursement, total return would be lower. |
(5) | Not annualized. |
(6) | Includes the Fund’s share of the Portfolios’ allocated expenses. |
(7) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(8) | Annualized. |
(9) | Percentage is based on the Fund’s contributions to and withdrawals from the Portfolios and excludes the investment activity of the Portfolios. |
10 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2017
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 8.440 | $ | 8.220 | $ | 8.500 | $ | 8.500 | $ | 7.600 | $ | 6.940 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.032 | $ | 0.052 | $ | 0.026 | $ | 0.024 | $ | 0.015 | $ | 0.041 | ||||||||||||
Net realized and unrealized gain | 0.488 | 0.266 | 0.138 | 0.705 | 1.502 | 0.693 | ||||||||||||||||||
Total income from operations | $ | 0.520 | $ | 0.318 | $ | 0.164 | $ | 0.729 | $ | 1.517 | $ | 0.734 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.040 | ) | $ | (0.066 | ) | $ | (0.063 | ) | $ | (0.046 | ) | $ | (0.040 | ) | $ | (0.074 | ) | ||||||
From net realized gain | — | (0.032 | ) | (0.381 | ) | (0.683 | ) | (0.577 | ) | — | ||||||||||||||
Total distributions | $ | (0.040 | ) | $ | (0.098 | ) | $ | (0.444 | ) | $ | (0.729 | ) | $ | (0.617 | ) | $ | (0.074 | ) | ||||||
Portfolio transaction fee, net(1) | $ | 0.000 | (2) | $ | (0.000 | )(2) | $ | — | $ | — | $ | — | $ | — | ||||||||||
Net asset value — End of period | $ | 8.920 | $ | 8.440 | $ | 8.220 | $ | 8.500 | $ | 8.500 | $ | 7.600 | ||||||||||||
Total Return(3) | 6.17 | %(4)(5) | 3.88 | %(4) | 1.86 | %(4) | 8.78 | % | 20.14 | % | 10.61 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 260,566 | $ | 254,656 | $ | 137,051 | $ | 60,351 | $ | 39,432 | $ | 25,783 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 1.73 | %(4)(8) | 1.73 | %(4) | 1.80 | %(4) | 1.88 | % | 1.89 | % | 1.91 | % | ||||||||||||
Net investment income | 0.73 | %(8) | 0.63 | % | 0.30 | % | 0.28 | % | 0.18 | % | 0.55 | % | ||||||||||||
Portfolio Turnover of the Fund(9) | 2 | %(5) | 11 | % | 2 | % | 17 | % | 9 | % | 2 | % |
(1) | Computed using average shares outstanding. |
(2) | Amount is less than $0.0005 or $(0.0005), as applicable. |
(3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(4) | The administrator of the Fund reimbursed certain operating expenses (equal to 0.01%, 0.03% and less than 0.005% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016 and 2015, respectively). Absent this reimbursement, total return would be lower. |
(5) | Not annualized. |
(6) | Includes the Fund’s share of the Portfolios’ allocated expenses. |
(7) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(8) | Annualized. |
(9) | Percentage is based on the Fund’s contributions to and withdrawals from the Portfolios and excludes the investment activity of the Portfolios. |
11 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | Period Ended December 31, 2012(1) | ||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||
Net asset value — Beginning of period | $ | 8.410 | $ | 8.190 | $ | 8.460 | $ | 8.460 | $ | 7.560 | $ | 7.610 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(2) | $ | 0.075 | $ | 0.137 | $ | 0.109 | $ | 0.115 | $ | 0.099 | $ | 0.032 | ||||||||||||
Net realized and unrealized gain (loss) | 0.478 | 0.258 | 0.138 | 0.700 | 1.500 | (0.049 | ) | |||||||||||||||||
Total income (loss) from operations | $ | 0.553 | $ | 0.395 | $ | 0.247 | $ | 0.815 | $ | 1.599 | $ | (0.017 | ) | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.083 | ) | $ | (0.143 | ) | $ | (0.136 | ) | $ | (0.132 | ) | $ | (0.122 | ) | $ | (0.033 | ) | ||||||
From net realized gain | — | (0.032 | ) | (0.381 | ) | (0.683 | ) | (0.577 | ) | — | ||||||||||||||
Total distributions | $ | (0.083 | ) | $ | (0.175 | ) | $ | (0.517 | ) | $ | (0.815 | ) | $ | (0.699 | ) | $ | (0.033 | ) | ||||||
Portfolio transaction fee, net(2) | $ | 0.000 | (3) | $ | (0.000 | )(3) | $ | — | $ | — | $ | — | $ | — | ||||||||||
Net asset value — End of period | $ | 8.880 | $ | 8.410 | $ | 8.190 | $ | 8.460 | $ | 8.460 | $ | 7.560 | ||||||||||||
Total Return(4) | 6.59 | %(5)(6) | 4.86 | %(5) | 2.88 | %(5) | 9.89 | % | 21.42 | % | (0.22 | )%(6) | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 215,518 | $ | 211,211 | $ | 78,055 | $ | 24,397 | $ | 6,198 | $ | 5 | ||||||||||||
Ratios (as a percentage of average daily net assets):(7) | ||||||||||||||||||||||||
Expenses(8) | 0.73 | %(5)(9) | 0.73 | %(5) | 0.80 | %(5) | 0.89 | % | 0.89 | % | 0.90 | %(9) | ||||||||||||
Net investment income | 1.73 | %(9) | 1.63 | % | 1.29 | % | 1.31 | % | 1.19 | % | 1.65 | %(9) | ||||||||||||
Portfolio Turnover of the Fund(10) | 2 | %(6) | 11 | % | 2 | % | 17 | % | 9 | % | 2 | %(11) |
(1) | For the period from commencement of operations on September 28, 2012 to December 31, 2012. |
(2) | Computed using average shares outstanding. |
(3) | Amount is less than $0.0005 or $(0.0005), as applicable. |
(4) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(5) | The administrator of the Fund reimbursed certain operating expenses (equal to 0.01%, 0.03% and less than 0.005% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016 and 2015, respectively). Absent this reimbursement, total return would be lower. |
(6) | Not annualized. |
(7) | Includes the Fund’s share of the Portfolios’ allocated expenses. |
(8) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(9) | Annualized. |
(10) | Percentage is based on the Fund’s contributions to and withdrawals from the Portfolios and excludes the investment activity of the Portfolios. |
(11) | For the Fund’s year ended December 31, 2012. |
12 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2017
Financial Highlights — continued
Class R | ||||||||
Six Months Ended June 30, 2017 (Unaudited) | Period Ended December 31, 2016(1) | |||||||
Net asset value — Beginning of period | $ | 8.400 | $ | 8.290 | ||||
Income (Loss) From Operations | ||||||||
Net investment income(2) | $ | 0.053 | $ | 0.075 | ||||
Net realized and unrealized gain | 0.480 | 0.152 | ||||||
Total income from operations | $ | 0.533 | $ | 0.227 | ||||
Less Distributions | ||||||||
From net investment income | $ | (0.063 | ) | $ | (0.085 | ) | ||
From net realized gain | — | (0.032 | ) | |||||
Total distributions | $ | (0.063 | ) | $ | (0.117 | ) | ||
Portfolio transaction fee, net(2) | $ | 0.000 | (3) | $ | (0.000 | )(3) | ||
Net asset value — End of period | $ | 8.870 | $ | 8.400 | ||||
Total Return(4) | 6.36 | %(5)(6) | 2.73 | %(5)(6) | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (000’s omitted) | $ | 244 | $ | 178 | ||||
Ratios (as a percentage of average daily net assets):(7) | ||||||||
Expenses(8) | 1.23 | %(5)(9) | 1.23 | %(5)(9) | ||||
Net investment income | 1.23 | %(9) | 1.33 | %(9) | ||||
Portfolio Turnover of the Fund(10) | 2 | %(6) | 11 | %(11) |
(1) | For the period from commencement of operations on May 2, 2016 to December 31, 2016. |
(2) | Computed using average shares outstanding. |
(3) | Amount is less than $0.0005 or $(0.0005), as applicable. |
(4) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(5) | The administrator of the Fund reimbursed certain operating expenses (equal to 0.01% and 0.03% of average daily net assets for the six months ended June 30, 2017 and the period ended December 31, 2016, respectively). Absent this reimbursement, total return would be lower. |
(6) | Not annualized. |
(7) | Includes the Fund’s share of the Portfolios’ allocated expenses. |
(8) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(9) | Annualized. |
(10) | Percentage is based on the Fund’s contributions to and withdrawals from the Portfolios and excludes the investment activity of the Portfolios. |
(11) | For the Fund’s year ended December 31, 2016. |
13 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2017
Financial Highlights — continued
Class R6 | ||||||||
Six Months Ended June 30, 2017 (Unaudited) | Period Ended December 31, 2016(1) | |||||||
Net asset value — Beginning of period | $ | 8.420 | $ | 8.300 | ||||
Income (Loss) From Operations | ||||||||
Net investment income(2) | $ | 0.070 | $ | 0.088 | ||||
Net realized and unrealized gain | 0.486 | 0.170 | ||||||
Total income from operations | $ | 0.556 | $ | 0.258 | ||||
Less Distributions | ||||||||
From net investment income | $ | (0.086 | ) | $ | (0.106 | ) | ||
From net realized gain | — | (0.032 | ) | |||||
Total distributions | $ | (0.086 | ) | $ | (0.138 | ) | ||
Portfolio transaction fees, net(2) | $ | 0.000 | (3) | $ | (0.000 | )(3) | ||
Net asset value — End of period | $ | 8.890 | $ | 8.420 | ||||
Total Return(4) | 6.62 | %(5)(6) | 3.11 | %(5)(6) | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (000’s omitted) | $ | 24,124 | $ | 7 | ||||
Ratios (as a percentage of average daily net assets):(7) | ||||||||
Expenses(8) | 0.69 | %(5)(9) | 0.69 | %(5)(9) | ||||
Net investment income | 1.60 | %(9) | 1.58 | %(9) | ||||
Portfolio Turnover of the Fund(10) | 2 | %(6) | 11 | %(11) |
(1) | For the period from commencement of operations on May 2, 2016 to December 31, 2016. |
(2) | Computed using average shares outstanding. |
(3) | Amount is less than $0.0005 or $(0.0005), as applicable. |
(4) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(5) | The administrator of the Fund reimbursed certain operating expenses (equal to 0.01% and 0.03% of average daily net assets for the six months ended June 30, 2017 and the period ended December 31, 2016, respectively). Absent this reimbursement, total return would be lower. |
(6) | Not annualized. |
(7) | Includes the Fund’s share of the Portfolios’ allocated expenses. |
(8) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(9) | Annualized. |
(10) | Percentage is based on the Fund’s contributions to and withdrawals from the Portfolios and excludes the investment activity of the Portfolios. |
(11) | For the Fund’s year ended December 31, 2016. |
14 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Balanced Fund (the Fund) is a diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund offers six classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class B and Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I, Class R and Class R6 shares are sold at net asset value and are not subject to a sales charge. Class B shares automatically convert to Class A shares eight years after their purchase as described in the Fund’s prospectus. Beginning January 1, 2012, Class B shares are only available for purchase upon exchange from another Eaton Vance fund or through reinvestment of distributions. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Sub-accounting, recordkeeping and similar administrative fees payable to financial intermediaries, which are a component of transfer and dividend disbursing agent fees on the Statement of Operations, are not allocated to Class R6 shares. Each class of shares differs in its distribution plan and certain other class-specific expenses. The Fund’s investment objective is to provide current income and long-term growth of capital. The Fund currently pursues its objective by investing all of its investable assets in interests in two portfolios managed by Eaton Vance Management (EVM) or its affiliates (the Portfolios), which are Massachusetts business trusts. The value of the Fund’s investments in the Portfolios reflects the Fund’s proportionate interest in their net assets. The Portfolios and the Fund’s proportionate interest in each of their net assets at June 30, 2017 were as follows: Core Bond Portfolio (70.0%) and Stock Portfolio (82.1%). The performance of the Fund is directly affected by the performance of the Portfolios. The financial statements of Stock Portfolio, including the portfolio of investments, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements. A copy of Core Bond Portfolio’s financial statements is available on the EDGAR database on the Securities and Exchange Commission’s website (www.sec.gov), at the Commission’s public reference room in Washington, DC or upon request from the Fund’s principal underwriter, Eaton Vance Distributors, Inc. (EVD), by calling 1-800-262-1122.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — Valuation of securities by Stock Portfolio is discussed in Note 1A of the Portfolio’s Notes to Financial Statements, which are included elsewhere in this report. Such policies are consistent with those of Core Bond Portfolio.
Additional valuation policies for Core Bond Portfolio (the Portfolio) are as follows:
Debt Obligations. Debt obligations are generally valued on the basis of valuations provided by third party pricing services, as derived from such services’ pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. Short-term obligations purchased with a remaining maturity of sixty days or less for which a valuation from a third party pricing service is not readily available may be valued at amortized cost, which approximates fair value.
Equity Securities. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by a third party pricing service that uses various techniques that consider factors including, but not limited to, prices or yields of securities with similar characteristics, benchmark yields, broker/dealer quotes, quotes of underlying common stock, issuer spreads, as well as industry and economic events.
B Income — The Fund’s net investment income or loss consists of the Fund’s pro-rata share of the net investment income or loss of the Portfolios, less all actual and accrued expenses of the Fund.
C Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
D Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
E Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
15 |
Eaton Vance
Balanced Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
F Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
G Other — Investment transactions are accounted for on a trade date basis.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders and Income Tax Information
It is the present policy of the Fund to make quarterly distributions of all or substantially all of its net investment income and to distribute annually all or substantially all of its net realized capital gains. Distributions to shareholders are recorded on the ex-dividend date. Distributions are declared separately for each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
3 Transactions with Affiliates
The administration fee is earned by EVM as compensation for administrative services rendered to the Fund. The fee is computed at an annual rate of 0.04% of the Fund’s average daily net assets. For the six months ended June 30, 2017, the administration fee amounted to $168,907. EVM has agreed to reimburse the Fund’s expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only) exceed 0.98%, 1.73%, 1.73%, 0.73%, 1.23% and 0.69% of the Fund’s average daily net assets for Class A, Class B, Class C, Class I, Class R and Class R6, respectively. This agreement may be changed or terminated after April 30, 2018. Pursuant to this agreement, EVM was allocated $59,405 of the Fund’s operating expenses for the six months ended June 30, 2017. The Portfolios have engaged Boston Management and Research (BMR), a subsidiary of EVM, to render investment advisory services. See Note 2 of the Portfolios’ Notes to Financial Statements. For the six months ended June 30, 2017, the Fund’s allocated portion of the adviser fees paid by the Portfolios amounted to $2,274,507 or 0.54% (annualized) of the Fund’s average daily net assets.
EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $24,593 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM, received $72,265 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A, Class B, Class C and Class R shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund and the Portfolios who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee. Certain officers and Trustees of the Fund and the Portfolios are officers of the above organizations.
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $437,718 for Class A shares.
The Fund also has in effect distribution plans for Class B shares (Class B Plan), Class C shares (Class C Plan) and Class R shares (Class R Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class B and Class C Plans, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class B and Class C shares for providing ongoing distribution services and facilities to the Fund. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $18,629 and $970,927 for Class B and Class C shares, respectively.
The Class R Plan requires the Fund to pay EVD an amount up to 0.50% per annum of its average daily net assets attributable to Class R shares for providing ongoing distribution services and facilities to the Fund. The Trustees of the Trust have currently limited Class R distribution payments to 0.25%
16 |
Eaton Vance
Balanced Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
per annum of the average daily net assets attributable to Class R shares. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $288 for Class R shares.
Pursuant to the Class B, Class C and Class R Plans, the Fund also makes payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended June 30, 2017 amounted to $6,210, $323,642 and $288 for Class B, Class C and Class R shares, respectively.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d) and for Class B, are further limited to a 5% maximum sales charge as determined in accordance with such rule.
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) generally is imposed on redemptions of Class B shares made within six years of purchase and on redemptions of Class C shares made within one year of purchase. Class A shares may be subject to a 1% CDSC if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. The CDSC for Class B shares is imposed at declining rates that begin at 5% in the case of redemptions in the first and second year after purchase, declining one percentage point each subsequent year. Class C shares are subject to a 1% CDSC if redeemed within one year of purchase. For the six months ended June 30, 2017, the Fund was informed that EVD received approximately $3,000, $1,000 and $35,000 of CDSCs paid by Class A, Class B and Class C shareholders, respectively.
6 Investment Transactions
For the six months ended June 30, 2017, increases and decreases in the Fund’s investments in the Portfolios were as follows:
Portfolio | Contributions | Withdrawals | ||||||
Core Bond Portfolio | $ | 14,406,192 | $ | 24,658,465 | ||||
Stock Portfolio | 5,746,812 | 49,478,587 |
In addition, a Portfolio transaction fee is imposed by Stock Portfolio on the combined daily inflows or outflows of the Fund and Stock Portfolio’s other investors as more fully described at Note 1H of Stock Portfolio’s financial statements included herein. Such fee is allocated to the Fund based on its pro-rata interest in Stock Portfolio. The amount of the Portfolio transaction fee imposed on the Fund, if any, and the allocation of such fee are presented as Other capital on the Statements of Changes in Net Assets.
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 3,964,512 | 18,624,217 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 302,502 | 716,421 | ||||||
Redemptions | (10,474,611 | ) | (10,963,491 | ) | ||||
Exchange from Class B shares | 83,101 | 246,196 | ||||||
Net increase (decrease) | (6,124,496 | ) | 8,623,343 |
17 |
Eaton Vance
Balanced Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
Class B | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 27,367 | 75,689 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 2,026 | 6,371 | ||||||
Redemptions | (75,770 | ) | (180,571 | ) | ||||
Exchange to Class A shares | (82,971 | ) | (245,989 | ) | ||||
Net decrease | (129,348 | ) | (344,500 | ) | ||||
Class C | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 3,353,827 | 17,667,510 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 128,998 | 286,019 | ||||||
Redemptions | (4,415,135 | ) | (4,458,092 | ) | ||||
Net increase (decrease) | (932,310 | ) | 13,495,437 | |||||
Class I | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 9,694,898 | 23,545,406 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 207,143 | 380,393 | ||||||
Redemptions | (10,746,721 | ) | (8,354,922 | ) | ||||
Net increase (decrease) | (844,680 | ) | 15,570,877 | |||||
Class R | Six Months Ended June 30, 2017 (Unaudited) | Period Ended December 31, 2016(1) | ||||||
Sales | 6,073 | 21,971 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 196 | 162 | ||||||
Redemptions | — | (893 | ) | |||||
Net increase | 6,269 | 21,240 | ||||||
Class R6 | Six Months Ended June 30, 2017 (Unaudited) | Period Ended December 31, 2016(1) | ||||||
Sales | 2,810,200 | 827 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 14,164 | 8 | ||||||
Redemptions | (110,325 | ) | (3 | ) | ||||
Net increase | 2,714,039 | 832 |
(1) | For the period from commencement of operations on May 2, 2016 to December 31, 2016. |
18 |
Eaton Vance
Balanced Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
8 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. At June 30, 2017 and December 31, 2016, the Fund’s investment in Core Bond Portfolio, whose financial statements are not included but are available elsewhere as discussed in Note 1, was valued based on Level 1 inputs.
19 |
Stock Portfolio
June 30, 2017
Portfolio of Investments (Unaudited)
Common Stocks — 100.0% | ||||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 2.3% |
| |||||||
CAE, Inc. | 386,100 | $ | 6,657,307 | |||||
United Technologies Corp. | 61,355 | 7,492,059 | ||||||
$ | 14,149,366 | |||||||
Air Freight & Logistics — 2.0% |
| |||||||
FedEx Corp. | 57,018 | $ | 12,391,722 | |||||
$ | 12,391,722 | |||||||
Auto Components — 1.1% |
| |||||||
Delphi Automotive PLC | 79,043 | $ | 6,928,119 | |||||
$ | 6,928,119 | |||||||
Banks — 6.6% |
| |||||||
JPMorgan Chase & Co. | 203,951 | $ | 18,641,121 | |||||
KeyCorp | 358,854 | 6,724,924 | ||||||
Wells Fargo & Co. | 286,924 | 15,898,459 | ||||||
$ | 41,264,504 | |||||||
Beverages — 1.6% |
| |||||||
Constellation Brands, Inc., Class A | 50,301 | $ | 9,744,813 | |||||
$ | 9,744,813 | |||||||
Biotechnology — 3.5% |
| |||||||
Biogen, Inc.(1) | 16,753 | $ | 4,546,094 | |||||
Celgene Corp.(1) | 44,975 | 5,840,903 | ||||||
Gilead Sciences, Inc. | 105,323 | 7,454,762 | ||||||
Incyte Corp.(1) | 16,792 | 2,114,281 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 17,577 | 2,265,148 | ||||||
$ | 22,221,188 | |||||||
Capital Markets — 2.1% |
| |||||||
CBOE Holdings, Inc. | 69,656 | $ | 6,366,558 | |||||
Charles Schwab Corp. (The) | 151,753 | 6,519,309 | ||||||
$ | 12,885,867 | |||||||
Chemicals — 0.5% |
| |||||||
Monsanto Co. | 23,745 | $ | 2,810,458 | |||||
$ | 2,810,458 | |||||||
Security | Shares | Value | ||||||
Commercial Services & Supplies — 1.9% |
| |||||||
Brambles, Ltd. | 794,700 | $ | 5,942,439 | |||||
Deluxe Corp. | 88,506 | 6,126,385 | ||||||
$ | 12,068,824 | |||||||
Communications Equipment — 0.7% |
| |||||||
Cisco Systems, Inc. | 149,800 | $ | 4,688,740 | |||||
$ | 4,688,740 | |||||||
Containers & Packaging — 2.2% |
| |||||||
Crown Holdings, Inc.(1) | 107,857 | $ | 6,434,749 | |||||
International Paper Co. | 129,958 | 7,356,922 | ||||||
$ | 13,791,671 | |||||||
Diversified Consumer Services — 1.4% |
| |||||||
Bright Horizons Family Solutions, Inc.(1) | 40,992 | $ | 3,164,993 | |||||
ServiceMaster Global Holdings, Inc.(1) | 138,001 | 5,408,259 | ||||||
$ | 8,573,252 | |||||||
Diversified Telecommunication Services — 2.2% |
| |||||||
Verizon Communications, Inc. | 310,701 | $ | 13,875,907 | |||||
$ | 13,875,907 | |||||||
Electric Utilities — 1.2% |
| |||||||
NextEra Energy, Inc. | 52,178 | $ | 7,311,703 | |||||
$ | 7,311,703 | |||||||
Electronic Equipment, Instruments & Components — 1.4% |
| |||||||
Avnet, Inc. | 227,756 | $ | 8,855,153 | |||||
$ | 8,855,153 | |||||||
Energy Equipment & Services — 1.2% |
| |||||||
Halliburton Co. | 113,238 | $ | 4,836,395 | |||||
Oceaneering International, Inc. | 120,704 | 2,756,879 | ||||||
$ | 7,593,274 | |||||||
Equity Real Estate Investment Trusts (REITs) — 2.8% |
| |||||||
CubeSmart | 318,750 | $ | 7,662,750 | |||||
Equity Residential | 97,074 | 6,390,381 | ||||||
Extra Space Storage, Inc. | 48,283 | 3,766,074 | ||||||
$ | 17,819,205 | |||||||
20 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Food & Staples Retailing — 2.1% |
| |||||||
CVS Health Corp. | 31,500 | $ | 2,534,490 | |||||
Performance Food Group Co.(1) | 381,976 | 10,466,142 | ||||||
$ | 13,000,632 | |||||||
Food Products — 1.5% |
| |||||||
Pinnacle Foods, Inc. | 159,901 | $ | 9,498,119 | |||||
$ | 9,498,119 | |||||||
Health Care Equipment & Supplies — 2.1% |
| |||||||
Zimmer Biomet Holdings, Inc. | 103,050 | $ | 13,231,620 | |||||
$ | 13,231,620 | |||||||
Health Care Providers & Services — 3.3% |
| |||||||
Aetna, Inc. | 69,220 | $ | 10,509,673 | |||||
Envision Healthcare Corp.(1) | 163,648 | 10,255,820 | ||||||
$ | 20,765,493 | |||||||
Household Durables — 3.5% |
| |||||||
D.R. Horton, Inc. | 151,221 | $ | 5,227,710 | |||||
Newell Brands, Inc. | 191,365 | 10,260,991 | ||||||
NVR, Inc.(1) | 2,658 | 6,407,402 | ||||||
$ | 21,896,103 | |||||||
Household Products — 1.2% |
| |||||||
Colgate-Palmolive Co. | 103,700 | $ | 7,687,281 | |||||
$ | 7,687,281 | |||||||
Industrial Conglomerates — 1.1% |
| |||||||
General Electric Co. | 262,546 | $ | 7,091,367 | |||||
$ | 7,091,367 | |||||||
Insurance — 5.9% |
| |||||||
American Financial Group, Inc. | 95,529 | $ | 9,492,717 | |||||
Chubb, Ltd. | 100,048 | 14,544,978 | ||||||
First American Financial Corp. | 285,546 | 12,761,051 | ||||||
$ | 36,798,746 | |||||||
Internet & Direct Marketing Retail — 1.8% |
| |||||||
Amazon.com, Inc.(1) | 11,916 | $ | 11,534,688 | |||||
$ | 11,534,688 | |||||||
Security | Shares | Value | ||||||
Internet Software & Services — 7.3% |
| |||||||
Alphabet, Inc., Class C(1) | 20,054 | $ | 18,223,672 | |||||
eBay, Inc.(1) | 304,025 | 10,616,553 | ||||||
Facebook, Inc., Class A(1) | 92,136 | 13,910,693 | ||||||
GoDaddy, Inc., Class A(1) | 75,222 | 3,190,917 | ||||||
$ | 45,941,835 | |||||||
IT Services — 3.3% |
| |||||||
Amdocs, Ltd. | 168,772 | $ | 10,879,043 | |||||
Genpact, Ltd. | 348,074 | 9,686,900 | ||||||
$ | 20,565,943 | |||||||
Media — 3.0% |
| |||||||
Time Warner, Inc. | 113,151 | $ | 11,361,492 | |||||
Walt Disney Co. (The) | 72,970 | 7,753,062 | ||||||
$ | 19,114,554 | |||||||
Metals & Mining — 0.3% |
| |||||||
Rio Tinto PLC ADR | 46,735 | $ | 1,977,358 | |||||
$ | 1,977,358 | |||||||
Multi-Utilities — 2.0% |
| |||||||
CMS Energy Corp. | 138,660 | $ | 6,413,025 | |||||
Sempra Energy | 55,956 | 6,309,039 | ||||||
$ | 12,722,064 | |||||||
Oil, Gas & Consumable Fuels — 4.7% |
| |||||||
Chevron Corp. | 116,955 | $ | 12,201,915 | |||||
ConocoPhillips | 158,780 | 6,979,969 | ||||||
EOG Resources, Inc. | 44,913 | 4,065,525 | ||||||
Phillips 66 | 75,090 | 6,209,192 | ||||||
$ | 29,456,601 | |||||||
Personal Products — 1.0% |
| |||||||
Unilever NV - NY Shares | 111,221 | $ | 6,147,185 | |||||
$ | 6,147,185 | |||||||
Pharmaceuticals — 5.5% |
| |||||||
Allergan PLC | 25,041 | $ | 6,087,217 | |||||
Jazz Pharmaceuticals PLC(1) | 43,382 | 6,745,901 | ||||||
Johnson & Johnson | 81,037 | 10,720,385 | ||||||
Pfizer, Inc. | 319,009 | 10,715,512 | ||||||
$ | 34,269,015 | |||||||
21 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Professional Services — 1.0% |
| |||||||
Dun & Bradstreet Corp. (The) | 60,341 | $ | 6,525,879 | |||||
$ | 6,525,879 | |||||||
Road & Rail — 1.8% |
| |||||||
CSX Corp. | 209,146 | $ | 11,411,006 | |||||
$ | 11,411,006 | |||||||
Semiconductors & Semiconductor Equipment — 3.7% |
| |||||||
Broadcom, Ltd. | 17,271 | $ | 4,025,007 | |||||
Intel Corp. | 232,386 | 7,840,704 | ||||||
NXP Semiconductors NV(1) | 34,896 | 3,819,367 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 85,713 | 2,996,526 | ||||||
Texas Instruments, Inc. | 58,734 | 4,518,407 | ||||||
$ | 23,200,011 | |||||||
Software — 2.1% |
| |||||||
Adobe Systems, Inc.(1) | 25,706 | $ | 3,635,857 | |||||
Intuit, Inc. | 25,050 | 3,326,890 | ||||||
Microsoft Corp. | 62,400 | 4,301,232 | ||||||
Proofpoint, Inc.(1) | 23,675 | 2,055,700 | ||||||
$ | 13,319,679 | |||||||
Specialty Retail — 1.0% |
| |||||||
Advance Auto Parts, Inc. | 52,372 | $ | 6,106,052 | |||||
$ | 6,106,052 | |||||||
Technology Hardware, Storage & Peripherals — 3.6% |
| |||||||
Apple, Inc. | 157,408 | $ | 22,669,900 | |||||
$ | 22,669,900 | |||||||
Textiles, Apparel & Luxury Goods — 0.6% |
| |||||||
NIKE, Inc., Class B | 63,825 | $ | 3,765,675 | |||||
$ | 3,765,675 | |||||||
Tobacco — 1.9% |
| |||||||
Philip Morris International, Inc. | 103,134 | $ | 12,113,088 | |||||
$ | 12,113,088 | |||||||
Total Common Stocks |
| $ | 627,783,660 | |||||
Short-Term Investments — 0.0%(2) | ||||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 1.20%(3) | 80,627 | $ | 80,643 | |||||
Total Short-Term Investments |
| $ | 80,643 | |||||
Total Investments — 100.0% |
| $ | 627,864,303 | |||||
Other Assets, Less Liabilities — 0.0%(2) |
| $ | 205,355 | |||||
Net Assets — 100.0% |
| $ | 628,069,658 | |||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
(1) | Non-income producing security. |
(2) | Amount is less than 0.05%. |
(3) | Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2017. |
Abbreviations:
ADR | – | American Depositary Receipt |
22 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Unaffiliated investments, at value (identified cost, $542,034,265) | $ | 627,783,660 | ||
Affiliated investment, at value (identified cost, $80,643) | 80,643 | |||
Cash | 55 | |||
Foreign currency, at value (identified cost, $17,829) | 17,880 | |||
Dividends receivable | 572,037 | |||
Dividends receivable from affiliated investment | 406 | |||
Receivable for investments sold | 11,527,392 | |||
Tax reclaims receivable | 153,396 | |||
Total assets | $ | 640,135,469 | ||
Liabilities | ||||
Demand note payable | $ | 700,000 | ||
Payable for investments purchased | 10,945,746 | |||
Payable for capital withdrawals | 28,807 | |||
Payable to affiliates: | ||||
Investment adviser fee | 308,794 | |||
Trustees’ fees | 9,650 | |||
Accrued expenses | 72,814 | |||
Total liabilities | $ | 12,065,811 | ||
Net Assets applicable to investors’ interest in Portfolio | $ | 628,069,658 | ||
Sources of Net Assets | ||||
Investors’ capital | $ | 542,321,656 | ||
Net unrealized appreciation | 85,748,002 | |||
Total | $ | 628,069,658 |
23 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends (net of foreign taxes, $35,800) | $ | 6,874,121 | ||
Dividends from affiliated investment | 8,080 | |||
Total investment income | $ | 6,882,201 | ||
Expenses | ||||
Investment adviser fee | $ | 1,885,699 | ||
Trustees’ fees and expenses | 21,901 | |||
Custodian fee | 86,897 | |||
Legal and accounting services | 26,532 | |||
Miscellaneous | 15,634 | |||
Total expenses | $ | 2,036,663 | ||
Net investment income | $ | 4,845,538 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 23,085,115 | (1) | |
Investment transactions — affiliated investment | 326 | |||
Foreign currency transactions | 19,432 | |||
Net realized gain | $ | 23,104,873 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 28,179,615 | ||
Investments — affiliated investment | 404 | |||
Foreign currency | 1,598 | |||
Net change in unrealized appreciation (depreciation) | $ | 28,181,617 | ||
Net realized and unrealized gain | $ | 51,286,490 | ||
Net increase in net assets from operations | $ | 56,132,028 |
(1) | Includes $3,112,149 of net realized gains from redemptions in-kind. |
24 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 4,845,538 | $ | 8,396,685 | ||||
Net realized gain from investment and foreign currency transactions | 23,104,873 | (1) | 12,678,047 | |||||
Net change in unrealized appreciation (depreciation) from investments and foreign currency | 28,181,617 | 20,172,529 | ||||||
Net increase in net assets from operations | $ | 56,132,028 | $ | 41,247,261 | ||||
Capital transactions — | ||||||||
Contributions | $ | 9,441,017 | $ | 255,687,315 | ||||
Withdrawals | (78,601,573 | ) | (51,820,934 | ) | ||||
Portfolio transaction fee | 125,356 | 367,287 | ||||||
Net increase (decrease) in net assets from capital transactions | $ | (69,035,200 | ) | $ | 204,233,668 | |||
Net increase (decrease) in net assets | $ | (12,903,172 | ) | $ | 245,480,929 | |||
Net Assets | ||||||||
At beginning of period | $ | 640,972,830 | $ | 395,491,901 | ||||
At end of period | $ | 628,069,658 | $ | 640,972,830 |
(1) | Includes $3,112,149 of net realized gains from redemptions in-kind. |
25 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2017
Financial Highlights
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
Ratios/Supplemental Data | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(1) | 0.64 | %(2) | 0.65 | % | 0.70 | % | 0.71 | % | 0.73 | % | 0.73 | % | ||||||||||||
Net investment income | 1.53 | %(2) | 1.60 | % | 1.16 | % | 1.07 | % | 0.93 | % | 1.21 | % | ||||||||||||
Portfolio Turnover | 61 | %(3) | 118 | % | 96 | % | 109 | % | 90 | % | 91 | % | ||||||||||||
Total Return | 9.20 | %(3) | 7.14 | % | 4.88 | % | 12.56 | % | 33.50 | % | 16.18 | % | ||||||||||||
Net assets, end of period (000’s omitted) | $ | 628,070 | $ | 640,973 | $ | 395,492 | $ | 252,929 | $ | 237,133 | $ | 188,806 |
(1) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(2) | Annualized. |
(3) | Not annualized. |
26 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Stock Portfolio (the Portfolio) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Portfolio’s investment objective is to achieve long-term capital appreciation by investing in a diversified portfolio of equity securities. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At June 30, 2017, Eaton Vance Stock Fund, Eaton Vance Stock NextShares and Eaton Vance Balanced Fund held an interest of 15.7%, 2.2% and 82.1%, respectively, in the Portfolio.
The following is a summary of significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Portfolio is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.
Foreign Securities and Currencies. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. When valuing foreign equity securities that meet certain criteria, the Portfolio’s Trustees have approved the use of a fair value service that values such securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities.
Affiliated Fund. The Portfolio may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Portfolio in a manner that fairly reflects the security’s value, or the amount that the Portfolio might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. 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. 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.
D 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 ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the Portfolio’s investors is a regulated investment company that invests all or substantially all of its 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 losses and any other items of income, gain, loss, deduction or credit.
As of June 30, 2017, the Portfolio had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Portfolio files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E Foreign Currency Translation — Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Recognized
27 |
Stock Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
gains or losses on investment transactions attributable to changes in foreign currency exchange 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 results from fluctuations in foreign currency exchange rates is not separately disclosed.
F Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications — Under the Portfolio’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Under Massachusetts law, if certain conditions prevail, interestholders in the Portfolio could be deemed to have personal liability for the obligations of the Portfolio. However, the Portfolio’s Declaration of Trust contains an express disclaimer of liability on the part of Portfolio interestholders and the By-laws provide that the Portfolio shall assume the defense on behalf of any Portfolio interestholder. Moreover, the By-laws also provide for indemnification out of Portfolio property of any interestholder held personally liable solely by reason of being or having been an interestholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred.
H Capital Transactions — To seek to protect the Portfolio (and, indirectly, other investors in the Portfolio) against the costs of accommodating investor inflows and outflows, the Portfolio imposes a fee (“Portfolio transaction fee”) on inflows and outflows by Portfolio investors. The Portfolio transaction fee is sized to cover the estimated cost to the Portfolio of, in connection with issuing interests, converting the cash and/or other instruments it receives to the desired composition and, in connection with redeeming its interests, converting Portfolio holdings to cash and/or other instruments to be distributed. Such fee, which may vary over time, is limited to amounts that have been authorized by the Board of Trustees and determined by EVM to be appropriate. The maximum Portfolio transaction fee is 2% of the amount of net contributions or withdrawals. The Portfolio transaction fee is recorded as a component of capital transactions on the Statements of Changes in Net Assets.
I Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Portfolio’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of EVM, as compensation for investment advisory services rendered to the Portfolio. Pursuant to the investment advisory agreement and subsequent fee reduction agreement between the Portfolio and BMR, the fee is computed at an annual rate of 0.60% of the Portfolio’s average daily net assets up to $500 million and 0.575% from $500 million but less than $1 billion, and is payable monthly. On net assets of $1 billion or over, the annual fee is reduced. The fee reduction cannot be terminated or reduced without the approval of a majority vote of the Trustees of the Portfolio who are not interested persons of BMR or the Portfolio and by the vote of a majority of the holders of interest in the Portfolio. For the six months ended June 30, 2017, the Portfolio’s investment adviser fee amounted to $1,885,699 or 0.59% (annualized) of the Portfolio’s average daily net assets. The Portfolio invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund.
Trustees and officers of the Portfolio who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Portfolio out of the investment adviser fee. Trustees of the Portfolio who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Portfolio are officers of the above organizations.
3 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations and in-kind transactions, aggregated $389,151,358 and $438,955,054, respectively, for the six months ended June 30, 2017. In-kind contributions and withdrawals for the six months ended June 30, 2017 aggregated $547,841 and $13,667,193, respectively.
28 |
Stock Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Portfolio at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 543,739,517 | ||
Gross unrealized appreciation | $ | 94,372,377 | ||
Gross unrealized depreciation | (10,247,591 | ) | ||
Net unrealized appreciation | $ | 84,124,786 |
5 Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Portfolio based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Portfolio, it may be unable to borrow some or all of its requested amounts at any particular time. At June 30, 2017, the Portfolio had a balance outstanding pursuant to this line of credit of $700,000 at an interest rate of 2.16%. Based on the short-term nature of the borrowings under the line of credit and variable interest rate, the carrying value of the borrowings approximated its fair value at June 30, 2017. If measured at fair value, borrowings under the line of credit would have been considered as Level 2 in the fair value hierarchy (see Note 6) at June 30, 2017. The Portfolio’s average borrowings or allocated fees during the six months ended June 30, 2017 were not significant.
6 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
29 |
Stock Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
At June 30, 2017, the hierarchy of inputs used in valuing the Portfolio’s investments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | ||||||||||||||||
Consumer Discretionary | $ | 77,918,443 | $ | — | $ | — | $ | 77,918,443 | ||||||||
Consumer Staples | 58,191,118 | — | — | 58,191,118 | ||||||||||||
Energy | 37,049,875 | — | — | 37,049,875 | ||||||||||||
Financials | 90,949,117 | — | — | 90,949,117 | ||||||||||||
Health Care | 90,487,316 | — | — | 90,487,316 | ||||||||||||
Industrials | 57,695,725 | 5,942,439 | — | 63,638,164 | ||||||||||||
Information Technology | 139,241,261 | — | — | 139,241,261 | ||||||||||||
Materials | 18,579,487 | — | — | 18,579,487 | ||||||||||||
Real Estate | 17,819,205 | — | — | 17,819,205 | ||||||||||||
Telecommunication Services | 13,875,907 | — | — | 13,875,907 | ||||||||||||
Utilities | 20,033,767 | — | — | 20,033,767 | ||||||||||||
Total Common Stocks | $ | 621,841,221 | $ | 5,942,439 | * | $ | — | $ | 627,783,660 | |||||||
Short-Term Investments | $ | — | $ | 80,643 | $ | — | $ | 80,643 | ||||||||
Total Investments | $ | 621,841,221 | $ | 6,023,082 | $ | — | $ | 627,864,303 |
* | Includes foreign equity securities whose values were adjusted to reflect market trading of comparable securities or other correlated instruments that occurred after the close of trading in their applicable foreign markets. |
The Portfolio held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
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Eaton Vance
Balanced Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio-level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
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Eaton Vance
Balanced Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreements of Core Bond Portfolio and Stock Portfolio (the “Portfolios”), which are portfolios in which Eaton Vance Balanced Fund (the “Fund”) is authorized to invest, each with Boston Management and Research (the “Adviser”), including their fee structures, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of each agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreements. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreements for the Portfolios.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreements of the Portfolios, the Board evaluated the nature, extent and quality of services provided to the Portfolios by the Adviser.
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by the Portfolios, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Portfolios. For Core Bond Portfolio, the Board noted the abilities and experience of the Adviser’s investment professionals in analyzing factors relevant to investing in investment grade fixed income securities, including the Adviser’s in-house research capabilities. For Stock Portfolio, the Board noted that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Fund and each Portfolio, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Fund, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing each Portfolio.
32 |
Eaton Vance
Balanced Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreements.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices, as well as a customized peer group of similarly managed funds. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2016 for the Fund. The Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Portfolios and by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered factors that had an impact on Fund expense ratios relative to comparable funds.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund, to the Portfolios and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their relationships with the Fund and the Portfolios, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Portfolios and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund and the Portfolios, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and the Portfolios increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund and the Portfolios, the structure of the advisory fees, which include breakpoints at several asset levels, will allow the Fund and the Portfolios to continue to benefit from any economies of scale in the future.
33 |
Eaton Vance
Balanced Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Balanced Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Officers of Stock Portfolio
Edward J. Perkin
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Balanced Fund and Stock Portfolio
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
34 |
Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
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This Page Intentionally Left Blank
Investment Adviser of Core Bond Portfolio and Stock Portfolio
Boston Management and Research
Two International Place
Boston, MA 02110
Administrator of Eaton Vance Balanced Fund
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7698 6.30.17
Eaton Vance
Core Bond Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Core Bond Fund
Table of Contents | ||||
Performance | 2 | |||
Fund Profile | 2 | |||
Endnotes and Additional Disclosures | 3 | |||
Fund Expenses | 4 | |||
Financial Statements | 5 | |||
Board of Trustees’ Contract Approval | 27 | |||
Officers and Trustees | 31 | |||
Important Notices | 32 |
Eaton Vance
Core Bond Fund
June 30, 2017
Performance1,2
Portfolio Managers Vishal Khanduja, CFA and Brian S. Ellis, CFA
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 01/05/2009 | 03/07/2000 | 2.65 | % | 0.07 | % | 2.16 | % | 4.21 | % | ||||||||||||||
Class A with 4.75% Maximum Sales Charge | — | — | –2.20 | –4.67 | 1.16 | 3.70 | ||||||||||||||||||
Class I at NAV | 03/21/2007 | 03/07/2000 | 2.78 | 0.32 | 2.41 | 4.42 | ||||||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond Index | — | — | 2.27 | % | –0.31 | % | 2.21 | % | 4.47 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class I | ||||||||||||||||||||||
Gross | 0.86 | % | 0.61 | % | ||||||||||||||||||||
Net | 0.74 | 0.49 |
Fund Profile4
Asset Allocation (% of total investments)
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Core Bond Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of domestic investment-grade bonds, including corporate, government and mortgage-backed securities. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class A is linked to Class I. Performance prior to the inception date of Class I is linked to the performance of Core Bond Portfolio (the Portfolio) into which the Fund invests. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. |
3 | Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 4/30/19. Without the reimbursement, performance would have been lower. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Fund invests in an affiliated investment company (Portfolio) with the same objective(s) and policies as the Fund. References to investments are to the Portfolio’s holdings. Other, if any, represents any investment type less than 1% of total investments. |
Fund profile subject to change due to active management. |
Important Notice to Shareholders
Effective June 27, 2017, the Fund is managed by Vishal Khanduja and Brian S. Ellis. |
3 |
Eaton Vance
Core Bond Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,026.50 | $ | 3.77 | ** | 0.75 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,027.80 | $ | 2.51 | ** | 0.50 | % | |||||||
Hypothetical | ||||||||||||||||
(5% return per year before expenses) | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,021.10 | $ | 3.76 | ** | 0.75 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,022.30 | $ | 2.51 | ** | 0.50 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. The Example reflects the expenses of both the Fund and the Portfolio. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
4 |
Eaton Vance
Core Bond Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Investment in Core Bond Portfolio, at value (identified cost, $140,890,977) | $ | 142,564,692 | ||
Receivable for Fund shares sold | 247,632 | |||
Receivable from affiliate | 1,911 | |||
Total assets | $ | 142,814,235 | ||
Liabilities | ||||
Payable for Fund shares redeemed | $ | 237,515 | ||
Distributions payable | 209,775 | |||
Payable to affiliates: | ||||
Distribution and service fees | 6,867 | |||
Trustees’ fees | 125 | |||
Accrued expenses | 22,694 | |||
Total liabilities | $ | 476,976 | ||
Net Assets | $ | 142,337,259 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 142,834,159 | ||
Accumulated net realized loss from Portfolio | (1,849,937 | ) | ||
Accumulated distributions in excess of net investment income | (320,678 | ) | ||
Net unrealized appreciation from Portfolio | 1,673,715 | |||
Total | $ | 142,337,259 | ||
Class A Shares | ||||
Net Assets | $ | 33,076,333 | ||
Shares Outstanding | 3,367,746 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.82 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 95.25 of net asset value per share) | $ | 10.31 | ||
Class I Shares | ||||
Net Assets | $ | 109,260,926 | ||
Shares Outstanding | 11,136,723 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.81 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
5 | See Notes to Financial Statements. |
Eaton Vance
Core Bond Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Interest allocated from Portfolio | $ | 2,107,625 | ||
Dividends allocated from Portfolio | 6,815 | |||
Expenses allocated from Portfolio | (363,225 | ) | ||
Total investment income from Portfolio | $ | 1,751,215 | ||
Expenses | ||||
Distribution and service fees | ||||
Class A | $ | 43,352 | ||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 8,531 | |||
Transfer and dividend disbursing agent fees | 21,905 | |||
Legal and accounting services | 15,189 | |||
Printing and postage | 11,086 | |||
Registration fees | 19,895 | |||
Miscellaneous | 5,045 | |||
Total expenses | $ | 125,253 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 81,901 | ||
Total expense reductions | $ | 81,901 | ||
Net expenses | $ | 43,352 | ||
Net investment income | $ | 1,707,863 | ||
Realized and Unrealized Gain (Loss) from Portfolio | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 537,890 | ||
Net realized gain | $ | 537,890 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 1,771,349 | ||
Net change in unrealized appreciation (depreciation) | $ | 1,771,349 | ||
Net realized and unrealized gain | $ | 2,309,239 | ||
Net increase in net assets from operations | $ | 4,017,102 |
6 | See Notes to Financial Statements. |
Eaton Vance
Core Bond Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 1,707,863 | $ | 2,389,817 | ||||
Net realized gain from investment transactions | 537,890 | 336,165 | ||||||
Net change in unrealized appreciation (depreciation) from investments | 1,771,349 | 547,152 | ||||||
Net increase in net assets from operations | $ | 4,017,102 | $ | 3,273,134 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (449,099 | ) | $ | (907,972 | ) | ||
Class I | (1,574,351 | ) | (2,447,903 | ) | ||||
Total distributions to shareholders | $ | (2,023,450 | ) | $ | (3,355,875 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 3,921,228 | $ | 15,905,835 | ||||
Class I | 19,317,475 | 105,769,225 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 432,877 | 875,157 | ||||||
Class I | 289,166 | 526,198 | ||||||
Cost of shares redeemed | ||||||||
Class A | (9,026,843 | ) | (13,955,023 | ) | ||||
Class I | (27,174,988 | ) | (46,561,845 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | $ | (12,241,085 | ) | $ | 62,559,547 | |||
Net increase (decrease) in net assets | $ | (10,247,433 | ) | $ | 62,476,806 | |||
Net Assets | ||||||||
At beginning of period | $ | 152,584,692 | $ | 90,107,886 | ||||
At end of period | $ | 142,337,259 | $ | 152,584,692 | ||||
Accumulated distributions in excess of net investment income included in net assets | ||||||||
At end of period | $ | (320,678 | ) | $ | (5,091 | ) |
7 | See Notes to Financial Statements. |
Eaton Vance
Core Bond Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 9.690 | $ | 9.690 | $ | 9.980 | $ | 9.800 | $ | 10.360 | $ | 10.470 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.104 | $ | 0.168 | $ | 0.173 | $ | 0.226 | $ | 0.220 | $ | 0.284 | ||||||||||||
Net realized and unrealized gain (loss) | 0.151 | 0.075 | (0.201 | ) | 0.260 | (0.341 | ) | 0.217 | ||||||||||||||||
Total income (loss) from operations | $ | 0.255 | $ | 0.243 | $ | (0.028 | ) | $ | 0.486 | $ | (0.121 | ) | $ | 0.501 | ||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.125 | ) | $ | (0.243 | ) | $ | (0.258 | ) | $ | (0.306 | ) | $ | (0.326 | ) | $ | (0.382 | ) | ||||||
From net realized gain | — | — | (0.004 | ) | — | (0.113 | ) | (0.229 | ) | |||||||||||||||
Total distributions | $ | (0.125 | ) | $ | (0.243 | ) | $ | (0.262 | ) | $ | (0.306 | ) | $ | (0.439 | ) | $ | (0.611 | ) | ||||||
Net asset value — End of period | $ | 9.820 | $ | 9.690 | $ | 9.690 | $ | 9.980 | $ | 9.800 | $ | 10.360 | ||||||||||||
Total Return(2)(3) | 2.65 | %(4) | 2.48 | % | (0.31 | )% | 5.00 | % | (1.18 | )% | 4.86 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 33,076 | $ | 37,290 | $ | 34,501 | $ | 25,821 | $ | 36,947 | $ | 16,550 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 0.75 | %(7) | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||||
Net investment income | 2.16 | %(7) | 1.69 | % | 1.75 | % | 2.27 | % | 2.19 | % | 2.69 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 71 | %(4) | 132 | % | 159 | % | 134 | % | 107 | % | 113 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | The investment adviser of the Portfolio and/or the administrator reimbursed certain operating expenses (equal to 0.11%, 0.11%, 0.21%, 0.24%, 0.28% and 0.33% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(4) | Not annualized. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
8 | See Notes to Financial Statements. |
Eaton Vance
Core Bond Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 9.680 | $ | 9.680 | $ | 9.960 | $ | 9.780 | $ | 10.350 | $ | 10.460 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.116 | $ | 0.193 | $ | 0.199 | $ | 0.249 | $ | 0.248 | $ | 0.309 | ||||||||||||
Net realized and unrealized gain (loss) | 0.151 | 0.074 | (0.193 | ) | 0.261 | (0.354 | ) | 0.218 | ||||||||||||||||
Total income (loss) from operations | $ | 0.267 | $ | 0.267 | $ | 0.006 | $ | 0.510 | $ | (0.106 | ) | $ | 0.527 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.137 | ) | $ | (0.267 | ) | $ | (0.282 | ) | $ | (0.330 | ) | $ | (0.351 | ) | $ | (0.408 | ) | ||||||
From net realized gain | — | — | (0.004 | ) | — | (0.113 | ) | (0.229 | ) | |||||||||||||||
Total distributions | $ | (0.137 | ) | $ | (0.267 | ) | $ | (0.286 | ) | $ | (0.330 | ) | $ | (0.464 | ) | $ | (0.637 | ) | ||||||
Net asset value — End of period | $ | 9.810 | $ | 9.680 | $ | 9.680 | $ | 9.960 | $ | 9.780 | $ | 10.350 | ||||||||||||
Total Return(2)(3) | 2.78 | %(4) | 2.73 | % | 0.04 | % | 5.27 | % | (1.04 | )% | 5.12 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 109,261 | $ | 115,294 | $ | 55,607 | $ | 40,753 | $ | 46,336 | $ | 20,292 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 0.50 | %(7) | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | ||||||||||||
Net investment income | 2.41 | %(7) | 1.95 | % | 2.01 | % | 2.50 | % | 2.47 | % | 2.93 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 71 | %(4) | 132 | % | 159 | % | 134 | % | 107 | % | 113 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | The investment adviser of the Portfolio and/or the administrator reimbursed certain operating expenses (equal to 0.11%, 0.11%, 0.21%, 0.24%, 0.28% and 0.34% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(4) | Not annualized. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
9 | See Notes to Financial Statements. |
Eaton Vance
Core Bond Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Core Bond Fund (the Fund) is a diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund offers two classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class I shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Net investment income, other than class-specific expenses, is allocated daily to each class of shares based upon the ratio of the value of each class’s paid shares to the total value of all paid shares. Each class of shares differs in its distribution plan and certain other class-specific expenses. The Fund invests all of its investable assets in interests in Core Bond Portfolio (the Portfolio), a Massachusetts business trust, having the same investment objective and policies as the Fund. The value of the Fund’s investment in the Portfolio reflects the Fund’s proportionate interest in the net assets of the Portfolio (30.0% at June 30, 2017). The performance of the Fund is directly affected by the performance of the Portfolio. The financial statements of the Portfolio, including the portfolio of investments, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio’s Notes to Financial Statements, which are included elsewhere in this report.
B Income — The Fund’s net investment income or loss consists of the Fund’s pro-rata share of the net investment income or loss of the Portfolio, less all actual and accrued expenses of the Fund.
C Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
D Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
E Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
F Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
G Other — Investment transactions are accounted for on a trade date basis.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders and Income Tax Information
The Fund declares dividends daily to shareholders of record at the time of declaration. Distributions are generally paid monthly. Distributions of realized capital gains are made at least annually. Distributions are declared separately for each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the reinvestment date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As
10 |
Eaton Vance
Core Bond Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
At December 31, 2016, the Fund, for federal income tax purposes, had deferred capital losses of $1,288,751 which would reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus would reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the first day of the Fund’s next taxable year and retain the same short-term or long-term character as when originally deferred. Of the deferred capital losses at December 31, 2016, $907,449 are short-term and $381,302 are long-term.
3 Transactions with Affiliates
Eaton Vance Management (EVM) serves as the administrator of the Fund, but receives no compensation. The Portfolio has engaged Boston Management and Research (BMR), a subsidiary of EVM, to render investment advisory services. See Note 2 of the Portfolio’s Notes to Financial Statements which are included elsewhere in this report. EVM has agreed to reimburse the Fund’s expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only) exceed 0.74% and 0.49% (0.75% and 0.50% prior to June 1, 2017) of the Fund’s average daily net assets for Class A and Class I, respectively. This agreement may be changed or terminated after April 30, 2019. Pursuant to this agreement, EVM was allocated $81,901 of the Fund’s operating expenses for the six months ended June 30, 2017.
EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $1,215 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $1,163 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee. Certain officers and Trustees of the Fund and the Portfolio are officers of the above organizations.
4 Distribution Plan
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $43,352 for Class A shares.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
Class A shares may be subject to a 1% contingent deferred sales charge (CDSC) if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six months ended June 30, 2017, the Fund was informed that EVD received less than $100 of CDSCs paid by Class A shareholders.
6 Investment Transactions
For the six months ended June 30, 2017, increases and decreases in the Fund’s investment in the Portfolio aggregated $10,284,612 and $22,519,115, respectively.
11 |
Eaton Vance
Core Bond Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 402,310 | 1,611,630 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 44,323 | 88,228 | ||||||
Redemptions | (928,537 | ) | (1,409,771 | ) | ||||
Net increase (decrease) | (481,904 | ) | 290,087 | |||||
Class I | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 1,987,460 | 10,820,087 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 29,638 | 53,144 | ||||||
Redemptions | (2,795,832 | ) | (4,700,988 | ) | ||||
Net increase (decrease) | (778,734 | ) | 6,172,243 |
At June 30, 2017, donor advised and pooled income funds (established and maintained by a public charity) managed by EVM and an Eaton Vance collective investment trust owned in the aggregate 61.5% of the value of the outstanding shares of the Fund.
12 |
Core Bond Portfolio
June 30, 2017
Portfolio of Investments (Unaudited)
Corporate Bonds & Notes — 31.6% | ||||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Aerospace & Defense — 0.6% |
| |||||||
Embraer Netherlands Finance B.V., 5.40%, 2/1/27 | $ | 1,301 | $ | 1,361,171 | ||||
Lockheed Martin Corp., 4.70%, 5/15/46 | 810 | 915,204 | ||||||
WestJet Airlines, Ltd., 3.50%, 6/16/21(1) | 620 | 634,117 | ||||||
$ | 2,910,492 | |||||||
Automotive — 0.7% |
| |||||||
Delphi Corp., 4.15%, 3/15/24 | $ | 913 | $ | 960,206 | ||||
General Motors Co., 4.875%, 10/2/23 | 1,119 | 1,200,658 | ||||||
ZF North America Capital, Inc., 4.50%, 4/29/22(1) | 1,000 | 1,053,750 | ||||||
$ | 3,214,614 | |||||||
Banks — 7.5% |
| |||||||
American Express Co., 3.625%, 12/5/24 | $ | 1,162 | $ | 1,191,038 | ||||
Bank of America Corp., 2.881% to 4/24/22, 4/24/23(2) | 1,425 | 1,429,065 | ||||||
Bank of America Corp., 3.124% to 1/20/22, 1/20/23(2) | 2,420 | 2,448,892 | ||||||
Bank of America Corp., 3.30%, 1/11/23 | 1,237 | 1,262,157 | ||||||
Barclays PLC, 4.836%, 5/9/28 | 1,480 | 1,514,915 | ||||||
Capital One Bank (USA), NA, 3.375%, 2/15/23 | 892 | 900,643 | ||||||
Capital One Financial Corp., 2.50%, 5/12/20 | 485 | 487,390 | ||||||
Capital One Financial Corp., 3.75%, 4/24/24 | 700 | 716,395 | ||||||
CIT Group, Inc., 5.00%, 8/1/23 | 915 | 988,200 | ||||||
Citigroup, Inc., 3.70%, 1/12/26 | 1,000 | 1,013,326 | ||||||
Citigroup, Inc., 3.887% to 1/10/27, 1/10/28(2) | 909 | 924,978 | ||||||
Citigroup, Inc., 4.50%, 1/14/22 | 725 | 780,317 | ||||||
Citizens Financial Group, Inc., 4.30%, 12/3/25 | 1,399 | 1,461,292 | ||||||
Discover Bank, 3.20%, 8/9/21 | 950 | 968,384 | ||||||
Discover Financial Services, 3.95%, 11/6/24 | 490 | 498,394 | ||||||
Fifth Third Bancorp, 4.30%, 1/16/24 | 1,131 | 1,204,074 | ||||||
First Horizon National Corp., 3.50%, 12/15/20 | 702 | 720,507 | ||||||
Goldman Sachs Group, Inc. (The), 3.691% to 6/5/27, 6/5/28(2) | 916 | 920,876 | ||||||
Goldman Sachs Group, Inc. (The), 3.75%, 2/25/26 | 970 | 989,569 | ||||||
Goldman Sachs Group, Inc. (The), 3.85%, 1/26/27 | 1,510 | 1,537,955 | ||||||
Goldman Sachs Group, Inc. (The), 5.75%, 1/24/22 | 1,151 | 1,296,535 | ||||||
JPMorgan Chase & Co., 2.70%, 5/18/23 | 1,988 | 1,967,526 | ||||||
JPMorgan Chase & Co., 3.782% to 2/1/27, 2/1/28(2) | 1,000 | 1,023,953 | ||||||
JPMorgan Chase & Co., 5.625%, 8/16/43 | 628 | 758,250 | ||||||
Morgan Stanley, 4.00%, 7/23/25 | 2,220 | 2,319,694 | ||||||
Morgan Stanley, 4.35%, 9/8/26 | 643 | 669,818 | ||||||
Morgan Stanley, 4.875%, 11/1/22 | 1,132 | 1,230,365 | ||||||
PPTT, 2006-A GS, Class A, 5.798%(1)(3) | 259 | 260,975 | ||||||
Regions Financial Corp., 3.20%, 2/8/21 | 1,526 | 1,561,356 |
Security | Principal Amount (000’s omitted) | Value | ||||||
Banks (continued) |
| |||||||
Santander Holdings USA, Inc., 2.70%, 5/24/19 | $ | 685 | $ | 690,384 | ||||
Santander Holdings USA, Inc., 4.50%, 7/17/25 | 712 | 734,039 | ||||||
Synchrony Bank, 3.00%, 6/15/22 | 410 | 408,569 | ||||||
Wells Fargo & Co., 3.45%, 2/13/23 | 948 | 971,226 | ||||||
$ | 35,851,057 | |||||||
Beverages — 0.8% |
| |||||||
Anheuser-Busch InBev Finance, Inc., 2.65%, 2/1/21 | $ | 1,185 | $ | 1,201,784 | ||||
Anheuser-Busch InBev Finance, Inc., 4.90%, 2/1/46 | 730 | 828,372 | ||||||
Constellation Brands, Inc., 3.50%, 5/9/27 | 387 | 387,479 | ||||||
Constellation Brands, Inc., 4.50%, 5/9/47 | 576 | 596,211 | ||||||
Dr Pepper Snapple Group, Inc., 3.43%, 6/15/27(1) | 618 | 623,649 | ||||||
$ | 3,637,495 | |||||||
Building Materials — 0.6% |
| |||||||
Masco Corp., 3.50%, 11/15/27 | $ | 940 | $ | 933,907 | ||||
Owens Corning, 3.40%, 8/15/26 | 983 | 970,338 | ||||||
Owens Corning, 4.20%, 12/15/22 | 502 | 530,205 | ||||||
Vulcan Materials Co., 4.50%, 6/15/47 | 479 | 485,302 | ||||||
$ | 2,919,752 | |||||||
Chemicals — 1.1% |
| |||||||
CF Industries, Inc., 7.125%, 5/1/20 | $ | 1,265 | $ | 1,400,987 | ||||
Ecolab, Inc., 5.50%, 12/8/41 | 797 | 981,069 | ||||||
Potash Corp. of Saskatchewan, Inc., 4.00%, 12/15/26 | 1,475 | 1,523,966 | ||||||
RPM International, Inc., 3.75%, 3/15/27 | 589 | 599,787 | ||||||
Sherwin-Williams Co. (The), 3.45%, 6/1/27 | 840 | 847,713 | ||||||
$ | 5,353,522 | |||||||
Commercial Services — 0.7% |
| |||||||
Block Financial, LLC, 5.25%, 10/1/25 | $ | 870 | $ | 923,753 | ||||
Moody’s Corp., 3.25%, 1/15/28(1) | 1,414 | 1,396,438 | ||||||
Total System Services, Inc., 3.75%, 6/1/23 | 1,080 | 1,121,877 | ||||||
$ | 3,442,068 | |||||||
Computers — 0.4% |
| |||||||
Apple, Inc., 2.85%, 2/23/23 | $ | 1,080 | $ | 1,099,417 | ||||
EMC Corp., 3.375%, 6/1/23 | 1,015 | 975,338 | ||||||
$ | 2,074,755 | |||||||
Diversified Financial Services — 1.2% | ||||||||
Air Lease Corp., 3.375%, 6/1/21 | $ | 1,200 | $ | 1,232,862 | ||||
Brookfield Finance, LLC, 4.00%, 4/1/24 | 1,070 | 1,098,885 |
13 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount (000’s omitted) | Value | ||||||
Diversified Financial Services (continued) |
| |||||||
Legg Mason, Inc., 4.75%, 3/15/26 | $ | 667 | $ | 707,155 | ||||
Neuberger Berman Group, LLC/Neuberger Berman Finance Corp., | 432 | 453,099 | ||||||
Neuberger Berman Group, LLC/Neuberger Berman Finance Corp., | 510 | 497,539 | ||||||
UBS Group Funding Switzerland AG, 3.491%, 5/23/23(1) | 1,450 | 1,484,992 | ||||||
$ | 5,474,532 | |||||||
Electric Utilities — 1.2% |
| |||||||
Comision Federal de Electricidad, 4.75%, 2/23/27(1) | $ | 1,500 | $ | 1,546,875 | ||||
Enel Americas SA, 4.00%, 10/25/26 | 1,550 | 1,568,988 | ||||||
Entergy Corp., 4.00%, 7/15/22 | 1,046 | 1,106,624 | ||||||
ITC Holdings Corp., 4.05%, 7/1/23 | 680 | 713,984 | ||||||
Pacific Gas & Electric Co., 4.00%, 12/1/46 | 965 | 996,340 | ||||||
$ | 5,932,811 | |||||||
Electrical and Electronic Equipment — 1.1% |
| |||||||
FLIR Systems, Inc., 3.125%, 6/15/21 | $ | 910 | $ | 917,993 | ||||
Jabil Circuit, Inc., 4.70%, 9/15/22 | 1,400 | 1,494,262 | ||||||
NXP B.V./NXP Funding, LLC, | 400 | 421,128 | ||||||
NXP B.V./NXP Funding, LLC, | 1,070 | 1,156,938 | ||||||
Tyco Electronics Group SA, 3.70%, 2/15/26 | 1,070 | 1,106,073 | ||||||
$ | 5,096,394 | |||||||
Foods — 0.4% |
| |||||||
ESAL GmbH, 6.25%, 2/5/23(1) | $ | 400 | $ | 351,000 | ||||
Smithfield Foods, Inc., 3.35%, 2/1/22(1) | 1,482 | 1,492,637 | ||||||
$ | 1,843,637 | |||||||
Health Services — 0.3% |
| |||||||
MEDNAX, Inc., 5.25%, 12/1/23(1) | $ | 1,420 | $ | 1,466,150 | ||||
$ | 1,466,150 | |||||||
Healthcare Products — 0.3% |
| |||||||
Becton Dickinson and Co., 3.70%, 6/6/27 | $ | 1,439 | $ | 1,444,167 | ||||
$ | 1,444,167 | |||||||
Home Construction — 0.3% |
| |||||||
Lennar Corp., 4.125%, 1/15/22 | $ | 313 | $ | 324,738 | ||||
Toll Brothers Finance Corp., 4.875%, 3/15/27 | 940 | 970,550 | ||||||
$ | 1,295,288 | |||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Home Furnishings — 0.2% |
| |||||||
Whirlpool Corp., 4.50%, 6/1/46 | $ | 914 | $ | 959,727 | ||||
$ | 959,727 | |||||||
Household Products — 0.3% |
| |||||||
Newell Brands, Inc., 3.85%, 4/1/23 | $ | 1,426 | $ | 1,498,900 | ||||
$ | 1,498,900 | |||||||
Industrial Conglomerates — 0.2% |
| |||||||
General Electric Capital Corp., 5.30%, 2/11/21 | $ | 846 | $ | 935,971 | ||||
$ | 935,971 | |||||||
Insurance — 0.9% |
| |||||||
Aon PLC, 4.60%, 6/14/44 | $ | 785 | $ | 834,254 | ||||
Arch Capital Finance, LLC, 5.031%, 12/15/46 | 1,000 | 1,117,743 | ||||||
Marsh and McLennan Cos., Inc., 3.75%, 3/14/26 | 841 | 877,271 | ||||||
Principal Financial Group, Inc., 4.30%, 11/15/46 | 534 | 558,653 | ||||||
UnitedHealth Group, Inc., 2.875%, 12/15/21 | 724 | 740,390 | ||||||
Willis North America, Inc., 3.60%, 5/15/24 | 344 | 347,891 | ||||||
$ | 4,476,202 | |||||||
Internet Software & Services — 0.1% |
| |||||||
Symantec Corp., 5.00%, 4/15/25(1) | $ | 500 | $ | 524,530 | ||||
$ | 524,530 | |||||||
Lodging and Gaming — 0.3% |
| |||||||
GLP Capital, L.P./GLP Financing II, Inc., 5.375%, 4/15/26 | $ | 160 | $ | 175,167 | ||||
Hilton Domestic Operating Co., Inc., | 505 | 513,206 | ||||||
MGM Resorts International, 4.625%, 9/1/26 | 900 | 913,500 | ||||||
$ | 1,601,873 | |||||||
Machinery — 0.2% |
| |||||||
Xylem, Inc., 3.25%, 11/1/26 | $ | 1,085 | $ | 1,082,707 | ||||
$ | 1,082,707 | |||||||
Media — 0.3% |
| |||||||
Discovery Communications, LLC, 3.80%, 3/13/24 | $ | 1,429 | $ | 1,446,654 | ||||
$ | 1,446,654 | |||||||
Mining — 0.4% |
| |||||||
Freeport-McMoRan, Inc., 3.55%, 3/1/22 | $ | 900 | $ | 847,962 | ||||
Glencore Funding, LLC, 4.00%, 3/27/27(1) | 1,006 | 991,880 | ||||||
$ | 1,839,842 | |||||||
14 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount (000’s omitted) | Value | ||||||
Miscellaneous Manufacturing — 0.2% |
| |||||||
Hexcel Corp., 3.95%, 2/15/27 | $ | 702 | $ | 720,339 | ||||
$ | 720,339 | |||||||
Oil and Gas — 3.6% |
| |||||||
AmeriGas Partners, L.P./AmeriGas Finance Corp., 5.75%, 5/20/27 | $ | 1,465 | $ | 1,494,300 | ||||
Anadarko Petroleum Corp., 6.95%, 6/15/19 | 716 | 776,473 | ||||||
BP Capital Markets PLC, 3.224%, 4/14/24 | 1,452 | 1,467,271 | ||||||
ConocoPhillips Co., 4.30%, 11/15/44 | 1,011 | 1,037,835 | ||||||
Ecopetrol SA, 5.875%, 9/18/23 | 1,400 | 1,534,400 | ||||||
EOG Resources, Inc., 4.15%, 1/15/26 | 1,330 | 1,399,983 | ||||||
Exxon Mobil Corp., 1.708%, 3/1/19 | 1,419 | 1,423,390 | ||||||
Nabors Industries, Inc., 4.625%, 9/15/21 | 983 | 938,569 | ||||||
National Oilwell Varco, Inc., 3.95%, 12/1/42 | 800 | 665,815 | ||||||
Noble Energy, Inc., 3.90%, 11/15/24 | 937 | 964,445 | ||||||
Petroleos Mexicanos, 6.875%, 8/4/26 | 1,500 | 1,665,750 | ||||||
Pioneer Natural Resources Co., 4.45%, 1/15/26 | 1,400 | 1,477,276 | ||||||
Shell International Finance B.V., 3.25%, 5/11/25 | 1,300 | 1,327,461 | ||||||
Total Capital International SA, 2.70%, 1/25/23 | 883 | 888,079 | ||||||
$ | 17,061,047 | |||||||
Packaging & Containers — 0.2% |
| |||||||
Owens-Brockway Glass Container, Inc., 5.875%, 8/15/23(1) | $ | 835 | $ | 922,153 | ||||
$ | 922,153 | |||||||
Pharmaceuticals — 1.6% |
| |||||||
Abbott Laboratories, 2.90%, 11/30/21 | $ | 1,444 | $ | 1,459,211 | ||||
Actavis Funding SCS, 3.00%, 3/12/20 | 1,322 | 1,351,651 | ||||||
Actavis Funding SCS, 4.55%, 3/15/35 | 796 | 852,862 | ||||||
Celgene Corp., 3.55%, 8/15/22 | 1,041 | 1,084,832 | ||||||
Mylan N.V., 3.95%, 6/15/26 | 1,416 | 1,437,512 | ||||||
Shire Acquisitions Investments Ireland DAC, 2.40%, 9/23/21 | 1,500 | 1,483,836 | ||||||
$ | 7,669,904 | |||||||
Pipelines — 0.8% |
| |||||||
Gulfstream Natural Gas, 4.60%, 9/15/25(1) | $ | 431 | $ | 463,393 | ||||
Plains All America Pipeline, L.P./PAA Finance Corp., 4.50%, 12/15/26 | 485 | 491,471 | ||||||
Plains All America Pipeline, L.P./PAA Finance Corp., 4.65%, 10/15/25 | 663 | 680,762 | ||||||
Sabine Pass Liquefaction, LLC, 5.00%, 3/15/27 | 750 | 799,023 | ||||||
Sabine Pass Liquefaction, LLC, 5.625%, 3/1/25 | 880 | 973,172 |
Security | Principal Amount (000’s omitted) | Value | ||||||
Pipelines (continued) |
| |||||||
Sunoco Logistics Partners Operations, L.P., 4.40%, 4/1/21 | $ | 582 | $ | 611,990 | ||||
$ | 4,019,811 | |||||||
Real Estate Investment Trusts (REITs) — 0.7% |
| |||||||
DDR Corp., 3.625%, 2/1/25 | $ | 1,016 | $ | 968,202 | ||||
Essex Portfolio, L.P., 3.25%, 5/1/23 | 805 | 807,736 | ||||||
Simon Property Group, L.P., 2.50%, 7/15/21 | 423 | 423,275 | ||||||
VEREIT Operating Partnership, L.P., 4.875%, 6/1/26 | 947 | 1,004,691 | ||||||
$ | 3,203,904 | |||||||
Retail-Specialty and Apparel — 0.8% |
| |||||||
Coach, Inc., 4.125%, 7/15/27 | $ | 1,877 | $ | 1,861,901 | ||||
Macy’s Retail Holdings, Inc., 4.375%, 9/1/23 | 965 | 949,414 | ||||||
Reliance Intermediate Holdings, L.P., 6.50%, 4/1/23(1) | 295 | 317,125 | ||||||
Signet UK Finance PLC, 4.70%, 6/15/24 | 500 | 487,401 | ||||||
$ | 3,615,841 | |||||||
Software — 0.6% |
| |||||||
CA, Inc., 3.60%, 8/15/22 | $ | 400 | $ | 404,904 | ||||
Electronic Arts, Inc., 4.80%, 3/1/26 | 1,400 | 1,538,800 | ||||||
Quintiles IMS, Inc., 5.00%, 10/15/26(1) | 930 | 961,388 | ||||||
$ | 2,905,092 | |||||||
Technology — 0.2% |
| |||||||
Broadcom Corp., 2.70%, 11/1/18 | $ | 1,000 | $ | 1,001,307 | ||||
$ | 1,001,307 | |||||||
Telecommunications — 1.3% |
| |||||||
AT&T, Inc., 3.00%, 6/30/22 | $ | 1,043 | $ | 1,045,998 | ||||
AT&T, Inc., 3.60%, 2/17/23 | 1,834 | 1,879,104 | ||||||
Nokia Oyj, 4.375%, 6/12/27 | 1,500 | 1,530,945 | ||||||
Verizon Communications, Inc., 5.15%, 9/15/23 | 877 | 975,332 | ||||||
Verizon Communications, Inc., 6.00%, 4/1/41 | 422 | 492,728 | ||||||
$ | 5,924,107 | |||||||
Utilities — 1.5% |
| |||||||
American Water Capital Corp., 3.40%, 3/1/25 | $ | 365 | $ | 377,846 | ||||
American Water Capital Corp., 4.30%, 9/1/45 | 842 | 909,439 | ||||||
Baltimore Gas & Electric Co., 3.50%, 8/15/46 | 1,580 | 1,512,814 | ||||||
Duke Energy Florida Project Finance, LLC, 1.196%, 3/1/20 | 1,916 | 1,903,655 |
15 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount (000’s omitted) | Value | ||||||
Utilities (continued) |
| |||||||
Southern Co. Gas Capital Corp., 2.45%, 10/1/23 | $ | 1,060 | $ | 1,029,657 | ||||
Southern Co. Gas Capital Corp., 3.95%, 10/1/46 | 1,270 | 1,219,229 | ||||||
$ | 6,952,640 | |||||||
Total Corporate Bonds & Notes | $ | 150,319,285 | ||||||
Agency Mortgage-Backed Securities — 24.9% | ||||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Federal Home Loan Mortgage Corp.: | ||||||||
Pool #A93547, 4.50%, 8/1/40 | $ | 978 | $ | 1,054,777 | ||||
Pool #C03490, 4.50%, 8/1/40 | 813 | 876,239 | ||||||
Pool #C03815, 3.50%, 3/1/42 | 633 | 653,191 | ||||||
Pool #C03921, 3.50%, 5/1/42 | 652 | 672,830 | ||||||
Pool #C09031, 2.50%, 2/1/43 | 1,983 | 1,923,130 | ||||||
Pool #C09032, 3.50%, 2/1/43 | 1,098 | 1,133,786 | ||||||
Pool #C91875, 3.50%, 6/1/36 | 1,297 | 1,346,967 | ||||||
Pool #G04913, 5.00%, 3/1/38 | 924 | 1,013,763 | ||||||
Pool #G05958, 5.00%, 8/1/40 | 220 | 241,098 | ||||||
Pool #G07459, 3.50%, 8/1/43 | 2,483 | 2,562,960 | ||||||
Pool #G07589, 5.50%, 6/1/41 | 3,827 | 4,257,312 | ||||||
Pool #G08348, 5.00%, 6/1/39 | 234 | 256,043 | ||||||
Pool #G08524, 3.00%, 3/1/43 | 1,214 | 1,218,427 | ||||||
Pool #G08534, 3.00%, 6/1/43 | 2,103 | 2,110,474 | ||||||
Pool #G08596, 4.50%, 7/1/44 | 1,168 | 1,256,279 | ||||||
Pool #G08666, 3.00%, 9/1/45 | 2,514 | 2,514,378 | ||||||
Pool #G08670, 3.00%, 10/1/45 | 1,644 | 1,643,611 | ||||||
Pool #G08701, 3.00%, 4/1/46 | 2,520 | 2,516,644 | ||||||
Pool #G08717, 4.00%, 8/1/46 | 2,556 | 2,689,064 | ||||||
Pool #G08738, 3.50%, 12/1/46 | 2,295 | 2,359,670 | ||||||
Pool #G08758, 4.00%, 4/1/47 | 2,225 | 2,343,835 | ||||||
Pool #G60173, 4.00%, 7/1/45 | 1,383 | 1,464,768 | ||||||
Pool #G60761, 3.00%, 10/1/43 | 2,486 | 2,494,978 | ||||||
Pool #Q00285, 4.50%, 4/1/41 | 602 | 648,605 | ||||||
Pool #Q08641, 3.50%, 6/1/42 | 665 | 687,012 | ||||||
Pool #Q10378, 3.00%, 8/1/42 | 1,277 | 1,281,441 | ||||||
Pool #Q17453, 3.50%, 4/1/43 | 2,008 | 2,075,385 | ||||||
Pool #Q21661, 3.50%, 9/1/43 | 1,081 | 1,116,124 | ||||||
Pool #Q34310, 3.50%, 6/1/45 | 2,370 | 2,437,238 | ||||||
Pool #Q40264, 3.50%, 5/1/46 | 1,824 | 1,874,926 | ||||||
Pool #Q45051, 3.00%, 12/1/46 | 3,713 | 3,716,528 | ||||||
Pool #Q46889, 3.50%, 3/1/47 | 2,991 | 3,105,245 | ||||||
Pool #Q47999, 4.00%, 5/1/47 | 4,027 | 4,265,346 | ||||||
$ | 59,812,074 | |||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Federal National Mortgage Association: | ||||||||
Pool #735403, 5.00%, 4/1/35 | $ | 131 | $ | 143,073 | ||||
Pool #735415, 6.50%, 12/1/32 | 282 | 325,216 | ||||||
Pool #889982, 5.50%, 11/1/38 | 73 | 80,596 | ||||||
Pool #890427, 3.50%, 4/1/42 | 1,232 | 1,272,175 | ||||||
Pool #929009, 6.00%, 1/1/38 | 231 | 261,764 | ||||||
Pool #995203, 5.00%, 7/1/35 | 27 | 29,360 | ||||||
Pool #AB3678, 3.50%, 10/1/41 | 4,231 | 4,381,386 | ||||||
Pool #AB6633, 3.50%, 10/1/42 | 787 | 812,606 | ||||||
Pool #AB8923, 3.00%, 4/1/43 | 1,510 | 1,517,390 | ||||||
Pool #AE0949, 4.00%, 2/1/41 | 361 | 381,928 | ||||||
Pool #AH1559, 4.00%, 12/1/40 | 136 | 143,670 | ||||||
Pool #AH9055, 4.50%, 4/1/41 | 483 | 521,235 | ||||||
Pool #AK6759, 3.50%, 3/1/42 | 1,159 | 1,197,003 | ||||||
Pool #AL5162, 3.00%, 9/1/43 | 1,123 | 1,128,208 | ||||||
Pool #AL6838, 4.00%, 4/1/43 | 977 | 1,032,219 | ||||||
Pool #AL7019, 3.50%, 11/1/42 | 2,095 | 2,163,069 | ||||||
Pool #AL7524, 5.00%, 7/1/41 | 1,323 | 1,450,813 | ||||||
Pool #AS3892, 4.00%, 11/1/44 | 1,328 | 1,398,211 | ||||||
Pool #AS4421, 4.00%, 2/1/45 | 941 | 996,458 | ||||||
Pool #AS5332, 4.00%, 7/1/45 | 1,619 | 1,709,581 | ||||||
Pool #AS6014, 4.00%, 10/1/45 | 1,046 | 1,104,333 | ||||||
Pool #AS6811, 3.00%, 3/1/46 | 1,807 | 1,806,578 | ||||||
Pool #AS9721, 4.00%, 6/1/47 | 2,971 | 3,128,306 | ||||||
Pool #AZ3743, 3.50%, 11/1/45 | 2,631 | 2,703,906 | ||||||
Pool #BA0891, 3.50%, 1/1/46 | 2,924 | 3,005,442 | ||||||
Pool #BA0908, 3.50%, 3/1/46 | 1,805 | 1,854,942 | ||||||
Pool #BA3938, 3.50%, 1/1/46 | 2,194 | 2,256,306 | ||||||
Pool #BC1849, 3.00%, 5/1/46 | 3,273 | 3,271,287 | ||||||
Pool #BC6815, 3.00%, 6/1/46 | 2,323 | 2,321,725 | ||||||
Pool #BD1183, 3.50%, 12/1/46 | 1,420 | 1,459,606 | ||||||
Pool #BE2316, 3.50%, 1/1/47 | 3,459 | 3,555,178 | ||||||
Pool #MA0634, 4.50%, 1/1/31 | 848 | 912,072 | ||||||
Pool #MA0956, 4.00%, 1/1/42 | 1,515 | 1,601,736 | ||||||
Pool #MA1789, 4.50%, 2/1/44 | 1,008 | 1,091,434 | ||||||
Pool #MA2389, 3.50%, 9/1/35 | 790 | 821,717 | ||||||
Pool #MA2653, 4.00%, 6/1/46 | 2,585 | 2,719,007 | ||||||
Pool #MA2711, 3.00%, 8/1/46 | 1,868 | 1,851,748 | ||||||
$ | 56,411,284 | |||||||
Government National Mortgage Association: | ||||||||
Pool #AQ1784, 3.50%, 12/20/45 | $ | 2,054 | $ | 2,139,696 | ||||
$ | 2,139,696 | |||||||
Total Agency Mortgage-Backed Securities | $ | 118,363,054 | ||||||
16 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Collateralized Mortgage Obligations — 3.5% | ||||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Federal Home Loan Mortgage Corp. Structured Agency Credit Risk Debt Notes: | ||||||||
Series 2017-DNA2, Class M1, 2.416%, 10/25/29(4) | $ | 669 | $ | 679,905 | ||||
$ | 679,905 | |||||||
Federal Home Loan Mortgage Corp.: | ||||||||
Series 3820, Class DJ, 3.00%, 11/15/35 | $ | 2,323 | $ | 2,355,479 | ||||
Series 4030, Class PA, 3.50%, 6/15/40 | 889 | 922,284 | ||||||
$ | 3,277,763 | |||||||
Federal National Mortgage Association: | ||||||||
Series 2005-58, Class MA, 5.50%, 7/25/35 | $ | 417 | $ | 455,376 | ||||
Series 2011-117, Class QA, 3.50%, 10/25/31 | 1,559 | 1,578,182 | ||||||
Series 2011-135, Class PK, 4.50%, 5/25/40 | 1,426 | 1,500,206 | ||||||
Series 2013-130, Class EA, 3.00%, 6/25/38 | 1,565 | 1,589,750 | ||||||
Series 2014-70, Class KP, 3.50%, 3/25/44 | 1,632 | 1,694,253 | ||||||
$ | 6,817,767 | |||||||
Government National Mortgage Association: | ||||||||
Series 2017-52, Class UA, 3.00%, 4/16/47 | $ | 3,227 | $ | 3,238,331 | ||||
Series 2017-80, Class UD, 3.00%, 5/20/47 | 2,532 | 2,541,515 | ||||||
$ | 5,779,846 | |||||||
Total Collateralized Mortgage Obligations | $ | 16,555,281 | ||||||
Commercial Mortgage-Backed Securities — 4.0% | ||||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
A10 Securitization, LLC | ||||||||
Series 2015-1, Class A2, | $ | 527 | $ | 528,903 | ||||
CFCRE Commercial Mortgage Trust | ||||||||
Series 2016-C7, Class C, | 1,050 | 1,063,322 | ||||||
Citigroup Commercial Mortgage Trust | ||||||||
Series 2012-GC8, Class A2, 1.813%, 9/10/45 | 35 | 35,404 | ||||||
Series 2015-P1, Class D, | 1,000 | 823,254 | ||||||
COMM Mortgage Trust | ||||||||
Series 2012-CR2, Class AM, 3.791%, 8/15/45 | 165 | 171,999 | ||||||
Series 2013-CR11, Class C, | 500 | 533,119 | ||||||
Series 2014-CR20, Class D, | 700 | 567,536 | ||||||
Series 2014-CR21, Class C, | 500 | 499,825 | ||||||
Series 2014-LC17, Class A2, 3.164%, 10/10/47 | 550 | 561,761 | ||||||
Series 2014-UBS2, Class A2, 2.82%, 3/10/47 | 670 | 679,795 | ||||||
Credit Suisse Mortgage Trust | ||||||||
Series 2016-NXSR, Class C, | 1,500 | 1,494,456 |
Security | Principal Amount (000’s omitted) | Value | ||||||
JPMBB Commercial Mortgage Securities Trust | ||||||||
Series 2014-C21, Class D, | $ | 675 | $ | 575,351 | ||||
Series 2014-C22, Class D, | 500 | 418,463 | ||||||
Series 2014-C23, Class D, | 250 | 212,776 | ||||||
Series 2014-C25, Class D, | 1,585 | 1,273,068 | ||||||
JPMorgan Chase Commercial Mortgage Securities Trust | ||||||||
Series 2011-C5, Class A3, 4.171%, 8/15/46 | 897 | 955,702 | ||||||
Series 2013-C13, Class D, | 2,000 | 1,846,882 | ||||||
Series 2013-LC11, Class AS, 3.216%, 4/15/46 | 220 | 222,788 | ||||||
Morgan Stanley Bank of America Merrill Lynch Trust | ||||||||
Series 2016-C32, Class C, | 1,050 | 1,064,080 | ||||||
Morgan Stanley Capital I Trust | ||||||||
Series 2007-IQ16, Class A4, 5.809%, 12/12/49 | 596 | 598,197 | ||||||
Motel 6 Trust | ||||||||
Series 2015-MTL6, Class D, | 1,000 | 1,001,303 | ||||||
UBS Commercial Mortgage Trust | ||||||||
Series 2012-C1, Class D, | 1,350 | 1,363,812 | ||||||
Wells Fargo Commercial Mortgage Trust | ||||||||
Series 2015-LC22, Class C, | 900 | 902,415 | ||||||
Series 2015-SG1, Class C, | 1,500 | 1,455,374 | ||||||
WF-RBS Commercial Mortgage Trust | ||||||||
Series 2013-C13, Class AS, 3.345%, 5/15/45 | 110 | 112,377 | ||||||
Total Commercial Mortgage-Backed Securities | $ | 18,961,962 | ||||||
Asset-Backed Securities — 8.9% | ||||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Automotive — 5.2% | ||||||||
AmeriCredit Automobile Receivables Trust | ||||||||
Series 2016-2, Class B, 2.21%, 5/10/21 | $ | 610 | $ | 612,060 | ||||
Series 2016-4, Class A3, 1.53%, 7/8/21 | 825 | 821,978 | ||||||
Series 2017-2, Class A2A, 1.65%, 9/18/20 | 670 | 669,913 | ||||||
Avis Budget Rental Car Funding, LLC | ||||||||
Series 2012-3A, Class A, 2.10%, 3/20/19(1) | 1,450 | 1,452,850 | ||||||
Series 2013-2A, Class B, 3.66%, 2/20/20(1) | 450 | 457,109 | ||||||
BMW Vehicle Lease Trust | ||||||||
Series 2016-2, Class A3, 1.43%, 9/20/19 | 825 | 822,922 | ||||||
California Republic Auto Receivables Trust | ||||||||
Series 2013-2, Class A2, 1.23%, 3/15/19 | 33 | 33,429 | ||||||
CarMax Auto Owner Trust | ||||||||
Series 2016-1, Class A2A, 1.30%, 4/15/19 | 222 | 222,245 | ||||||
Series 2017-2, Class A3, 1.93%, 3/15/22 | 1,355 | 1,356,798 |
17 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount (000’s omitted) | Value | ||||||
Automotive (continued) | ||||||||
Drive Auto Receivables Trust | ||||||||
Series 2017-1, Class A3, 1.86%, 3/16/20 | $ | 510 | $ | 510,021 | ||||
Enterprise Fleet Financing, LLC | ||||||||
Series 2014-1, Class A3, | 294 | 293,669 | ||||||
Series 2017-1, Class A2, 2.13%, 7/20/22(1) | 500 | 501,009 | ||||||
First Investors Auto Owner Trust | ||||||||
Series 2015-2A, Class A1, | 261 | 260,751 | ||||||
Series 2016-1A, Class A1, | 227 | 227,493 | ||||||
Series 2016-2A, Class A1, | 303 | 302,126 | ||||||
Series 2017-1A, Class A1, | 623 | 622,170 | ||||||
Ford Credit Auto Owner Trust | ||||||||
Series 2014-1, Class B, | 475 | 476,545 | ||||||
Series 2016-A, Class A2A, 1.12%, 12/15/18 | 89 | 88,619 | ||||||
Series 2017-A, Class A3, 1.67%, 6/15/21 | 1,080 | 1,079,542 | ||||||
GMF Floorplan Owner Revolving Trust | ||||||||
Series 2015-1, Class B, 1.97%, 5/15/20(1) | 775 | 775,904 | ||||||
Hertz Fleet Lease Funding, L.P. | ||||||||
Series 2017-1, Class A2, 2.13%, 4/10/31(1) | 1,090 | 1,088,802 | ||||||
Honda Auto Receivables Owner Trust | ||||||||
Series 2014-2, Class A4, 1.18%, 5/18/20 | 570 | 569,868 | ||||||
Hyundai Auto Receivables Trust | ||||||||
Series 2015-C, Class A2A, 0.99%, 11/15/18 | 66 | 66,240 | ||||||
Mercedes-Benz Auto Receivables Trust | ||||||||
Series 2016-1, Class A3, 1.26%, 2/16/21 | 1,650 | 1,642,354 | ||||||
Santander Drive Auto Receivables Trust | ||||||||
Series 2015-1, Class B, 1.97%, 11/15/19 | 479 | 479,649 | ||||||
Series 2016-1, Class A2A, 1.41%, 7/15/19 | 156 | 156,409 | ||||||
Series 2016-3, Class A3, 1.50%, 8/17/20 | 980 | 978,584 | ||||||
Series 2017-2, Class A2, 1.60%, 3/16/20 | 985 | 984,704 | ||||||
Securitized Term Auto Receivables Trust | ||||||||
Series 2016-1A, Class A3, | 590 | 587,675 | ||||||
TCF Auto Receivables Owner Trust | ||||||||
Series 2016-PT1A, Class A, | 1,506 | 1,504,782 | ||||||
Volkswagen Credit Auto Master Trust | ||||||||
Series 2014-1A, Class A2, | 455 | 454,964 | ||||||
World Omni Auto Receivables Trust | ||||||||
Series 2014-A, Class A4, 1.53%, 6/15/20 | 1,915 | 1,915,749 | ||||||
Series 2016-A, Class A2, 1.32%, 12/16/19 | 688 | 688,129 | ||||||
Series 2016-B, Class A2, 1.10%, 1/15/20 | 796 | 794,489 | ||||||
World Omni Automobile Lease Securitization Trust | ||||||||
Series 2017-A, Class A3, 2.13%, 4/15/20 | 1,000 | 1,004,654 | ||||||
$ | 24,504,205 | |||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Computers — 0.3% | ||||||||
Dell Equipment Finance Trust | ||||||||
Series 2015-1, Class C, 2.42%, 3/23/20(1) | $ | 1,225 | $ | 1,228,830 | ||||
$ | 1,228,830 | |||||||
Other — 2.2% | ||||||||
Ascentium Equipment Receivable Trust | ||||||||
Series 2016-1A, Class A3, | $ | 1,691 | $ | 1,691,222 | ||||
CNH Equipment Trust | ||||||||
Series 2017-A, Class A3, 2.07%, 5/16/22 | 1,200 | 1,207,248 | ||||||
FOCUS Brands Funding, LLC | ||||||||
Series 2017-1A, Class A2II, | 1,000 | 1,035,230 | ||||||
Leaf II Receivables Funding, LLC | ||||||||
Series 2015-1, Class A4, | 555 | 555,023 | ||||||
Nextgear Floorplan Master Owner Trust | ||||||||
Series 2015-2A, Class A, | 1,250 | 1,256,070 | ||||||
OneMain Financial Issuance Trust | ||||||||
Series 2015-1A, Class A, | 1,000 | 1,011,225 | ||||||
Sierra Receivables Funding Co., LLC | ||||||||
Series 2014-1A, Class B, 2.42%, 3/20/30(1) | 78 | 78,270 | ||||||
Series 2015-1A, Class B, 3.05%, 3/22/32(1) | 243 | 244,414 | ||||||
Social Professional Loan Program, LLC | ||||||||
Series 2014-B, Class A2, 2.55%, 8/27/29(1) | 820 | 824,732 | ||||||
SpringCastle Funding Trust | ||||||||
Series 2016-AA, Class A, 3.05%, 4/25/29(1) | 1,195 | 1,203,371 | ||||||
Synchrony Credit Card Master Note Trust | ||||||||
Series 2015-3, Class A, 1.74%, 9/15/21 | 700 | 700,656 | ||||||
Verizon Owner Trust | ||||||||
Series 2016-1A, Class A, 1.42%, 1/20/21(1) | 600 | 597,779 | ||||||
$ | 10,405,240 | |||||||
Restaurants — 0.9% | ||||||||
DB Master Finance, LLC | ||||||||
Series 2015-1A, Class A2I, | $ | 1,496 | $ | 1,507,825 | ||||
Taco Bell Funding, LLC | ||||||||
Series 2016-1A, Class A2I, | 1,191 | 1,220,157 | ||||||
Wendys Funding, LLC | ||||||||
Series 2015-1A, Class A2I, | 1,621 | 1,639,523 | ||||||
$ | 4,367,505 | |||||||
18 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount (000’s omitted) | Value | ||||||
Single Family Home Rental — 0.3% | ||||||||
Colony American Homes | ||||||||
Series 2014-1A, Class C, | $ | 915 | $ | 923,361 | ||||
FirstKey Lending Trust | ||||||||
Series 2015-SFR1, Class A, | 649 | 649,133 | ||||||
$ | 1,572,494 | |||||||
Total Asset-Backed Securities |
| $ | 42,078,274 | |||||
Foreign Government and Agency Securities — 0.5% | ||||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Bermuda — 0.1% | ||||||||
Government of Bermuda, | $ | 510 | $ | 553,773 | ||||
$ | 553,773 | |||||||
Mexico — 0.3% | ||||||||
Government of Mexico, 3.60%, 1/30/25 | $ | 500 | $ | 507,250 | ||||
Government of Mexico, 4.00%, 10/2/23 | 790 | 827,960 | ||||||
$ | 1,335,210 | |||||||
Panama — 0.1% | ||||||||
Republic of Panama, 3.875%, 3/17/28 | $ | 700 | $ | 719,250 | ||||
$ | 719,250 | |||||||
Total Foreign Government and Agency Securities |
| $ | 2,608,233 | |||||
U.S. Treasury Obligations — 25.5% | ||||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
U.S. Treasury Bond, 2.875%, 11/15/46 | $ | 15,000 | $ | 15,111,615 | ||||
U.S. Treasury Bond, 3.00%, 5/15/47 | 3,150 | 3,257,113 | ||||||
U.S. Treasury Bond, 5.00%, 5/15/37 | 17,000 | 23,356,742 | ||||||
U.S. Treasury Note, 1.50%, 5/15/20 | 40,900 | 40,856,073 | ||||||
U.S. Treasury Note, 1.75%, 5/31/22 | 19,800 | 19,683,992 | ||||||
U.S. Treasury Note, 2.00%, 5/31/24 | 14,700 | 14,579,695 | ||||||
U.S. Treasury Note, 2.625%, 8/15/20 | 4,000 | 4,125,780 | ||||||
Total U.S. Treasury Obligations | $ | 120,971,010 | ||||||
Preferred Securities — 0.1% | ||||||||
Security | Shares | Value | ||||||
Insurance — 0.1% | ||||||||
American Overseas Group, Ltd., Series A, 4.803%(4)(6)(7) | 2,000 | $ | 400,000 | |||||
Total Preferred Securities | $ | 400,000 | ||||||
Short-Term Investments — 0.6% | ||||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 1.20%(8) | 2,883,671 | $ | 2,884,248 | |||||
Total Short-Term Investments | $ | 2,884,248 | ||||||
Total Investments — 99.6% |
| $ | 473,141,347 | |||||
Other Assets, Less Liabilities — 0.4% |
| $ | 2,123,625 | |||||
Net Assets — 100.0% |
| $ | 475,264,972 | |||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
(1) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be sold in certain transactions in reliance on an exemption from registration (normally to qualified institutional buyers). At June 30, 2017, the aggregate value of these securities is $51,903,216 or 10.9% of the Portfolio’s net assets. |
(2) | Security converts to floating rate after the indicated fixed-rate coupon period. |
(3) | Perpetual security with no stated maturity date but may be subject to calls by the issuer. |
(4) | Variable rate security. The stated interest rate represents the rate in effect at June 30, 2017. |
(5) | Weighted average fixed-rate coupon that changes/updates monthly. Rate shown is the rate at June 30, 2017. |
(6) | Non-income producing security. |
(7) | For fair value measurement disclosure purposes, security is categorized as Level 3 (see Note 6). |
(8) | Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2017. |
19 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Unaffiliated investments, at value (identified cost, $469,108,316) | $ | 470,257,099 | ||
Affiliated investment, at value (identified cost, $2,884,378) | 2,884,248 | |||
Interest receivable | 2,367,743 | |||
Dividends receivable from affiliated investment | 4,891 | |||
Receivable from affiliate | 10,930 | |||
Total assets | $ | 475,524,911 | ||
Liabilities | ||||
Payable to affiliates: | ||||
Investment adviser fee | $ | 177,007 | ||
Trustees’ fees | 7,320 | |||
Accrued expenses | 75,612 | |||
Total liabilities | $ | 259,939 | ||
Net Assets applicable to investors’ interest in Portfolio | $ | 475,264,972 | ||
Sources of Net Assets | ||||
Investors’ capital | $ | 474,116,319 | ||
Net unrealized appreciation | 1,148,653 | |||
Total | $ | 475,264,972 |
20 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Interest | $ | 6,907,904 | ||
Dividends from affiliated investment | 22,383 | |||
Total investment income | $ | 6,930,287 | ||
Expenses | ||||
Investment adviser fee | $ | 1,075,732 | ||
Trustees’ fees and expenses | 15,660 | |||
Custodian fee | 71,904 | |||
Legal and accounting services | 37,253 | |||
Miscellaneous | 8,520 | |||
Total expenses | $ | 1,209,069 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 17,758 | ||
Total expense reductions | $ | 17,758 | ||
Net expenses | $ | 1,191,311 | ||
Net investment income | $ | 5,738,976 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 1,784,314 | ||
Investment transactions — affiliated investment | (57 | ) | ||
Net realized gain | $ | 1,784,257 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 5,972,251 | ||
Investments — affiliated investment | 371 | |||
Net change in unrealized appreciation (depreciation) | $ | 5,972,622 | ||
Net realized and unrealized gain | $ | 7,756,879 | ||
Net increase in net assets from operations | $ | 13,495,855 |
21 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 5,738,976 | $ | 8,848,020 | ||||
Net realized gain from investment transactions | 1,784,257 | 700,300 | ||||||
Net change in unrealized appreciation (depreciation) from investments | 5,972,622 | (1,296,888 | ) | |||||
Net increase in net assets from operations | $ | 13,495,855 | $ | 8,251,432 | ||||
Capital transactions — | ||||||||
Contributions | $ | 24,690,804 | $ | 273,785,174 | ||||
Withdrawals | (47,177,581 | ) | (140,464,710 | ) | ||||
Net increase (decrease) in net assets from capital transactions | $ | (22,486,777 | ) | $ | 133,320,464 | |||
Net increase (decrease) in net assets | $ | (8,990,922 | ) | $ | 141,571,896 | |||
Net Assets | ||||||||
At beginning of period | $ | 484,255,894 | $ | 342,683,998 | ||||
At end of period | $ | 475,264,972 | $ | 484,255,894 |
22 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Financial Highlights
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
Ratios/Supplemental Data | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(1)(2) | 0.50 | %(3) | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | ||||||||||||
Net investment income | 2.40 | %(3) | 2.01 | % | 2.00 | % | 2.47 | % | 2.48 | % | 2.93 | % | ||||||||||||
Portfolio Turnover | 71 | %(4) | 132 | %(5) | 159 | %(5) | 134 | %(5) | 107 | % | 113 | % | ||||||||||||
Total Return(2) | 2.78 | %(4) | 2.73 | % | 0.04 | % | 5.27 | % | (1.04 | )% | 5.12 | % | ||||||||||||
Net assets, end of period (000’s omitted) | $ | 475,265 | $ | 484,256 | $ | 342,684 | $ | 214,538 | $ | 177,700 | $ | 114,900 |
(1) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(2) | The investment adviser reimbursed certain operating expenses (equal to 0.01%, 0.01%, 0.02%, 0.03%, 0.07% and 0.07% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(3) | Annualized. |
(4) | Not annualized. |
(5) | Includes the effect of To-Be-Announced (TBA) transactions. |
23 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Core Bond Portfolio (the Portfolio) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Portfolio’s investment objectives are to seek current income and total return. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At June 30, 2017, Eaton Vance Balanced Fund and Eaton Vance Core Bond Fund held an interest of 70.0% and 30.0%, respectively, in the Portfolio.
The following is a summary of significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Portfolio is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Debt Obligations. Debt obligations are generally valued on the basis of valuations provided by third party pricing services, as derived from such services’ pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. Short-term obligations purchased with a remaining maturity of sixty days or less for which a valuation from a third party pricing service is not readily available may be valued at amortized cost, which approximates fair value.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by a third party pricing service that uses various techniques that consider factors including, but not limited to, prices or yields of securities with similar characteristics, benchmark yields, broker/dealer quotes, quotes of underlying common stock, issuer spreads, as well as industry and economic events.
Affiliated Fund. The Portfolio may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Portfolio in a manner that fairly reflects the security’s value, or the amount that the Portfolio might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities.
D 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 ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the Portfolio’s investors is a regulated investment company that invests all or substantially all of its 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 losses and any other items of income, gain, loss, deduction or credit.
As of June 30, 2017, the Portfolio had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Portfolio files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
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Core Bond Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
F Indemnifications — Under the Portfolio’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Under Massachusetts law, if certain conditions prevail, interestholders in the Portfolio could be deemed to have personal liability for the obligations of the Portfolio. However, the Portfolio’s Declaration of Trust contains an express disclaimer of liability on the part of Portfolio interestholders and the By-laws provide that the Portfolio shall assume the defense on behalf of any Portfolio interestholder. Moreover, the By-laws also provide for indemnification out of Portfolio property of any interestholder held personally liable solely by reason of being or having been an interestholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred.
G Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Portfolio’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of EVM, as compensation for investment advisory services rendered to the Portfolio. Pursuant to the investment advisory agreement and subsequent fee reduction agreement between the Portfolio and BMR, the fee is computed at an annual rate of 0.45% of the Portfolio’s average daily net assets up to $1 billion and at reduced rates on average daily net assets of $1 billion or more, and is payable monthly. The fee reduction cannot be terminated or reduced without the approval of a majority vote of the Trustees of the Portfolio who are not interested persons of BMR or the Portfolio and by the vote of a majority of the holders of interest in the Portfolio. For the six months ended June 30, 2017, the Portfolio’s investment adviser fee amounted to $1,075,732 or 0.45% (annualized) of the Portfolio’s average daily net assets. Pursuant to a voluntary expense reimbursement, BMR was allocated $17,758 of the Portfolio’s operating expenses for the six months ended June 30, 2017. The Portfolio invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund.
Trustees and officers of the Portfolio who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Portfolio out of the investment adviser fee. Trustees of the Portfolio who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Portfolio are officers of the above organizations.
3 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations and including maturities and paydowns, for the six months ended June 30, 2017 were as follows:
Purchases | Sales | |||||||
Investments (non-U.S. Government) | $ | 85,580,212 | $ | 88,338,199 | ||||
U.S. Government and Agency Securities | 254,737,913 | 264,228,055 | ||||||
$ | 340,318,125 | $ | 352,566,254 |
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Portfolio at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 473,164,750 | ||
Gross unrealized appreciation | $ | 4,688,878 | ||
Gross unrealized depreciation | (4,712,281 | ) | ||
Net unrealized depreciation | $ | (23,403 | ) |
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Core Bond Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
5 Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Portfolio based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Portfolio, it may be unable to borrow some or all of its requested amounts at any particular time. The Portfolio did not have any significant borrowings or allocated fees during the six months ended June 30, 2017.
6 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At June 30, 2017, the hierarchy of inputs used in valuing the Portfolio’s investments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3* | Total | ||||||||||||
Corporate Bonds & Notes | $ | — | $ | 150,319,285 | $ | — | $ | 150,319,285 | ||||||||
Agency Mortgage-Backed Securities | — | 118,363,054 | — | 118,363,054 | ||||||||||||
Collateralized Mortgage Obligations | — | 16,555,281 | — | 16,555,281 | ||||||||||||
Commercial Mortgage-Backed Securities | — | 18,961,962 | — | 18,961,962 | ||||||||||||
Asset-Backed Securities | — | 42,078,274 | — | 42,078,274 | ||||||||||||
Foreign Government and Agency Securities | — | 2,608,233 | — | 2,608,233 | ||||||||||||
U.S. Treasury Obligations | — | 120,971,010 | — | 120,971,010 | ||||||||||||
Preferred Securities | — | — | 400,000 | 400,000 | ||||||||||||
Short-Term Investments | — | 2,884,248 | — | 2,884,248 | ||||||||||||
Total Investments | $ | — | $ | 472,741,347 | $ | 400,000 | $ | 473,141,347 |
* | None of the unobservable inputs for Level 3 assets, individually or collectively, had a material impact on the Portfolio. |
Level 3 investments at the beginning and/or end of the period in relation to net assets were not significant and accordingly, a reconciliation of Level 3 assets for the six months ended June 30, 2017 is not presented. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
26 |
Eaton Vance
Core Bond Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio-level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
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Eaton Vance
Core Bond Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Core Bond Portfolio (the “Portfolio”), the portfolio in which Eaton Vance Core Bond Fund (the “Fund”) invests, with Boston Management and Research (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Portfolio.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement of the Portfolio, the Board evaluated the nature, extent and quality of services provided to the Portfolio by the Adviser.
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by the Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Portfolio. The Board noted the abilities and experience of the Adviser’s investment professionals in analyzing factors relevant to investing in investment grade fixed income securities. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Portfolio, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Portfolio, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing the Portfolio.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio
28 |
Eaton Vance
Core Bond Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2016 for the Fund. On the basis of the foregoing and other relevant information provided by the Adviser in response to inquiries from the Contract Review Committee, the Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Portfolio and by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also received and considered information about the services offered and the fee rates charged by the Adviser to other types of clients with investment objectives and strategies that are substantially similar to and/or managed in a similar investment style as the Portfolio. In this regard, the Board received information about the differences in the nature and scope of services the Adviser provides to the Portfolio as compared to other types of clients and the material differences in compliance, reporting and other legal burdens and risks to the Adviser as between the Portfolio and other types of clients. The Board also considered factors that had an impact on Fund expense ratios relative to comparable funds, as identified by management in response to inquiries from the Contract Review Committee.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund, to the Portfolio and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their relationships with the Fund and the Portfolio, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Portfolio and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund and the Portfolio, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and the Portfolio increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a
29 |
Eaton Vance
Core Bond Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund and the Portfolio, the structure of the advisory fee, which includes breakpoints at several asset levels, will allow the Fund and the Portfolio to continue to benefit from any economies of scale in the future.
30 |
Eaton Vance
Core Bond Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Core Bond Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Officers of Core Bond Portfolio
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Core Bond Fund and Core Bond Portfolio
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
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Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
32 |
Investment Adviser of Core Bond Portfolio
Boston Management and Research
Two International Place
Boston, MA 02110
Administrator of Eaton Vance Core Bond Fund
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7754 6.30.17
Eaton Vance
Dividend Builder Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Dividend Builder Fund
Table of Contents
Performance | 2 | |||
Fund Profile | 2 | |||
Endnotes and Additional Disclosures | 3 | |||
Fund Expenses | 4 | |||
Financial Statements | 5 | |||
Board of Trustees’ Contract Approval | 26 | |||
Officers and Trustees | 29 | |||
Important Notices | 30 |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Performance1,2
Portfolio Manager Charles B. Gaffney
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 12/18/1981 | 12/18/1981 | 6.26 | % | 10.81 | % | 12.22 | % | 4.82 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | 0.18 | 4.45 | 10.90 | 4.20 | ||||||||||||||||||
Class C at NAV | 11/01/1993 | 12/18/1981 | 5.83 | 10.09 | 11.38 | 4.05 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 4.83 | 9.09 | 11.38 | 4.05 | ||||||||||||||||||
Class I at NAV | 06/20/2005 | 12/18/1981 | 6.39 | 11.10 | 12.50 | 5.09 | ||||||||||||||||||
S&P 500 Index | — | — | 9.34 | % | 17.90 | % | 14.62 | % | 7.18 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | |||||||||||||||||||||
1.04 | % | 1.79 | % | 0.79 | % |
Fund Profile4
Sector Allocation (% of net assets)5
Top 10 Holdings (% of net assets)5
|
| |||
Apple, Inc. | 4.1 | % | ||
Verizon Communications, Inc. | 2.8 | |||
Alphabet, Inc., Class C | 2.7 | |||
Pfizer, Inc. | 2.6 | |||
Microsoft Corp. | 2.6 | |||
JPMorgan Chase & Co. | 2.5 | |||
Wells Fargo & Co. | 2.2 | |||
Chubb, Ltd. | 2.2 | |||
Time Warner, Inc. | 2.1 | |||
General Electric Co. | 2.1 | |||
Total | 25.9 | % |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | S&P 500 Index is an unmanaged index of large-cap stocks commonly used as a measure of U.S. stock market performance. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
3 | Source: Fund prospectus. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Fund invests in an affiliated investment company (Portfolio) with the same objective(s) and policies as the Fund. References to investments are to the Portfolio’s holdings. |
5 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,062.60 | $ | 5.32 | 1.04 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,058.30 | $ | 9.14 | 1.79 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,063.90 | $ | 4.04 | 0.79 | % | ||||||||
Hypothetical | ||||||||||||||||
(5% return per year before expenses) | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,019.60 | $ | 5.21 | 1.04 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,015.90 | $ | 8.95 | 1.79 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,020.90 | $ | 3.96 | 0.79 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. The Example reflects the expenses of both the Fund and the Portfolio. |
4 |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Investment in Dividend Builder Portfolio, at value (identified cost, $857,122,888) | $ | 954,938,734 | ||
Receivable for Fund shares sold | 902,064 | |||
Total assets | $ | 955,840,798 | ||
Liabilities | ||||
Payable for Fund shares redeemed | $ | 1,926,140 | ||
Payable to affiliates: | ||||
Distribution and service fees | 259,253 | |||
Trustees’ fees | 125 | |||
Accrued expenses | 194,364 | |||
Total liabilities | $ | 2,379,882 | ||
Net Assets | $ | 953,460,916 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 805,189,825 | ||
Accumulated net realized gain from Portfolio | 46,439,017 | |||
Accumulated undistributed net investment income | 4,016,228 | |||
Net unrealized appreciation from Portfolio | 97,815,846 | |||
Total | $ | 953,460,916 | ||
Class A Shares | ||||
Net Assets | $ | 653,208,868 | ||
Shares Outstanding | 45,928,903 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.22 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 15.09 | ||
Class C Shares | ||||
Net Assets | $ | 148,698,856 | ||
Shares Outstanding | 10,407,040 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.29 | ||
Class I Shares | ||||
Net Assets | $ | 151,553,192 | ||
Shares Outstanding | 10,664,310 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.21 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
* | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
5 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends allocated from Portfolio (net of foreign taxes, $294,859) | $ | 15,397,320 | ||
Securities lending income allocated from Portfolio, net | 108,143 | |||
Expenses allocated from Portfolio | (3,301,638 | ) | ||
Total investment income from Portfolio | $ | 12,203,825 | ||
Expenses | ||||
Distribution and service fees | ||||
Class A | $ | 826,955 | ||
Class C | 792,752 | |||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 28,845 | |||
Transfer and dividend disbursing agent fees | 350,585 | |||
Legal and accounting services | 28,753 | |||
Printing and postage | 35,907 | |||
Registration fees | 25,375 | |||
Miscellaneous | 7,982 | |||
Total expenses | $ | 2,097,404 | ||
Net investment income | $ | 10,106,421 | ||
Realized and Unrealized Gain (Loss) from Portfolio | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 36,911,963 | ||
Written options | (3,756,542 | ) | ||
Foreign currency transactions | (87,645 | ) | ||
Net realized gain | $ | 33,067,776 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 16,302,264 | ||
Written options | (1,676,712 | ) | ||
Foreign currency | 93,279 | |||
Net change in unrealized appreciation (depreciation) | $ | 14,718,831 | ||
Net realized and unrealized gain | $ | 47,786,607 | ||
Net increase in net assets from operations | $ | 57,893,028 |
6 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 10,106,421 | $ | 19,187,500 | ||||
Net realized gain from investment transactions, written options and foreign currency transactions | 33,067,776 | 48,370,732 | ||||||
Net change in unrealized appreciation (depreciation) from investments, written options and foreign currency | 14,718,831 | 16,539,640 | ||||||
Net increase in net assets from operations | $ | 57,893,028 | $ | 84,097,872 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (6,348,767 | ) | $ | (13,762,416 | ) | ||
Class C | (915,931 | ) | (2,014,010 | ) | ||||
Class I | (1,421,911 | ) | (2,385,560 | ) | ||||
From net realized gain | ||||||||
Class A | — | (26,297,186 | ) | |||||
Class C | — | (6,214,210 | ) | |||||
Class I | — | (4,158,941 | ) | |||||
Total distributions to shareholders | $ | (8,686,609 | ) | $ | (54,832,323 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 19,332,773 | $ | 39,291,532 | ||||
Class C | 3,687,901 | 14,564,408 | ||||||
Class I | 51,757,118 | 32,481,418 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 5,480,291 | 35,095,746 | ||||||
Class C | 797,049 | 7,042,824 | ||||||
Class I | 1,191,822 | 5,375,099 | ||||||
Cost of shares redeemed | ||||||||
Class A | (91,452,941 | ) | (121,207,612 | ) | ||||
Class C | (27,162,931 | ) | (29,437,260 | ) | ||||
Class I | (21,612,133 | ) | (35,313,548 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (57,981,051 | ) | $ | (52,107,393 | ) | ||
Net decrease in net assets | $ | (8,774,632 | ) | $ | (22,841,844 | ) | ||
Net Assets | ||||||||
At beginning of period | $ | 962,235,548 | $ | 985,077,392 | ||||
At end of period | $ | 953,460,916 | $ | 962,235,548 | ||||
Accumulated undistributed net investment income included in net assets | ||||||||
At end of period | $ | 4,016,228 | $ | 2,596,416 |
7 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.510 | $ | 13.110 | $ | 14.190 | $ | 13.430 | $ | 10.870 | $ | 9.800 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.153 | $ | 0.278 | $ | 0.238 | $ | 0.269 | $ | 0.158 | $ | 0.271 | ||||||||||||
Net realized and unrealized gain | 0.689 | 0.907 | 0.178 | 1.269 | 2.582 | 1.039 | ||||||||||||||||||
Total income from operations | $ | 0.842 | $ | 1.185 | $ | 0.416 | $ | 1.538 | $ | 2.740 | $ | 1.310 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.132 | ) | $ | (0.264 | ) | $ | (0.236 | ) | $ | (0.195 | ) | $ | (0.180 | ) | $ | (0.240 | ) | ||||||
From net realized gain | — | (0.521 | ) | (1.260 | ) | (0.583 | ) | — | — | |||||||||||||||
Total distributions | $ | (0.132 | ) | $ | (0.785 | ) | $ | (1.496 | ) | $ | (0.778 | ) | $ | (0.180 | ) | $ | (0.240 | ) | ||||||
Net asset value — End of period | $ | 14.220 | $ | 13.510 | $ | 13.110 | $ | 14.190 | $ | 13.430 | $ | 10.870 | ||||||||||||
Total Return(2) | 6.26 | %(3) | 9.21 | % | 2.91 | % | 11.73 | % | 25.40 | % | 13.50 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 653,209 | $ | 685,372 | $ | 711,199 | $ | 758,216 | $ | 787,254 | $ | 771,307 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.04 | %(6) | 1.04 | % | 1.04 | % | 1.05 | % | 1.06 | % | 1.07 | % | ||||||||||||
Net investment income | 2.21 | %(6) | 2.09 | % | 1.67 | % | 1.92 | % | 1.30 | % | 2.59 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 46 | %(3) | 97 | % | 99 | % | 93 | % | 59 | % | 63 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(6) | Annualized. |
8 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.580 | $ | 13.160 | $ | 14.250 | $ | 13.480 | $ | 10.910 | $ | 9.830 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.101 | $ | 0.179 | $ | 0.132 | $ | 0.163 | $ | 0.067 | $ | 0.193 | ||||||||||||
Net realized and unrealized gain | 0.689 | 0.926 | 0.167 | 1.278 | 2.592 | 1.047 | ||||||||||||||||||
Total income from operations | $ | 0.790 | $ | 1.105 | $ | 0.299 | $ | 1.441 | $ | 2.659 | $ | 1.240 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.080 | ) | $ | (0.164 | ) | $ | (0.129 | ) | $ | (0.088 | ) | $ | (0.089 | ) | $ | (0.160 | ) | ||||||
From net realized gain | — | (0.521 | ) | (1.260 | ) | (0.583 | ) | — | — | |||||||||||||||
Total distributions | $ | (0.080 | ) | $ | (0.685 | ) | $ | (1.389 | ) | $ | (0.671 | ) | $ | (0.089 | ) | $ | (0.160 | ) | ||||||
Net asset value — End of period | $ | 14.290 | $ | 13.580 | $ | 13.160 | $ | 14.250 | $ | 13.480 | $ | 10.910 | ||||||||||||
Total Return(2) | 5.83 | %(3) | 8.51 | % | 2.05 | % | 10.90 | % | 24.47 | % | 12.70 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 148,699 | $ | 163,138 | $ | 165,915 | $ | 175,086 | $ | 175,875 | $ | 164,219 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.79 | %(6) | 1.79 | % | 1.79 | % | 1.80 | % | 1.81 | % | 1.82 | % | ||||||||||||
Net investment income | 1.46 | %(6) | 1.34 | % | 0.92 | % | 1.16 | % | 0.55 | % | 1.83 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 46 | %(3) | 97 | % | 99 | % | 93 | % | 59 | % | 63 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(6) | Annualized. |
9 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.500 | $ | 13.100 | $ | 14.180 | $ | 13.430 | $ | 10.870 | $ | 9.790 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.170 | $ | 0.312 | $ | 0.274 | $ | 0.296 | $ | 0.189 | $ | 0.296 | ||||||||||||
Net realized and unrealized gain | 0.689 | 0.906 | 0.178 | 1.268 | 2.581 | 1.051 | ||||||||||||||||||
Total income from operations | $ | 0.859 | $ | 1.218 | $ | 0.452 | $ | 1.564 | $ | 2.770 | $ | 1.347 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.149 | ) | $ | (0.297 | ) | $ | (0.272 | ) | $ | (0.231 | ) | $ | (0.210 | ) | $ | (0.267 | ) | ||||||
From net realized gain | — | (0.521 | ) | (1.260 | ) | (0.583 | ) | — | — | |||||||||||||||
Total distributions | $ | (0.149 | ) | $ | (0.818 | ) | $ | (1.532 | ) | $ | (0.814 | ) | $ | (0.210 | ) | $ | (0.267 | ) | ||||||
Net asset value — End of period | $ | 14.210 | $ | 13.500 | $ | 13.100 | $ | 14.180 | $ | 13.430 | $ | 10.870 | ||||||||||||
Total Return(2) | 6.39 | %(3) | 9.49 | % | 3.10 | % | 12.01 | % | 25.72 | % | 13.91 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 151,553 | $ | 113,726 | $ | 107,963 | $ | 103,942 | $ | 67,746 | $ | 66,792 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 0.79 | %(6) | 0.79 | % | 0.79 | % | 0.80 | % | 0.81 | % | 0.82 | % | ||||||||||||
Net investment income | 2.45 | %(6) | 2.35 | % | 1.92 | % | 2.10 | % | 1.55 | % | 2.82 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 46 | %(3) | 97 | % | 99 | % | 93 | % | 59 | % | 63 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | Not annualized. |
(4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(6) | Annualized. |
10 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Dividend Builder Fund (the Fund) is a diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund offers three classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class-specific expenses. The Fund invests all of its investable assets in interests in Dividend Builder Portfolio (the Portfolio), a Massachusetts business trust, having the same investment objective and policies as the Fund. The value of the Fund’s investment in the Portfolio reflects the Fund’s proportionate interest in the net assets of the Portfolio (99.9% at June 30, 2017). The performance of the Fund is directly affected by the performance of the Portfolios. The financial statements of the Portfolio, including the portfolio of investments, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio’s Notes to Financial Statements, which are included elsewhere in this report.
B Income — The Fund’s net investment income or loss consists of the Fund’s pro-rata share of the net investment income or loss of the Portfolio, less all actual and accrued expenses of the Fund.
C Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
D Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
E Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
F Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
G Other — Investment transactions are accounted for on a trade date basis.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders and Income Tax Information
It is the present policy of the Fund to make monthly distributions of all or substantially all of its net investment income and to distribute annually all or substantially all of its net realized capital gains (reduced by available capital loss carryforwards from prior years). Distributions to shareholders are recorded on the ex-dividend date. Distributions are declared separately for each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date or, at the election of the shareholder, receive distributions
11 |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
3 Transactions with Affiliates
Eaton Vance Management (EVM) serves as the administrator of the Fund, but receives no compensation. The Portfolio has engaged Boston Management and Research (BMR), a subsidiary of EVM, to render investment advisory services. See Note 2 of the Portfolio’s Notes to Financial Statements which are included elsewhere in this report.
EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $33,680 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $16,996 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A and Class C shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee. Certain officers and Trustees of the Fund and the Portfolio are officers of the above organizations.
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $826,955 for Class A shares.
The Fund also has in effect a distribution plan for Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class C shares for providing ongoing distribution services and facilities to the Fund. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $594,564 for Class C shares.
Pursuant to the Class C Plan, the Fund also makes payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended June 30, 2017 amounted to $198,188 for Class C shares.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is imposed on redemptions of Class C shares made within one year of purchase. Class A shares may be subject to a 1% CDSC if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six months ended June 30, 2017, the Fund was informed that EVD received approximately $2,000 of CDSCs paid by each of Class A and Class C shareholders.
6 Investment Transactions
For the six months ended June 30, 2017, increases and decreases in the Fund’s investment in the Portfolio aggregated $164,514 and $70,612,016, respectively.
12 |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 1,377,721 | 2,976,973 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 394,522 | 2,619,391 | ||||||
Redemptions | (6,555,631 | ) | (9,150,217 | ) | ||||
Net decrease | (4,783,388 | ) | (3,553,853 | ) | ||||
Class C | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 263,166 | 1,094,105 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 57,095 | 522,281 | ||||||
Redemptions | (1,929,024 | ) | (2,205,535 | ) | ||||
Net decrease | (1,608,763 | ) | (589,149 | ) | ||||
Class I | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 3,706,883 | 2,442,886 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 85,680 | 401,602 | ||||||
Redemptions | (1,549,632 | ) | (2,667,037 | ) | ||||
Net increase | 2,242,931 | 177,451 | ||||||
13 |
Dividend Builder Portfolio
June 30, 2017
Portfolio of Investments (Unaudited)
Common Stocks — 99.4% | ||||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 2.8% |
| |||||||
CAE, Inc. | 579,500 | $ | 9,991,996 | |||||
Lockheed Martin Corp. | 25,500 | 7,079,055 | ||||||
Textron, Inc. | 214,500 | 10,102,950 | ||||||
$ | 27,174,001 | |||||||
Auto Components — 0.6% |
| |||||||
Delphi Automotive PLC | 65,000 | $ | 5,697,250 | |||||
$ | 5,697,250 | |||||||
Automobiles — 0.5% |
| |||||||
Ford Motor Co. | 390,000 | $ | 4,364,100 | |||||
$ | 4,364,100 | |||||||
Banks — 6.7% |
| |||||||
First Hawaiian, Inc. | 327,000 | $ | 10,012,740 | |||||
JPMorgan Chase & Co. | 258,000 | 23,581,200 | ||||||
People’s United Financial, Inc.(1) | 510,000 | 9,006,600 | ||||||
Wells Fargo & Co. | 387,000 | 21,443,670 | ||||||
$ | 64,044,210 | |||||||
Beverages — 0.5% |
| |||||||
Diageo PLC | 161,300 | $ | 4,766,696 | |||||
$ | 4,766,696 | |||||||
Biotechnology — 4.7% |
| |||||||
AbbVie, Inc. | 73,600 | $ | 5,336,736 | |||||
Alexion Pharmaceuticals, Inc.(2) | 23,000 | 2,798,410 | ||||||
Biogen, Inc.(2) | 18,200 | 4,938,752 | ||||||
Celgene Corp.(2) | 53,940 | 7,005,188 | ||||||
Gilead Sciences, Inc. | 271,500 | 19,216,770 | ||||||
Incyte Corp.(2) | 22,000 | 2,770,020 | ||||||
Vertex Pharmaceuticals, Inc.(2) | 21,000 | 2,706,270 | ||||||
$ | 44,772,146 | |||||||
Capital Markets — 2.9% |
| |||||||
Blackstone Group LP (The) | 316,000 | $ | 10,538,600 | |||||
Invesco, Ltd. | 321,000 | 11,295,990 | ||||||
Lazard, Ltd., Class A | 118,000 | 5,466,940 | ||||||
$ | 27,301,530 | |||||||
Chemicals — 1.9% |
| |||||||
Dow Chemical Co. (The) | 123,000 | $ | 7,757,610 | |||||
LyondellBasell Industries NV, Class A | 120,639 | 10,180,725 | ||||||
$ | 17,938,335 | |||||||
Security | Shares | Value | ||||||
Commercial Services & Supplies — 1.5% |
| |||||||
Brambles, Ltd.(1) | 1,263,000 | $ | 9,444,193 | |||||
Deluxe Corp. | 67,000 | 4,637,740 | ||||||
$ | 14,081,933 | |||||||
Communications Equipment — 1.7% |
| |||||||
Cisco Systems, Inc. | 510,000 | $ | 15,963,000 | |||||
$ | 15,963,000 | |||||||
Containers & Packaging — 1.1% |
| |||||||
International Paper Co.(1) | 188,553 | $ | 10,673,985 | |||||
$ | 10,673,985 | |||||||
Diversified Consumer Services — 0.6% |
| |||||||
Bright Horizons Family Solutions, Inc.(2) | 71,000 | $ | 5,481,910 | |||||
$ | 5,481,910 | |||||||
Diversified Telecommunication Services — 2.8% |
| |||||||
Verizon Communications, Inc. | 607,580 | $ | 27,134,523 | |||||
$ | 27,134,523 | |||||||
Electric Utilities — 2.1% |
| |||||||
Pinnacle West Capital Corp. | 104,835 | $ | 8,927,749 | |||||
Southern Co. (The) | 235,000 | 11,251,800 | ||||||
$ | 20,179,549 | |||||||
Electronic Equipment, Instruments & Components — 1.0% |
| |||||||
Avnet, Inc. | 250,800 | $ | 9,751,104 | |||||
$ | 9,751,104 | |||||||
Energy Equipment & Services — 0.9% |
| |||||||
Schlumberger, Ltd. | 132,000 | $ | 8,690,880 | |||||
$ | 8,690,880 | |||||||
Equity Real Estate Investment Trusts (REITs) — 3.4% |
| |||||||
DDR Corp. | 801,000 | $ | 7,265,070 | |||||
Equity Residential | 154,000 | 10,137,820 | ||||||
Extra Space Storage, Inc. | 128,000 | 9,984,000 | ||||||
National Retail Properties, Inc. | 135,800 | 5,309,780 | ||||||
$ | 32,696,670 | |||||||
Food & Staples Retailing — 1.4% |
| |||||||
Costco Wholesale Corp. | 60,000 | $ | 9,595,800 | |||||
CVS Health Corp. | 46,900 | 3,773,574 | ||||||
$ | 13,369,374 | |||||||
14 | See Notes to Financial Statements. |
Dividend Builder Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Food Products — 2.6% |
| |||||||
B&G Foods, Inc.(1) | 249,000 | $ | 8,864,400 | |||||
Pinnacle Foods, Inc. | 272,400 | 16,180,560 | ||||||
$ | 25,044,960 | |||||||
Health Care Equipment & Supplies — 2.2% |
| |||||||
Boston Scientific Corp.(2) | 290,000 | $ | 8,038,800 | |||||
Zimmer Biomet Holdings, Inc. | 104,000 | 13,353,600 | ||||||
$ | 21,392,400 | |||||||
Health Care Providers & Services — 2.6% |
| |||||||
Aetna, Inc. | 118,000 | $ | 17,915,940 | |||||
McKesson Corp. | 43,500 | 7,157,490 | ||||||
$ | 25,073,430 | |||||||
Hotels, Restaurants & Leisure — 0.6% |
| |||||||
Las Vegas Sands Corp. | 82,000 | $ | 5,238,980 | |||||
$ | 5,238,980 | |||||||
Independent Power and Renewable Electricity Producers — 1.1% |
| |||||||
NextEra Energy Partners LP | 282,000 | $ | 10,431,180 | |||||
$ | 10,431,180 | |||||||
Industrial Conglomerates — 2.1% |
| |||||||
General Electric Co. | 741,600 | $ | 20,030,616 | |||||
$ | 20,030,616 | |||||||
Insurance — 4.9% |
| |||||||
American Financial Group, Inc. | 103,300 | $ | 10,264,921 | |||||
Chubb, Ltd. | 141,500 | 20,571,270 | ||||||
First American Financial Corp.(1) | 364,000 | 16,267,160 | ||||||
$ | 47,103,351 | |||||||
Internet & Direct Marketing Retail — 1.8% |
| |||||||
Amazon.com, Inc.(2) | 18,100 | $ | 17,520,800 | |||||
$ | 17,520,800 | |||||||
Internet Software & Services — 4.5% |
| |||||||
Alphabet, Inc., Class C(2) | 27,914 | $ | 25,366,289 | |||||
Facebook, Inc., Class A(2) | 114,000 | 17,211,720 | ||||||
$ | 42,578,009 | |||||||
Security | Shares | Value | ||||||
IT Services — 2.6% |
| |||||||
Amdocs, Ltd. | 148,800 | $ | 9,591,648 | |||||
International Business Machines Corp. | 39,772 | 6,118,127 | ||||||
Leidos Holdings, Inc. | 176,000 | 9,097,440 | ||||||
$ | 24,807,215 | |||||||
Leisure Products — 1.1% |
| |||||||
Mattel, Inc.(1) | 479,300 | $ | 10,319,329 | |||||
$ | 10,319,329 | |||||||
Media — 4.5% |
| |||||||
Interpublic Group of Cos., Inc. | 627,000 | $ | 15,424,200 | |||||
Time Warner, Inc. | 203,919 | 20,475,507 | ||||||
Walt Disney Co. (The) | 67,100 | 7,129,375 | ||||||
$ | 43,029,082 | |||||||
Metals & Mining — 0.3% |
| |||||||
Rio Tinto PLC ADR(1) | 71,000 | $ | 3,004,010 | |||||
$ | 3,004,010 | |||||||
Oil, Gas & Consumable Fuels — 5.4% |
| |||||||
Chevron Corp. | 157,000 | $ | 16,379,810 | |||||
ConocoPhillips | 188,000 | 8,264,480 | ||||||
Occidental Petroleum Corp. | 105,400 | 6,310,298 | ||||||
Phillips 66 | 139,300 | 11,518,717 | ||||||
Royal Dutch Shell PLC, Class B | 345,300 | 9,270,060 | ||||||
$ | 51,743,365 | |||||||
Personal Products — 1.0% |
| |||||||
Unilever PLC | 174,100 | $ | 9,421,920 | |||||
$ | 9,421,920 | |||||||
Pharmaceuticals — 5.1% |
| |||||||
Eli Lilly & Co. | 57,800 | $ | 4,756,940 | |||||
Johnson & Johnson | 144,400 | 19,102,676 | ||||||
Pfizer, Inc. | 738,000 | 24,789,420 | ||||||
$ | 48,649,036 | |||||||
Professional Services — 0.5% |
| |||||||
Dun & Bradstreet Corp. (The) | 47,600 | $ | 5,147,940 | |||||
$ | 5,147,940 | |||||||
Road & Rail — 1.2% |
| |||||||
Kansas City Southern | 110,000 | $ | 11,511,500 | |||||
$ | 11,511,500 | |||||||
15 | See Notes to Financial Statements. |
Dividend Builder Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Semiconductors & Semiconductor Equipment — 3.9% |
| |||||||
Broadcom, Ltd. | 26,392 | $ | 6,150,655 | |||||
Intel Corp. | 481,900 | 16,259,306 | ||||||
QUALCOMM, Inc. | 84,000 | 4,638,480 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 135,000 | 4,719,600 | ||||||
Texas Instruments, Inc. | 69,000 | 5,308,170 | ||||||
$ | 37,076,211 | |||||||
Software — 3.6% |
| |||||||
Adobe Systems, Inc.(2) | 22,900 | $ | 3,238,976 | |||||
Microsoft Corp. | 356,800 | 24,594,224 | ||||||
Oracle Corp. | 137,838 | 6,911,197 | ||||||
$ | 34,744,397 | |||||||
Specialty Retail — 1.2% |
| |||||||
Home Depot, Inc. (The) | 74,400 | $ | 11,412,960 | |||||
$ | 11,412,960 | |||||||
Technology Hardware, Storage & Peripherals — 4.1% |
| |||||||
Apple, Inc. | 269,900 | $ | 38,870,998 | |||||
$ | 38,870,998 | |||||||
Textiles, Apparel & Luxury Goods — 1.1% |
| |||||||
VF Corp.(1) | 176,000 | $ | 10,137,600 | |||||
$ | 10,137,600 | |||||||
Tobacco — 3.3% |
| |||||||
Altria Group, Inc. | 191,790 | $ | 14,282,601 | |||||
Philip Morris International, Inc. | 149,535 | 17,562,886 | ||||||
$ | 31,845,487 | |||||||
Wireless Telecommunication Services — 1.0% |
| |||||||
Vodafone Group PLC ADR(1) | 329,000 | $ | 9,452,170 | |||||
$ | 9,452,170 | |||||||
Total Common Stocks |
| $ | 949,668,142 | |||||
Short-Term Investments — 1.0% | ||||||||
Description | Units/Shares | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 1.20%(3) | 8,125 | $ | 8,127 | |||||
State Street Navigator Securities Lending Government Money Market Portfolio(4) | 9,076,527 | 9,076,527 | ||||||
Total Short-Term Investments |
| $ | 9,084,654 | |||||
Total Investments — 100.4% |
| $ | 958,752,796 | |||||
Other Assets, Less Liabilities — (0.4)% |
| $ | (3,813,997 | ) | ||||
Net Assets — 100.0% |
| $ | 954,938,799 | |||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
(1) | All or a portion of this security was on loan at June 30, 2017. |
(2) | Non-income producing security. |
(3) | Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2017. |
(4) | Represents investment of cash collateral received in connection with securities lending. |
Abbreviations:
ADR | – | American Depositary Receipt |
16 | See Notes to Financial Statements. |
Dividend Builder Portfolio
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Unaffiliated investments, at value including $52,708,442 of securities on loan (identified cost, $860,471,507) | $ | 958,744,669 | ||
Affiliated investment, at value (identified cost, $8,127) | 8,127 | |||
Foreign currency, at value (identified cost, $22,231) | 22,292 | |||
Dividends receivable | 1,716,605 | |||
Dividends receivable from affiliated investment | 1,021 | |||
Receivable for investments sold | 3,815,989 | |||
Securities lending income receivable | 6,589 | |||
Tax reclaims receivable | 1,925,808 | |||
Total assets | $ | 966,241,100 | ||
Liabilities | ||||
Demand note payable | $ | 1,600,000 | ||
Collateral for securities loaned | 9,076,527 | |||
Payable to affiliates: | ||||
Investment adviser fee | 504,115 | |||
Trustees’ fees | 14,475 | |||
Accrued expenses | 107,184 | |||
Total liabilities | $ | 11,302,301 | ||
Net Assets applicable to investors’ interest in Portfolio | $ | 954,938,799 | ||
Sources of Net Assets | ||||
Investors’ capital | $ | 856,601,934 | ||
Net unrealized appreciation | 98,336,865 | |||
Total | $ | 954,938,799 |
17 | See Notes to Financial Statements. |
Dividend Builder Portfolio
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends (net of foreign taxes, $294,859) | $ | 15,391,834 | ||
Dividends from affiliated investment | 5,486 | |||
Securities lending income, net | 108,143 | |||
Total investment income | $ | 15,505,463 | ||
Expenses | ||||
Investment adviser fee | $ | 3,050,563 | ||
Trustees’ fees and expenses | 30,625 | |||
Custodian fee | 117,302 | |||
Legal and accounting services | 37,247 | |||
Miscellaneous | 65,901 | |||
Total expenses | $ | 3,301,638 | ||
Net investment income | $ | 12,203,825 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 36,911,420 | ||
Investment transactions — affiliated investment | 548 | |||
Written options | (3,756,543 | ) | ||
Foreign currency transactions | (87,645 | ) | ||
Net realized gain | $ | 33,067,780 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 16,302,206 | ||
Investments — affiliated investment | 58 | |||
Written options | (1,676,712 | ) | ||
Foreign currency | 93,279 | |||
Net change in unrealized appreciation (depreciation) | $ | 14,718,831 | ||
Net realized and unrealized gain | $ | 47,786,611 | ||
Net increase in net assets from operations | $ | 59,990,436 |
18 | See Notes to Financial Statements. |
Dividend Builder Portfolio
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 12,203,825 | $ | 23,578,596 | ||||
Net realized gain from investment transactions, written options and foreign currency transactions | 33,067,780 | 48,370,733 | ||||||
Net change in unrealized appreciation (depreciation) from investments, written options and foreign currency | 14,718,831 | 16,539,640 | ||||||
Net increase in net assets from operations | $ | 59,990,436 | $ | 88,488,969 | ||||
Capital transactions — | ||||||||
Contributions | $ | 164,514 | $ | 9,431,750 | ||||
Withdrawals | (70,612,016 | ) | (121,235,079 | ) | ||||
Net decrease in net assets from capital transactions | $ | (70,447,502 | ) | $ | (111,803,329 | ) | ||
Net decrease in net assets | $ | (10,457,066 | ) | $ | (23,314,360 | ) | ||
Net Assets | ||||||||
At beginning of period | $ | 965,395,865 | $ | 988,710,225 | ||||
At end of period | $ | 954,938,799 | $ | 965,395,865 |
19 | See Notes to Financial Statements. |
Dividend Builder Portfolio
June 30, 2017
Financial Highlights
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
Ratios/Supplemental Data | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(1) | 0.69 | %(2) | 0.68 | % | 0.68 | % | 0.68 | % | 0.68 | % | 0.68 | % | ||||||||||||
Net investment income | 2.55 | %(2) | 2.45 | % | 2.02 | % | 2.28 | % | 1.67 | % | 2.97 | % | ||||||||||||
Portfolio Turnover | 46 | %(3) | 97 | % | 99 | % | 93 | % | 59 | % | 63 | % | ||||||||||||
Total Return | 6.44 | %(3) | 9.60 | % | 3.28 | % | 12.13 | % | 25.87 | % | 13.93 | % | ||||||||||||
Net assets, end of period (000’s omitted) | $ | 954,939 | $ | 965,396 | $ | 988,710 | $ | 1,038,631 | $ | 1,082,543 | $ | 1,060,224 |
(1) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(2) | Annualized. |
(3) | Not annualized. |
20 | See Notes to Financial Statements. |
Dividend Builder Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Dividend Builder Portfolio (the Portfolio) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Portfolio’s investment objective is to seek total return. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At June 30, 2017, Eaton Vance Dividend Builder Fund held a 99.9% interest in the Portfolio.
The following is a summary of significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Portfolio is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.
Derivatives. U.S. exchange-traded options are valued at the mean between the bid and asked prices at valuation time as reported by the Options Price Reporting Authority. Non U.S. exchange-traded options and over-the-counter options are valued by a third party pricing service using techniques that consider factors including the value of the underlying instrument, the volatility of the underlying instrument and the period of time until option expiration.
Foreign Securities and Currencies. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. When valuing foreign equity securities that meet certain criteria, the Portfolio’s Trustees have approved the use of a fair value service that values such securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities.
Affiliated Fund. The Portfolio may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Other. Investments in registered investment companies (including money market funds) that do not trade on an exchange are valued at the net asset value per share on the valuation day.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Portfolio in a manner that fairly reflects the security’s value, or the amount that the Portfolio might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. 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. 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. In consideration of recent decisions rendered by European courts, the Portfolio has filed additional tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. Due to the uncertainty as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, no amounts are reflected in the financial statements for such outstanding reclaims. These filings are subject to various administrative and judicial proceedings within these countries.
D 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 ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the Portfolio’s investors is a regulated investment company that invests all or substantially all of its assets in the Portfolio, the Portfolio normally must satisfy the applicable source of income and diversification requirements (under the Internal Revenue Code) in order
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Dividend Builder Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
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 losses and any other items of income, gain, loss, deduction or credit.
As of June 30, 2017, the Portfolio had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Portfolio files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E Foreign Currency Translation — Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to changes in foreign currency exchange 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 results from fluctuations in foreign currency exchange rates is not separately disclosed.
F Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications — Under the Portfolio’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Under Massachusetts law, if certain conditions prevail, interestholders in the Portfolio could be deemed to have personal liability for the obligations of the Portfolio. However, the Portfolio’s Declaration of Trust contains an express disclaimer of liability on the part of Portfolio interestholders and the By-laws provide that the Portfolio shall assume the defense on behalf of any Portfolio interestholder. Moreover, the By-laws also provide for indemnification out of Portfolio property of any interestholder held personally liable solely by reason of being or having been an interestholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred.
H Written Options — Upon the writing of a call or a put option, 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 options which expire are treated as realized gains. Premiums received from writing 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. When an index option is exercised, the Portfolio is required to deliver an amount of cash determined by the excess of the strike price of the option over the value of the index (in the case of a put) or the excess of the value of the index over the strike price of the option (in the case of a call) at contract termination. If a put option on a security 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 or other assets 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 or other assets underlying the written option. The Portfolio may also bear the risk of not being able to enter into a closing transaction if a liquid secondary market does not exist.
I Purchased Options — Upon the purchase of a call or put option, the premium paid by the Portfolio is included in the Statement of Assets and Liabilities as an investment. The amount of the investment is subsequently marked-to-market to reflect the current market value of the option purchased, in accordance with the Portfolio’s policies on investment valuations discussed above. As the purchaser of an index option, the Portfolio has the right to receive a cash payment equal to any depreciation in the value of the index below the strike price of the option (in the case of a put) or equal to any appreciation in the value of the index over the strike price of the option (in the case of a call) as of the valuation date of the option. If an option which the Portfolio had purchased expires on the stipulated expiration date, the Portfolio will realize a loss in the amount of the cost of the option. If the Portfolio enters into a closing sale transaction, the Portfolio will realize a gain or loss, depending on whether the sales proceeds from the closing sale transaction are greater or less than the cost of the option. If the Portfolio exercises a put option on a security, it will realize a gain or loss from the sale of the underlying security, and the proceeds from such sale will be decreased by the premium originally paid. If the Portfolio exercises a call option on a security, the cost of the security which the Portfolio purchases upon exercise will be increased by the premium originally paid. The risk associated with purchasing options is limited to the premium originally paid. Purchased options traded over-the-counter involve risk that the issuer or counterparty will fail to perform its contractual obligations.
J Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Portfolio’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of EVM, as compensation for investment advisory services rendered to the Portfolio. Pursuant to the investment advisory agreement and subsequent fee reduction agreement between the Portfolio and BMR, the fee is computed at an annual rate of 0.65% of the Portfolio’s average daily net assets up to $500 million, 0.625% from $500 million up to $1 billion, 0.600%
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June 30, 2017
Notes to Financial Statements (Unaudited) — continued
from $1 billion up to $1.5 billion, 0.550% from $1.5 billion up to $2 billion, 0.500% from $2 billion up to $3 billion and at reduced rates on daily net assets of $3 billion or more, and is payable monthly. The fee reduction cannot be terminated or reduced without the approval of a majority vote of the Trustees of the Portfolio who are not interested persons of BMR or the Portfolio and by the vote of a majority of the holders of interest in the Portfolio. For the six months ended June 30, 2017, the Portfolio’s investment adviser fee amounted to $3,050,563 or 0.64% (annualized) of the Portfolio’s average daily net assets. The Portfolio invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund.
Trustees and officers of the Portfolio who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Portfolio out of the investment adviser fee. Trustees of the Portfolio who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Portfolio are officers of the above organizations.
3 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $439,143,514 and $500,664,219, respectively, for the six months ended June 30, 2017.
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Portfolio at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 860,778,125 | ||
Gross unrealized appreciation | $ | 126,494,808 | ||
Gross unrealized depreciation | (28,520,137 | ) | ||
Net unrealized appreciation | $ | 97,974,671 |
5 Financial Instruments
The Portfolio may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities. These financial instruments may include written options 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 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. At June 30, 2017, there were no obligations outstanding under these financial instruments.
Written options activity for the six months ended June 30, 2017 was as follows:
Number of Contracts | Premiums Received | |||||||
Outstanding, beginning of period | 13,256 | $ | 3,452,808 | |||||
Options written | 10,458 | 4,831,828 | ||||||
Options terminated in closing purchase transactions | (21,433 | ) | (7,014,673 | ) | ||||
Options exercised | (1,326 | ) | (329,727 | ) | ||||
Options expired | (955 | ) | (940,236 | ) | ||||
Outstanding, end of period | — | $ | — |
The Portfolio is subject to equity price risk in the normal course of pursuing its investment objective. During the six months ended June 30, 2017, the Portfolio entered into written and puchased option transactions on individual securities to seek return and to seek to hedge against fluctuations in security prices.
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June 30, 2017
Notes to Financial Statements (Unaudited) — continued
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is equity price risk for the six months ended June 30, 2017 was as follows:
Derivative | Realized Gain (Loss) on Derivatives Recognized in Income(1) | Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income(2) | ||||||
Purchased options | $ | 1,750,170 | $ | (627,491 | ) | |||
Written options | (3,756,543 | ) | (1,676,712 | ) | ||||
Total | $ | (2,006,373 | ) | $ | (2,304,203 | ) |
(1) | Statement of Operations location: Net realized gain (loss) – Investment transactions and Written options, respectively. |
(2) | Statement of Operations location: Change in unrealized appreciation (depreciation) – Investments and Written options, respectively. |
The average number of purchased options contracts outstanding during the six months ended June 30, 2017, which is indicative of the volume of this derivative type, was 700 contracts.
6 Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Portfolio based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Portfolio, it may be unable to borrow some or all of its requested amounts at any particular time. At June 30, 2017, the Portfolio had a balance outstanding pursuant to this line of credit of $1,600,000 at an interest rate of 2.16%. Based on the short-term nature of the borrowings under the line of credit and variable interest rate, the carrying value of the borrowings approximated its fair value at June 30, 2017. If measured at fair value, borrowings under the line of credit would have been considered as Level 2 in the fair value hierarchy (see Note 9) at June 30, 2017. The Portfolio’s average borrowings or allocated fees during the six months ended June 30, 2017 were not significant.
7 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. Certain 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 securities 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.
8 Securities Lending Agreement
The Portfolio has established a securities lending agreement with State Street Bank and Trust Company (SSBT) as securities lending agent in which the Portfolio lends portfolio securities to qualified borrowers in exchange for collateral consisting of either cash or securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities in an amount at least equal to the market value of the securities on loan. The market value of securities loaned is determined daily and any additional required collateral is delivered to the Portfolio on the next business day. Cash collateral is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market fund registered under the 1940 Act. The Portfolio earns interest on the amount invested but it must pay (and at times receive from) the broker a loan rebate fee computed as a varying percentage of the collateral received. For security loans secured by non-cash collateral, the Portfolio earns a negotiated lending fee from the borrower. A portion of the income earned by the Portfolio from its investment of cash collateral, net of rebate fees, and lending fees received is allocated to SSBT for its services as lending agent and the portion allocated to the Portfolio is presented as securities lending income, net on the Statement of Operations. Non-cash collateral is held by the lending agent on behalf of the Portfolio and cannot be sold or re-pledged by the Portfolio; accordingly, such collateral is not reflected in the Statement of Assets and Liabilities.
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June 30, 2017
Notes to Financial Statements (Unaudited) — continued
The Portfolio is subject to possible delay in the recovery of loaned securities. Pursuant to the securities lending agreement, SSBT has provided indemnification to the Portfolio in the event of default by a borrower with respect to a loan. The Portfolio bears the risk of loss with respect to the investment of cash collateral.
At June 30, 2017, the value of the securities loaned (all common stock) and the value of the collateral received, which exceeded the value of the securities loaned, amounted to $52,708,442 and $53,719,415, respectively. Collateral received included cash of $9,076,527 and non-cash U.S. Government securities of $44,642,888. The securities lending transactions have no contractual maturity date and each of the Portfolio and borrower has the option to terminate a loan at any time. The carrying amount of the liability for collateral for securities loaned at June 30, 2017 approximated its fair value. If measured at fair value, such liability would have been considered as Level 2 in the fair value hierarchy (see Note 9) at June 30, 2017.
9 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At June 30, 2017, the hierarchy of inputs used in valuing the Portfolio’s investments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | ||||||||||||||||
Consumer Discretionary | $ | 113,202,011 | $ | — | $ | — | $ | 113,202,011 | ||||||||
Consumer Staples | 70,259,821 | 14,188,616 | — | 84,448,437 | ||||||||||||
Energy | 51,164,185 | 9,270,060 | — | 60,434,245 | ||||||||||||
Financials | 138,449,091 | — | — | 138,449,091 | ||||||||||||
Health Care | 139,887,012 | — | — | 139,887,012 | ||||||||||||
Industrials | 68,501,797 | 9,444,193 | — | 77,945,990 | ||||||||||||
Information Technology | 203,790,934 | — | — | 203,790,934 | ||||||||||||
Materials | 31,616,330 | — | — | 31,616,330 | ||||||||||||
Real Estate | 32,696,670 | — | — | 32,696,670 | ||||||||||||
Telecommunication Services | 36,586,693 | — | — | 36,586,693 | ||||||||||||
Utilities | 30,610,729 | — | — | 30,610,729 | ||||||||||||
Total Common Stocks | $ | 916,765,273 | $ | 32,902,869 | * | $ | — | $ | 949,668,142 | |||||||
Short-Term Investments | $ | 9,076,527 | $ | 8,127 | $ | — | $ | 9,084,654 | ||||||||
Total Investments | $ | 925,841,800 | $ | 32,910,996 | $ | — | $ | 958,752,796 |
* | Includes foreign equity securities whose values were adjusted to reflect market trading of comparable securities or other correlated instruments that occurred after the close of trading in their applicable foreign markets. |
The Portfolio held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
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Eaton Vance
Dividend Builder Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio-level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
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Eaton Vance
Dividend Builder Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Dividend Builder Portfolio (the “Portfolio”), the portfolio in which Eaton Vance Dividend Builder Fund (the “Fund”) invests, with Boston Management and Research (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Portfolio.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement of the Portfolio, the Board evaluated the nature, extent and quality of services provided to the Portfolio by the Adviser.
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by the Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Portfolio. The Board specifically noted that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Portfolio, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Portfolio, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing the Portfolio.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
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Eaton Vance
Dividend Builder Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2016 for the Fund. The Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Portfolio and by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered factors that had an impact on Fund expense ratios relative to comparable funds.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund, to the Portfolio and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their relationships with the Fund and the Portfolio, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Portfolio and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund and the Portfolio, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and the Portfolio increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund and the Portfolio, the structure of the advisory fee, which includes breakpoints at several asset levels, will allow the Fund and the Portfolio to continue to benefit from any economies of scale in the future.
28 |
Eaton Vance
Dividend Builder Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Dividend Builder Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Officers of Dividend Builder Portfolio
Edward J. Perkin
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Dividend Builder Fund and Dividend Builder Portfolio
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
29 |
Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
30 |
This Page Intentionally Left Blank
This Page Intentionally Left Blank
Investment Adviser of Dividend Builder Portfolio
Boston Management and Research
Two International Place
Boston, MA 02110
Administrator of Eaton Vance Dividend Builder Fund
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7697 6.30.17
Eaton Vance
Greater India Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Greater India Fund
Table of Contents
Performance | 2 | |||
Fund Profile | 2 | |||
Endnotes and Additional Disclosures | 3 | |||
Fund Expenses | 4 | |||
Financial Statements | 5 | |||
Board of Trustees’ Contract Approval | 28 | |||
Officers and Trustees | 32 | |||
Important Notices | 33 |
Eaton Vance
Greater India Fund
June 30, 2017
Performance1,2
Portfolio Manager Hiren Dasani, CFA, of Goldman Sachs Asset Management International (GSAMI)
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 05/02/1994 | 05/02/1994 | 26.24 | % | 21.11 | % | 12.68 | % | 2.96 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | 19.00 | 14.16 | 11.35 | 2.35 | ||||||||||||||||||
Class B at NAV | 05/02/1994 | 05/02/1994 | 25.81 | 20.29 | 11.90 | 2.31 | ||||||||||||||||||
Class B with 5% Maximum Sales Charge | — | — | 20.81 | 15.29 | 11.65 | 2.31 | ||||||||||||||||||
Class C at NAV | 07/07/2006 | 05/02/1994 | 25.80 | 20.27 | 11.89 | 2.31 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 24.80 | 19.27 | 11.89 | 2.31 | ||||||||||||||||||
Class I at NAV | 10/01/2009 | 05/02/1994 | 26.41 | 21.46 | 13.02 | 3.21 | ||||||||||||||||||
MSCI India Index | — | — | 20.53 | % | 17.47 | % | 9.03 | % | 3.06 | % | ||||||||||||||
S&P Bombay Stock Exchange 100 Index | — | — | 24.32 | 23.64 | 11.62 | 4.91 | ||||||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class B | Class C | Class I | ||||||||||||||||||||
1.72 | % | 2.42 | % | 2.42 | % | 1.42 | % |
Fund Profile
Sector Allocation (% of net assets)5
Top 10 Holdings (% of net assets)5
Maruti Suzuki India, Ltd. | 6.3 | % | ||
Infosys, Ltd. | 4.4 | |||
ITC, Ltd. | 4.3 | |||
HDFC Bank, Ltd. | 4.1 | |||
Housing Development Finance Corp., Ltd. | 3.9 | |||
Idea Cellular, Ltd. | 3.5 | |||
Cognizant Technology Solutions Corp., Class A | 3.2 | |||
IndusInd Bank, Ltd. | 3.0 | |||
Eicher Motors, Ltd. | 3.0 | |||
Crompton Greaves Consumer Electricals, Ltd. | 2.9 | |||
Total | 38.6 | % |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Greater India Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | MSCI India Index is an unmanaged index of common stocks traded in the India market. MSCI indexes are net of foreign withholding taxes. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. S&P Bombay Stock Exchange 100 Index is an unmanaged index of 100 common stocks traded in the India market. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class I is linked to Class A. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. |
Effective September 15, 2016, the Fund changed its primary benchmark to the MSCI India Index because the investment adviser believes it is more closely aligned with the Fund’s investment strategies. |
3 | Source: Fund prospectus. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Fund primarily invests in an affiliated investment company (Portfolio) with the same objective(s) and policies as the Fund and may also invest directly. Unless otherwise noted, references to investments are to the aggregate holdings of the Fund and the Portfolio. |
5 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
Important Notice to Shareholders
Effective on or about May 8, 2017, the Fund is managed by Hiren Dasani, Executive Director and co-head of Emerging Markets Equity at Goldman Sachs Asset Management International (“GSAMI”). |
3 |
Eaton Vance
Greater India Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,262.40 | $ | 9.76 | 1.74 | % | ||||||||
Class B | $ | 1,000.00 | $ | 1,258.10 | $ | 13.72 | 2.45 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,258.00 | $ | 13.66 | 2.44 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,264.10 | $ | 8.08 | 1.44 | % | ||||||||
Hypothetical | ||||||||||||||||
(5% return per year before expenses) | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,016.20 | $ | 8.70 | 1.74 | % | ||||||||
Class B | $ | 1,000.00 | $ | 1,012.60 | $ | 12.23 | 2.45 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,012.70 | $ | 12.18 | 2.44 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,017.70 | $ | 7.20 | 1.44 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. The Example reflects the expenses of both the Fund and the Portfolio. |
4 |
Eaton Vance
Greater India Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Investment in Greater India Portfolio, at value (identified cost, $198,510,432) | $ | 251,209,647 | ||
Receivable for Fund shares sold | 244,056 | |||
Total assets | $ | 251,453,703 | ||
Liabilities | ||||
Payable for Fund shares redeemed | $ | 423,445 | ||
Payable to affiliates: | ||||
Administration fee | 31,100 | |||
Distribution and service fees | 68,126 | |||
Trustees’ fees | 125 | |||
Accrued expenses | 71,750 | |||
Total liabilities | $ | 594,546 | ||
Net Assets | $ | 250,859,157 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 242,291,414 | ||
Accumulated net realized loss from Portfolio | (45,545,336 | ) | ||
Accumulated undistributed net investment income | 1,413,864 | |||
Net unrealized appreciation from Portfolio | 52,699,215 | |||
Total | $ | 250,859,157 | ||
Class A Shares | ||||
Net Assets | $ | 174,640,348 | ||
Shares Outstanding | 5,259,940 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 33.20 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 35.23 | ||
Class B Shares | ||||
Net Assets | $ | 2,732,687 | ||
Shares Outstanding | 94,078 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 29.05 | ||
Class C Shares | ||||
Net Assets | $ | 27,146,948 | ||
Shares Outstanding | 937,319 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 28.96 | ||
Class I Shares | ||||
Net Assets | $ | 46,339,174 | ||
Shares Outstanding | 1,369,190 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 33.84 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
* | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
5 | See Notes to Financial Statements. |
Eaton Vance
Greater India Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends allocated from Portfolio | $ | 1,998,934 | ||
Interest allocated from Portfolio | 1,695 | |||
Expenses allocated from Portfolio | (1,131,869 | ) | ||
Total investment income from Portfolio | $ | 868,760 | ||
Expenses | ||||
Administration fee | $ | 174,000 | ||
Distribution and service fees | ||||
Class A | 249,750 | |||
Class B | 15,380 | |||
Class C | 126,692 | |||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 10,271 | |||
Transfer and dividend disbursing agent fees | 140,502 | |||
Legal and accounting services | 13,636 | |||
Printing and postage | 170,901 | |||
Registration fees | 29,134 | |||
Miscellaneous | 7,349 | |||
Total expenses | $ | 937,865 | ||
Net investment loss | $ | (69,105 | ) | |
Realized and Unrealized Gain (Loss) from Portfolio | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | (272,783 | ) | |
Financial futures contracts | 284,558 | |||
Foreign currency transactions | (49,360 | ) | ||
Net realized loss | $ | (37,585 | ) | |
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 52,676,647 | ||
Financial futures contracts | 992 | |||
Foreign currency | (6,686 | ) | ||
Net change in unrealized appreciation (depreciation) | $ | 52,670,953 | ||
Net realized and unrealized gain | $ | 52,633,368 | ||
Net increase in net assets from operations | $ | 52,564,263 |
6 | See Notes to Financial Statements. |
Eaton Vance
Greater India Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment loss | $ | (69,105 | ) | $ | (1,822,695 | ) | ||
Net realized gain (loss) from investment transactions, financial futures contracts and foreign currency transactions | (37,585 | ) | 56,850,843 | |||||
Net change in unrealized appreciation (depreciation) from investments, financial futures contracts and foreign currency | 52,670,953 | (48,725,952 | ) | |||||
Net increase in net assets from operations | $ | 52,564,263 | $ | 6,302,196 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | — | $ | (844,287 | ) | |||
Class I | — | (236,344 | ) | |||||
Total distributions to shareholders | $ | — | $ | (1,080,631 | ) | |||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 10,529,940 | $ | 8,348,831 | ||||
Class B | 11,147 | 7,250 | ||||||
Class C | 2,839,708 | 1,214,806 | ||||||
Class I | 19,077,464 | 16,772,739 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | — | 764,709 | ||||||
Class I | — | 135,210 | ||||||
Cost of shares redeemed | ||||||||
Class A | (24,602,754 | ) | (38,190,546 | ) | ||||
Class B | (335,313 | ) | (995,558 | ) | ||||
Class C | (3,701,812 | ) | (7,757,206 | ) | ||||
Class I | (7,793,824 | ) | (20,841,836 | ) | ||||
Net asset value of shares exchanged | ||||||||
Class A | 788,859 | 2,916,288 | ||||||
Class B | (788,859 | ) | (2,916,288 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (3,975,444 | ) | $ | (40,541,601 | ) | ||
Net increase (decrease) in net assets | $ | 48,588,819 | $ | (35,320,036 | ) | |||
Net Assets | ||||||||
At beginning of period | $ | 202,270,338 | $ | 237,590,374 | ||||
At end of period | $ | 250,859,157 | $ | 202,270,338 | ||||
Accumulated undistributed net investment income included in net assets | ||||||||
At end of period | $ | 1,413,864 | $ | 1,482,969 |
7 | See Notes to Financial Statements. |
Eaton Vance
Greater India Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 26.300 | $ | 25.770 | $ | 27.310 | $ | 19.980 | $ | 22.210 | $ | 17.240 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | (0.006 | ) | $ | (0.200 | ) | $ | (0.245 | ) | $ | (0.116 | ) | $ | 0.002 | $ | (0.064 | ) | |||||||
Net realized and unrealized gain (loss) | 6.906 | 0.878 | (1.090 | ) | 7.956 | (2.232 | ) | 5.034 | ||||||||||||||||
Total income (loss) from operations | $ | 6.900 | $ | 0.678 | $ | (1.335 | ) | $ | 7.840 | $ | (2.230 | ) | $ | 4.970 | ||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (0.148 | ) | $ | (0.205 | ) | $ | (0.510 | ) | $ | — | $ | — | |||||||||
Total distributions | $ | — | $ | (0.148 | ) | $ | (0.205 | ) | $ | (0.510 | ) | $ | — | $ | — | |||||||||
Net asset value — End of period | $ | 33.200 | $ | 26.300 | $ | 25.770 | $ | 27.310 | $ | 19.980 | $ | 22.210 | ||||||||||||
Total Return(2) | 26.24 | %(3) | 2.64 | %(4) | (4.96 | )%(4) | 39.28 | %(4) | (10.04 | )%(4) | 28.83 | %(4) | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 174,640 | $ | 149,950 | $ | 172,386 | $ | 195,146 | $ | 154,207 | $ | 233,906 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(6) | 1.74 | %(7) | 1.88 | %(4) | 1.88 | %(4) | 1.88 | %(4) | 1.88 | %(4) | 1.88 | %(4) | ||||||||||||
Net investment income (loss) | (0.04 | )% (7) | (0.75 | )% | (0.88 | )% | (0.48 | )% | 0.01 | % | (0.32 | )% | ||||||||||||
Portfolio Turnover of the Portfolio | 15 | %(3) | 91 | % | 30 | % | 22 | % | 42 | % | 65 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | The investment adviser and sub-adviser of the Portfolio reimbursed certain operating expenses (equal to 0.02%, 0.02%, 0.04%, 0.14% and 0.16% of average daily net assets for the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
8 | See Notes to Financial Statements. |
Eaton Vance
Greater India Fund
June 30, 2017
Financial Highlights — continued
Class B | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 23.090 | $ | 22.650 | $ | 24.190 | $ | 17.680 | $ | 19.790 | $ | 15.470 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.102 | ) | $ | (0.334 | ) | $ | (0.401 | ) | $ | (0.261 | ) | $ | (0.123 | ) | $ | (0.184 | ) | ||||||
Net realized and unrealized gain (loss) | 6.062 | 0.774 | (0.938 | ) | 7.024 | (1.987 | ) | 4.504 | ||||||||||||||||
Total income (loss) from operations | $ | 5.960 | $ | 0.440 | $ | (1.339 | ) | $ | 6.763 | $ | (2.110 | ) | $ | 4.320 | ||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | (0.201 | ) | $ | (0.253 | ) | $ | — | $ | — | ||||||||||
Total distributions | $ | — | $ | — | $ | (0.201 | ) | $ | (0.253 | ) | $ | — | $ | — | ||||||||||
Net asset value — End of period | $ | 29.050 | $ | 23.090 | $ | 22.650 | $ | 24.190 | $ | 17.680 | $ | 19.790 | ||||||||||||
Total Return(2) | 25.81 | %(3) | 1.94 | %(4) | (5.62 | )%(4) | 38.27 | %(4) | (10.66 | )%(4) | 27.92 | %(4) | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 2,733 | $ | 3,120 | $ | 6,970 | $ | 16,502 | $ | 31,336 | $ | 57,303 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(6) | 2.45 | %(7) | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | ||||||||||||
Net investment loss | (0.77 | )%(7) | (1.45 | )% | (1.62 | )% | (1.27 | )% | (0.68 | )% | (1.03 | )% | ||||||||||||
Portfolio Turnover of the Portfolio | 15 | %(3) | 91 | % | 30 | % | 22 | % | 42 | % | 65 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | The investment adviser and sub-adviser of the Portfolio reimbursed certain operating expenses (equal to 0.02%, 0.02%, 0.04%, 0.14% and 0.16% of average daily net assets for the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
9 | See Notes to Financial Statements. |
Eaton Vance
Greater India Fund
June 30, 2017
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 23.020 | $ | 22.580 | $ | 24.120 | $ | 17.720 | $ | 19.840 | $ | 15.500 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.097 | ) | $ | (0.336 | ) | $ | (0.383 | ) | $ | (0.256 | ) | $ | (0.122 | ) | $ | (0.182 | ) | ||||||
Net realized and unrealized gain (loss) | 6.037 | 0.776 | (0.954 | ) | 7.029 | (1.998 | ) | 4.522 | ||||||||||||||||
Total income (loss) from operations | $ | 5.940 | $ | 0.440 | $ | (1.337 | ) | $ | 6.773 | $ | (2.120 | ) | $ | 4.340 | ||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | (0.203 | ) | $ | (0.373 | ) | $ | — | $ | — | ||||||||||
Total distributions | $ | — | $ | — | $ | (0.203 | ) | $ | (0.373 | ) | $ | — | $ | — | ||||||||||
Net asset value — End of period | $ | 28.960 | $ | 23.020 | $ | 22.580 | $ | 24.120 | $ | 17.720 | $ | 19.840 | ||||||||||||
Total Return(2) | 25.80 | %(3) | 1.95 | %(4) | (5.63 | )%(4) | 38.25 | %(4) | (10.69 | )%(4) | 28.00 | %(4) | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 27,147 | $ | 22,335 | $ | 28,276 | $ | 31,918 | $ | 24,749 | $ | 40,193 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(6) | 2.44 | %(7) | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | ||||||||||||
Net investment loss | (0.73 | )%(7) | (1.44 | )% | (1.56 | )% | (1.19 | )% | (0.68 | )% | (1.01 | )% | ||||||||||||
Portfolio Turnover of the Portfolio | 15 | %(3) | 91 | % | 30 | % | 22 | % | 42 | % | 65 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | The investment adviser and sub-adviser of the Portfolio reimbursed certain operating expenses (equal to 0.02%, 0.02%, 0.04%, 0.14% and 0.16% of average daily net assets for the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
10 | See Notes to Financial Statements. |
Eaton Vance
Greater India Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 26.770 | $ | 26.230 | $ | 27.710 | $ | 20.260 | $ | 22.460 | $ | 17.380 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | 0.058 | $ | (0.126 | ) | $ | (0.166 | ) | $ | (0.044 | ) | $ | 0.057 | $ | (0.015 | ) | ||||||||
Net realized and unrealized gain (loss) | 7.012 | 0.900 | (1.108 | ) | 8.078 | (2.257 | ) | 5.095 | ||||||||||||||||
Total income (loss) from operations | $ | 7.070 | $ | 0.774 | $ | (1.274 | ) | $ | 8.034 | $ | (2.200 | ) | $ | 5.080 | ||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (0.234 | ) | $ | (0.206 | ) | $ | (0.584 | ) | $ | — | $ | — | |||||||||
Total distributions | $ | — | $ | (0.234 | ) | $ | (0.206 | ) | $ | (0.584 | ) | $ | — | $ | — | |||||||||
Net asset value — End of period | $ | 33.840 | $ | 26.770 | $ | 26.230 | $ | 27.710 | $ | 20.260 | $ | 22.460 | ||||||||||||
Total Return(2) | 26.41 | %(3) | 2.97 | %(4) | (4.70 | )%(4) | 39.74 | %(4) | (9.83 | )%(4) | 29.29 | %(4) | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 46,339 | $ | 26,866 | $ | 29,959 | $ | 35,388 | $ | 18,909 | $ | 28,616 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(6) | 1.44 | %(7) | 1.58 | %(4) | 1.58 | %(4) | 1.58 | %(4) | 1.58 | %(4) | 1.58 | %(4) | ||||||||||||
Net investment income (loss) | 0.37 | %(7) | (0.46 | )% | (0.59 | )% | (0.18 | )% | 0.28 | % | (0.07 | )% | ||||||||||||
Portfolio Turnover of the Portfolio | 15 | %(3) | 91 | % | 30 | % | 22 | % | 42 | % | 65 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | Not annualized. |
(4) | The investment adviser and sub-adviser of the Portfolio reimbursed certain operating expenses (equal to 0.02%, 0.02%, 0.04%, 0.14% and 0.16% of average daily net assets for the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
11 | See Notes to Financial Statements. |
Eaton Vance
Greater India Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Greater India Fund (the Fund) is a non-diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund offers four classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class B and Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I shares are sold at net asset value and are not subject to a sales charge. Class B shares automatically convert to Class A shares eight years after their purchase as described in the Fund’s prospectus. Beginning January 1, 2012, Class B shares are only available for purchase upon exchange from another Eaton Vance fund or through reinvestment of distributions. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class-specific expenses. The Fund invests all of its investable assets in interests in Greater India Portfolio (the Portfolio), a Massachusetts business trust, having the same investment objective and policies as the Fund. The value of the Fund’s investment in the Portfolio reflects the Fund’s proportionate interest in the net assets of the Portfolio (99.9% at June 30, 2017). The performance of the Fund is directly affected by the performance of the Portfolio. The financial statements of the Portfolio, including the portfolio of investments, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio’s Notes to Financial Statements, which are included elsewhere in this report.
B Income — The Fund’s net investment income or loss consists of the Fund’s pro-rata share of the net investment income or loss of the Portfolio, less all actual and accrued expenses of the Fund.
C Federal and Other Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
In addition to the requirements of the Internal Revenue Code, the Fund may also be required to recognize its pro-rata share of the capital gains taxes incurred by the Portfolio. In doing so, the daily net asset value would reflect the Fund’s pro-rata share of the estimated reserve for such taxes incurred by the Portfolio.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
D Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
E Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
F Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
G Other — Investment transactions are accounted for on a trade date basis.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
12 |
Eaton Vance
Greater India Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
2 Distributions to Shareholders and Income Tax Information
It is the present policy of the Fund to make at least one distribution annually (normally in December) of all or substantially all of its net investment income and to distribute annually all or substantially all of its net realized capital gains (reduced by available capital loss carryforwards from prior years). Distributions to shareholders are recorded on the ex-dividend date. Distributions are declared separately for each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
At December 31, 2016, the Fund, for federal income tax purposes, had capital loss carryforwards of $44,461,615 which would reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus would reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. The capital loss carryforwards will expire on December 31, 2017 and their character is short-term. Under tax regulations, capital losses incurred in taxable years beginning after December 2010 are considered deferred capital losses and are treated as arising on the first day of the Fund’s next taxable year, retaining the same short-term or long-term character as when originally deferred. Deferred capital losses are required to be used prior to capital loss carryforwards, which carry an expiration date. As a result of this ordering rule, capital loss carryforwards may be more likely to expire unused.
Additionally, at December 31, 2016, the Fund had a net capital loss of $1,965,719 attributable to security transactions incurred after October 31, 2016 that it has elected to defer. This net capital loss is treated as arising on the first day of the Fund’s taxable year ending December 31, 2017.
3 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of Eaton Vance Management (EVM), as compensation for management and investment advisory services rendered to the Fund. The fee is computed at an annual rate of 0.85% of the Fund’s average daily net assets that are not invested in other investment companies for which BMR or its affiliates serve as investment adviser and receive an advisory fee (“Investable Assets”) up to $500 million and is payable monthly. On Investable Assets of $500 million and over, the annual fee is reduced. Pursuant to a sub-advisory agreement, BMR pays Goldman Sachs Asset Management International a portion of its investment adviser fee for sub-advisory services provided to the Fund. For the six months ended June 30, 2017, the Fund incurred no investment adviser fee on Investable Assets. To the extent the Fund’s assets are invested in the Portfolio, the Fund is allocated its share of the Portfolio’s investment adviser fee. The Portfolio has engaged BMR to render investment advisory services. See Note 2 of the Portfolio’s Notes to Financial Statements which are included elsewhere in this report. The administration fee is earned by EVM as compensation for administering the business affairs of the Fund and is computed at an annual rate of 0.15% of the Fund’s average daily net assets. For the six months ended June 30, 2017, the administration fee amounted to $174,000.
EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $11,025 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $9,395 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A, Class B and Class C shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee and administration fee. Certain officers and Trustees of the Fund and the Portfolio are officers of the above organizations.
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.30% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $249,750 for Class A shares.
The Fund also has in effect distribution plans for Class B shares (Class B Plan) and Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class B and Class C Plans, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class B and Class C shares for providing ongoing distribution services and facilities to the Fund. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $11,535 and $95,019 for Class B and Class C shares, respectively.
Pursuant to the Class B and Class C Plans, the Fund also makes payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended June 30, 2017 amounted to $3,845 and $31,673 for Class B and Class C shares, respectively.
13 |
Eaton Vance
Greater India Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d) and for Class B, are further limited to a 5% maximum sales charge as determined in accordance with such rule.
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) generally is imposed on redemptions of Class B shares made within six years of purchase and on redemptions of Class C shares made within one year of purchase. Class A shares may be subject to a 1% CDSC if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. The CDSC for Class B shares is imposed at declining rates that begin at 5% in the case of redemptions in the first and second year after purchase, declining one percentage point each subsequent year. Class C shares are subject to a 1% CDSC if redeemed within one year of purchase. For the six months ended June 30, 2017, the Fund was informed that EVD received approximately $300 and $1,000 of CDSCs paid by Class B and Class C shareholders, respectively, and no CDSCs paid by Class A shareholders.
6 Investment Transactions
For the six months ended June 30, 2017, increases and decreases in the Fund’s investment in the Portfolio aggregated $7,648,505 and $13,603,001, respectively.
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 343,500 | 305,168 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 29,709 | ||||||
Redemptions | (809,682 | ) | (1,437,764 | ) | ||||
Exchange from Class B shares | 25,265 | 113,772 | ||||||
Net decrease | (440,917 | ) | (989,115 | ) | ||||
Class B | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 459 | 349 | ||||||
Redemptions | (12,661 | ) | (43,178 | ) | ||||
Exchange to Class A shares | (28,836 | ) | (129,751 | ) | ||||
Net decrease | (41,038 | ) | (172,580 | ) | ||||
Class C | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 104,845 | 51,408 | ||||||
Redemptions | (137,591 | ) | (333,352 | ) | ||||
Net decrease | (32,746 | ) | (281,944 | ) |
14 |
Eaton Vance
Greater India Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
Class I | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 615,138 | 618,531 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 5,160 | ||||||
Redemptions | (249,427 | ) | (762,288 | ) | ||||
Net increase (decrease) | 365,711 | (138,597 | ) |
15 |
Greater India Portfolio
June 30, 2017
Portfolio of Investments (Unaudited)
Common Stocks — 96.8% | ||||||||
Security | Shares | Value | ||||||
India — 93.6% |
| |||||||
Auto Components — 1.3% |
| |||||||
MRF, Ltd. | 3,154 | $ | 3,339,494 | |||||
$ | 3,339,494 | |||||||
Automobiles — 7.1% |
| |||||||
Bajaj Auto, Ltd. | 49,086 | $ | 2,118,577 | |||||
Maruti Suzuki India, Ltd. | 141,206 | 15,719,869 | ||||||
$ | 17,838,446 | |||||||
Banks — 13.9% |
| |||||||
Federal Bank, Ltd. | 692,039 | $ | 1,207,078 | |||||
HDFC Bank, Ltd. | 403,603 | 10,327,334 | ||||||
ICICI Bank, Ltd. | 1,449,927 | 6,523,676 | ||||||
IndusInd Bank, Ltd. | 332,966 | 7,628,798 | ||||||
RBL Bank, Ltd.(1)(2) | 309,230 | 2,430,510 | ||||||
Yes Bank, Ltd. | 300,483 | 6,808,859 | ||||||
$ | 34,926,255 | |||||||
Beverages — 0.7% |
| |||||||
United Breweries, Ltd. | 139,855 | $ | 1,695,636 | |||||
$ | 1,695,636 | |||||||
Building Products — 0.7% |
| |||||||
Kajaria Ceramics, Ltd. | 165,378 | $ | 1,692,865 | |||||
$ | 1,692,865 | |||||||
Capital Markets — 1.6% |
| |||||||
Credit Analysis & Research, Ltd. | 163,539 | $ | 4,043,942 | |||||
$ | 4,043,942 | |||||||
Chemicals — 4.1% |
| |||||||
Bayer CropScience, Ltd./India | 32,679 | $ | 2,344,514 | |||||
Castrol India, Ltd. | 285,075 | 1,782,792 | ||||||
UPL, Ltd. | 469,941 | 6,127,434 | ||||||
$ | 10,254,740 | |||||||
Construction & Engineering — 1.3% |
| |||||||
Voltas, Ltd. | 458,638 | $ | 3,247,557 | |||||
$ | 3,247,557 | |||||||
Security | Shares | Value | ||||||
Construction Materials — 5.8% |
| |||||||
Ambuja Cements, Ltd. | 745,692 | $ | 2,836,699 | |||||
Century Textiles & Industries, Ltd. | 181,003 | 3,081,759 | ||||||
Dalmia Bharat, Ltd.(2) | 78,403 | 3,007,343 | ||||||
Grasim Industries, Ltd. GDR(3) | 291,800 | 5,613,641 | ||||||
$ | 14,539,442 | |||||||
Consumer Finance — 6.5% |
| |||||||
Bajaj Finance, Ltd. | 285,730 | $ | 6,065,553 | |||||
Bharat Financial Inclusion, Ltd.(2) | 166,217 | 1,850,641 | ||||||
Mahindra & Mahindra Financial Services, Ltd. | 517,379 | 2,776,073 | ||||||
Muthoot Finance, Ltd. | 802,705 | 5,665,130 | ||||||
$ | 16,357,397 | |||||||
Diversified Financial Services — 1.5% |
| |||||||
Bajaj Holdings & Investment, Ltd. | 110,719 | $ | 3,665,475 | |||||
$ | 3,665,475 | |||||||
Food Products — 1.4% |
| |||||||
Britannia Industries, Ltd. | 60,017 | $ | 3,429,775 | |||||
$ | 3,429,775 | |||||||
Hotels, Restaurants & Leisure — 0.5% |
| |||||||
Indian Hotels Co., Ltd. (The) | 661,871 | $ | 1,370,993 | |||||
$ | 1,370,993 | |||||||
Household Durables — 3.9% |
| |||||||
Crompton Greaves Consumer Electricals, Ltd.(2) | 2,028,778 | $ | 7,183,723 | |||||
Whirlpool of India, Ltd.(2) | 145,630 | 2,555,208 | ||||||
$ | 9,738,931 | |||||||
Household Products — 1.5% |
| |||||||
Hindustan Unilever, Ltd. | 231,594 | $ | 3,868,327 | |||||
$ | 3,868,327 | |||||||
Industrial Conglomerates — 1.3% |
| |||||||
Siemens, Ltd. | 155,154 | $ | 3,200,286 | |||||
$ | 3,200,286 | |||||||
Internet Software & Services — 1.4% |
| |||||||
Info Edge India, Ltd. | 220,829 | $ | 3,554,853 | |||||
$ | 3,554,853 | |||||||
16 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
IT Services — 6.4% |
| |||||||
HCL Technologies, Ltd. | 377,108 | $ | 4,966,755 | |||||
Infosys, Ltd. | 766,484 | 11,081,027 | ||||||
$ | 16,047,782 | |||||||
Machinery — 4.8% |
| |||||||
AIA Engineering, Ltd. | 85,422 | $ | 1,841,643 | |||||
Eicher Motors, Ltd.(2) | 17,820 | 7,440,600 | ||||||
Thermax, Ltd. | 186,957 | 2,689,466 | ||||||
$ | 11,971,709 | |||||||
Media — 0.8% |
| |||||||
Sun TV Network, Ltd. | 164,934 | $ | 2,084,140 | |||||
$ | 2,084,140 | |||||||
Metals & Mining — 2.7% |
| |||||||
Hindalco Industries, Ltd. | 1,221,302 | $ | 3,604,139 | |||||
Hindustan Zinc, Ltd. | 799,666 | 3,241,797 | ||||||
$ | 6,845,936 | |||||||
Oil, Gas & Consumable Fuels — 2.2% |
| |||||||
Indian Oil Corp., Ltd. | 912,334 | $ | 5,416,280 | |||||
$ | 5,416,280 | |||||||
Personal Products — 4.2% |
| |||||||
Colgate-Palmolive (India), Ltd. | 220,758 | $ | 3,772,963 | |||||
Emami, Ltd. | 206,931 | 3,438,546 | ||||||
Procter & Gamble Hygiene & Health Care, Ltd. | 27,742 | 3,434,141 | ||||||
$ | 10,645,650 | |||||||
Pharmaceuticals — 4.7% |
| |||||||
Abbott India, Ltd. | 34,916 | $ | 2,318,597 | |||||
Cadila Healthcare, Ltd. | 258,021 | 2,092,584 | ||||||
Cipla, Ltd. | 535,500 | 4,619,802 | ||||||
Eris Lifesciences, Ltd.(1)(2) | 284,452 | 2,653,638 | ||||||
$ | 11,684,621 | |||||||
Real Estate Management & Development — 0.5% |
| |||||||
Prestige Estates Projects, Ltd.(2) | 325,464 | $ | 1,273,184 | |||||
$ | 1,273,184 | |||||||
Road & Rail — 1.1% |
| |||||||
Container Corp. of India, Ltd. | 154,547 | $ | 2,740,162 | |||||
$ | 2,740,162 | |||||||
Security | Shares | Value | ||||||
Thrifts & Mortgage Finance — 3.9% |
| |||||||
Housing Development Finance Corp., Ltd. | 396,352 | $ | 9,879,802 | |||||
$ | 9,879,802 | |||||||
Tobacco — 4.3% |
| |||||||
ITC, Ltd. | 2,185,783 | $ | 10,912,274 | |||||
$ | 10,912,274 | |||||||
Wireless Telecommunication Services — 3.5% |
| |||||||
Idea Cellular, Ltd. | 6,728,649 | $ | 8,873,176 | |||||
$ | 8,873,176 | |||||||
Total India |
| $ | 235,139,130 | |||||
United States — 3.2% |
| |||||||
IT Services — 3.2% |
| |||||||
Cognizant Technology Solutions Corp., Class A | 121,937 | $ | 8,096,617 | |||||
$ | 8,096,617 | |||||||
Total United States |
| $ | 8,096,617 | |||||
Total Common Stocks |
| $ | 243,235,747 | |||||
Short-Term Investments — 0.4% | ||||||||
Description | Principal Amount (000’s omitted) | Value | ||||||
State Street Bank and Trust Euro Time Deposit, 0.09%, 7/3/17 | $ | 967 | $ | 966,761 | ||||
Total Short-Term Investments | $ | 966,761 | ||||||
Total Investments — 97.2% | $ | 244,202,508 | ||||||
Other Assets, Less Liabilities — 2.8% | $ | 7,008,864 | ||||||
Net Assets — 100.0% | $ | 251,211,372 | ||||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
17 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
(1) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be sold in certain transactions in reliance on an exemption from registration (normally to qualified institutional buyers). At June 30, 2017, the aggregate value of these securities is $5,084,148 or 2.0% of the Portfolio’s net assets. |
(2) | Non-income producing security. |
(3) | Security exempt from registration under Regulation S of the Securities Act of 1933, which exempts from registration securities offered and sold outside the United States. Security may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. At June 30, 2017, the aggregate value of these securities is $5,613,641 or 2.2% of the Portfolio’s net assets. |
Futures Contracts | ||||||||||||||||||||||||
Description | Contracts | Position | Expiration Month/Year | Aggregate Cost | Value | Net Unrealized Appreciation | ||||||||||||||||||
Equity Futures | ||||||||||||||||||||||||
SGX CNX Nifty Index | 342 | Long | Jul-17 | $ | 6,509,662 | $ | 6,510,654 | $ | 992 | |||||||||||||||
$ | 992 |
SGX CNX Nifty Index: Price-weighted average of 50 large and highly liquid companies listed on the National Stock Exchange of India.
Abbreviations:
GDR | – | Global Depositary Receipt |
18 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Investments, at value (identified cost, $191,563,197) | $ | 244,202,508 | ||
Restricted cash* | 263,340 | |||
Foreign currency, at value (identified cost, $5,934,308) | 5,927,200 | |||
Dividends and interest receivable | 367,017 | |||
Receivable for investments sold | 1,284,997 | |||
Receivable for foreign taxes | 45,552 | |||
Total assets | $ | 252,090,614 | ||
Liabilities | ||||
Payable for investments purchased | $ | 598,048 | ||
Payable for variation margin on open financial futures contracts | 6,941 | |||
Payable to affiliates: | ||||
Investment adviser fee | 176,363 | |||
Trustees’ fees | 3,150 | |||
Accrued expenses | 94,740 | |||
Total liabilities | $ | 879,242 | ||
Net Assets applicable to investors’ interest in Portfolio | $ | 251,211,372 | ||
Sources of Net Assets | ||||
Investors’ capital | $ | 198,577,459 | ||
Net unrealized appreciation | 52,633,913 | |||
Total | $ | 251,211,372 |
* | Represents restricted cash on deposit at the broker for open financial futures contracts. |
19 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends | $ | 1,998,948 | ||
Interest | 1,695 | |||
Total investment income | $ | 2,000,643 | ||
Expenses | ||||
Investment adviser fee | $ | 986,447 | ||
Trustees’ fees and expenses | 6,296 | |||
Custodian fee | 97,329 | |||
Legal and accounting services | 33,948 | |||
Miscellaneous | 7,856 | |||
Total expenses | $ | 1,131,876 | ||
Net investment income | $ | 868,767 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | (272,784 | ) | |
Financial futures contracts | 284,560 | |||
Foreign currency transactions | (49,360 | ) | ||
Net realized loss | $ | (37,584 | ) | |
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 52,677,004 | ||
Financial futures contracts | 992 | |||
Foreign currency | (6,686 | ) | ||
Net change in unrealized appreciation (depreciation) | $ | 52,671,310 | ||
Net realized and unrealized gain | $ | 52,633,726 | ||
Net increase in net assets from operations | $ | 53,502,493 |
20 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income (loss) | $ | 868,767 | $ | (139,680 | ) | |||
Net realized gain (loss) from investment transactions, financial futures contracts and foreign currency transactions | (37,584 | ) | 56,851,192 | |||||
Net change in unrealized appreciation (depreciation) from investments, financial futures contracts and foreign currency | 52,671,310 | (48,726,256 | ) | |||||
Net increase in net assets from operations | $ | 53,502,493 | $ | 7,985,256 | ||||
Capital transactions — | ||||||||
Contributions | $ | 7,648,505 | $ | 7,069,673 | ||||
Withdrawals | (13,603,001 | ) | (49,559,052 | ) | ||||
Net decrease in net assets from capital transactions | $ | (5,954,496 | ) | $ | (42,489,379 | ) | ||
Net increase (decrease) in net assets | $ | 47,547,997 | $ | (34,504,123 | ) | |||
Net Assets | ||||||||
At beginning of period | $ | 203,663,375 | $ | 238,167,498 | ||||
At end of period | $ | 251,211,372 | $ | 203,663,375 |
21 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2017
Financial Highlights
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
Ratios/Supplemental Data | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(1) | 0.97 | %(2) | 1.19 | % | 1.23 | % | 1.22 | % | 1.31 | % | 1.33 | % | ||||||||||||
Net investment income (loss) | 0.75 | %(2) | (0.06 | )% | (0.23 | )% | 0.17 | % | 0.58 | % | 0.22 | % | ||||||||||||
Portfolio Turnover | 15 | %(3) | 91 | % | 30 | % | 22 | % | 42 | % | 65 | % | ||||||||||||
Total Return | 26.70 | %(3) | 3.35 | % | (4.33 | )% | 40.17 | % | (9.52 | )% | 29.53 | % | ||||||||||||
Net assets, end of period (000’s omitted) | $ | 251,211 | $ | 203,663 | $ | 238,167 | $ | 280,593 | $ | 231,169 | $ | 361,498 |
(1) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(2) | Annualized. |
(3) | Not annualized. |
22 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Greater India Portfolio (the Portfolio) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a non-diversified, open-end management investment company. The Portfolio’s investment objective is to seek long-term capital appreciation. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At June 30, 2017, Eaton Vance Greater India Fund held a 99.9% interest in the Portfolio.
The following is a summary of significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Portfolio is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.
Debt Obligations. Debt obligations are generally valued on the basis of valuations provided by third party pricing services, as derived from such services’ pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. Short-term obligations purchased with a remaining maturity of sixty days or less for which a valuation from a third party pricing service is not readily available may be valued at amortized cost, which approximates fair value.
Derivatives. Financial futures contracts are valued at the closing settlement price established by the board of trade or exchange on which they are traded, with adjustments for fair valuation for certain foreign financial futures contracts as described below.
Foreign Securities, Financial Futures Contracts and Currencies. Foreign securities, financial futures contracts and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. The daily valuation of exchange-traded foreign securities and certain exchange-traded foreign financial futures contracts generally is determined as of the close of trading on the principal exchange on which such securities and contracts trade. Foreign ownership of shares of certain Indian companies may be subject to limitations. When foreign ownership of such an Indian company’s shares approaches the limitation, foreign investors may be willing to pay a premium to the local share price to acquire shares from other foreign investors. Such shares are valued at the closing price for foreign investors as provided by the exchange on which they trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities and certain foreign financial futures contracts to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. When valuing foreign equity securities and foreign financial futures contracts that meet certain criteria, the Portfolio’s Trustees have approved the use of a fair value service that values such securities and foreign financial futures contracts to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities and foreign financial futures contracts.
Affiliated Fund. The Portfolio may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Portfolio in a manner that fairly reflects the security’s value, or the amount that the Portfolio might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. 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. 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. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.
23 |
Greater India Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
D Federal and Other 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 ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the Portfolio’s investors is a regulated investment company that invests all or substantially all of its 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 losses and any other items of income, gain, loss, deduction or credit.
In addition to the requirements of the Internal Revenue Code, the Portfolio may also be subject to local taxes on the recognition of capital gains in India. In determining the daily net asset value, the Portfolio estimates the accrual for such taxes, if any, based on the unrealized appreciation on certain portfolio securities, the holding period of such securities, the related tax rates, and the availability of any realized losses in excess of gains that may be carried forward to offset future gains. Taxes attributable to unrealized appreciation are included in the change in unrealized appreciation (depreciation) on investments. Capital gains taxes on certain Indian securities sold at a gain are included in net realized gain (loss) on investments. As of March 31, 2017, the Portfolio, for tax reporting in India, had accumulated losses of INR 625,296,108 (having a value of approximately $9,674,000 at June 30, 2017) that can be carried forward to offset future realized gains from the sale of certain Indian securities that would otherwise be subject to Indian capital gains taxes. These accumulated losses expire on March 31, 2020 (INR 535,151,798) and March 31, 2022 (INR 90,144,310).
As of June 30, 2017, the Portfolio had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Portfolio files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing. The Portfolio also files a tax return in India annually as of March 31st. Such tax returns are subject to examination by the Indian tax authorities for open years as determined by the statute of limitations, which is generally a period of up to 7 years after a tax return is filed.
E Foreign Currency Translation — Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to changes in foreign currency exchange 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 results from fluctuations in foreign currency exchange rates is not separately disclosed.
F Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications — Under the Portfolio’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Under Massachusetts law, if certain conditions prevail, interestholders in the Portfolio could be deemed to have personal liability for the obligations of the Portfolio. However, the Portfolio’s Declaration of Trust contains an express disclaimer of liability on the part of Portfolio interestholders and the By-laws provide that the Portfolio shall assume the defense on behalf of any Portfolio interestholder. Moreover, the By-laws also provide for indemnification out of Portfolio property of any interestholder held personally liable solely by reason of being or having been an interestholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred.
H Financial Futures Contracts — Upon entering into a financial futures contract, the Portfolio is required to deposit with the broker, either in cash or securities, an amount equal to a certain percentage of the contract amount (initial margin). Subsequent payments, known as variation margin, are made or received by the Portfolio each business day, depending on the daily fluctuations in the value of the underlying security or index, and are recorded as unrealized gains or losses by the Portfolio. Gains (losses) are realized upon the expiration or closing of the financial futures contracts. Should market conditions change unexpectedly, the Portfolio may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. Futures contracts have minimal counterparty risk as they are exchange traded and the clearinghouse for the exchange is substituted as the counterparty, guaranteeing counterparty performance.
I Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Portfolio’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of EVM, as compensation for management and investment advisory services rendered to the Portfolio. Pursuant to the investment advisory agreement and subsequent fee reduction agreement between the Portfolio and BMR, the fee is computed at an annual rate of 0.85% of the Portfolio’s average daily net assets up to $500 million and is payable monthly. On net assets of $500 million and over, the annual fee is reduced. The fee reduction cannot be terminated or reduced without the approval of a majority vote of
24 |
Greater India Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
the Trustees of the Portfolio who are not interested persons of BMR or the Portfolio and by vote of a majority of the holders of interest in the Portfolio. For the six months ended June 30, 2017, the investment adviser fee amounted to $986,447 or 0.85% (annualized) of the Portfolio’s average daily net assets. Pursuant to a sub-advisory agreement, BMR pays Goldman Sachs Asset Management International a portion of its investment adviser fee for sub-advisory services provided to the Portfolio.
Trustees and officers of the Portfolio who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Portfolio out of the investment adviser fee. Trustees of the Portfolio who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Portfolio are officers of the above organizations.
3 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $33,817,119 and $46,776,642, respectively, for the six months ended June 30, 2017.
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Portfolio at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 193,449,383 | ||
Gross unrealized appreciation | $ | 55,110,998 | ||
Gross unrealized depreciation | (4,357,873 | ) | ||
Net unrealized appreciation | $ | 50,753,125 |
5 Financial Instruments
The Portfolio may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities. These financial instruments may include 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 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 June 30, 2017 is included in the Portfolio of Investments. At June 30, 2017, the Portfolio had sufficient cash and/or securities to cover commitments under these contracts.
The Portfolio is subject to equity price risk in the normal course of pursuing its investment objective. The Portfolio enters into equity index futures contracts to manage cash flows.
The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) and whose primary underlying risk exposure is equity price risk at June 30, 2017 was as follows:
Fair Value | ||||||||
Derivative | Asset Derivative (1) | Liability Derivative | ||||||
Futures contracts | $ | 992 | $ | — |
(1) | Amount represents cumulative unrealized appreciation on futures contracts. Only the current day’s variation margin on open futures contracts is reported within the Statement of Assets and Liabilities as Receivable or Payable for variation margin, as applicable. |
25 |
Greater India Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is equity price risk for the six months ended June 30, 2017 was as follows:
Derivative | Realized Gain (Loss) on Derivatives Recognized in Income(1) | Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income(2) | ||||||
Futures contracts | $ | 284,560 | $ | 992 |
(1) | Statement of Operations location: Net realized gain (loss) – Financial futures contracts. |
(2) | Statement of Operations location: Change in unrealized appreciation (depreciation) – Financial futures contracts. |
The average notional cost of futures contracts (long) outstanding during the six months ended June 30, 2017, which is indicative of the volume of this derivative type, was approximately $4,059,000.
6 Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Portfolio based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Portfolio, it may be unable to borrow some or all of its requested amounts at any particular time. The Portfolio did not have any significant borrowings or allocated fees during the six months ended June 30, 2017.
7 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. Certain 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 securities 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.
The securities markets in the India region are substantially smaller, less liquid and more volatile than the major securities markets in the United States, which may result in trading or price volatility and difficulties in the settlement and recording of transactions, and in interpreting and applying relevant laws and regulations. Governmental actions can have a significant effect on the economic conditions in the India region, which could adversely affect the value and liquidity of investments.
8 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
26 |
Greater India Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
At June 30, 2017, the hierarchy of inputs used in valuing the Portfolio’s investments and open derivative instruments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks |
| |||||||||||||||
Consumer Discretionary | $ | — | $ | 34,372,004 | $ | — | $ | 34,372,004 | ||||||||
Consumer Staples | — | 30,551,662 | — | 30,551,662 | ||||||||||||
Energy | — | 5,416,280 | — | 5,416,280 | ||||||||||||
Financials | — | 68,872,871 | — | 68,872,871 | ||||||||||||
Health Care | 2,653,638 | 9,030,983 | — | 11,684,621 | ||||||||||||
Industrials | — | 22,852,579 | — | 22,852,579 | ||||||||||||
Information Technology | 8,096,617 | 19,602,635 | — | 27,699,252 | ||||||||||||
Materials | 5,613,641 | 26,026,477 | — | 31,640,118 | ||||||||||||
Real Estate | — | 1,273,184 | — | 1,273,184 | ||||||||||||
Telecommunication Services | — | 8,873,176 | — | 8,873,176 | ||||||||||||
Total Common Stocks | $ | 16,363,896 | $ | 226,871,851 | * | $ | — | $ | 243,235,747 | |||||||
Short-Term Investments | $ | — | $ | 966,761 | $ | — | $ | 966,761 | ||||||||
Total Investments | $ | 16,363,896 | $ | 227,838,612 | $ | — | $ | 244,202,508 | ||||||||
Futures Contracts | $ | — | $ | 992 | $ | — | $ | 992 | ||||||||
Total | $ | 16,363,896 | $ | 227,839,604 | $ | — | $ | 244,203,500 |
* | Includes foreign equity securities whose values were adjusted to reflect market trading of comparable securities or other correlated instruments that occurred after the close of trading in their applicable foreign markets. |
The Portfolio held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
27 |
Eaton Vance
Greater India Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements, including information with respect to the investment advisory agreement between the Adviser (defined below) and the Fund (defined below) and the sub-advisory agreements with the Sub-adviser (defined below) provided in connection with the meeting of the Board on August 9 and 10, 2016.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
28 |
Eaton Vance
Greater India Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Greater India Portfolio (the “Portfolio”), the portfolio in which Eaton Vance Greater India Fund (the “Fund”) invests, with Boston Management and Research (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Portfolio. Goldman Sachs Asset Management International (the “Sub-adviser”) began serving as the sub-adviser to the Portfolio on September 15, 2016. The Adviser and the Sub-adviser began serving as investment adviser and sub-adviser, respectively, to the Fund on December 16, 2016. Accordingly, the investment advisory agreement between the Fund and the Adviser and the investment sub-advisory agreements with the Sub-adviser were in their initial two-year term, and the Board was not required to approve the agreements at its meeting on April 25, 2017.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement for the Portfolio, the Board evaluated the nature, extent and quality of services provided to the Fund and Portfolio by the Adviser.
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by the Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Portfolio, including recent changes to such personnel. With respect to the Adviser, the Board considered the Adviser’s responsibilities overseeing the Sub-adviser. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Portfolio, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Portfolio, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing the Portfolio.
29 |
Eaton Vance
Greater India Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices, as well as a customized peer group of similarly managed funds. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2016 for the Fund. The Board noted that actions are being taken by the Adviser to address Fund performance and concluded that additional time is required to evaluate the effectiveness of such actions. In this regard, the Board noted the recent appointment of the Sub-adviser to manage the Portfolio on a day-to-day basis, including the Board’s evaluation of the Sub-adviser in determining to approve the sub-advisory agreements with the Portfolio and the Fund and to recommend shareholder approval of such agreements.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Portfolio and by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered certain factors identified by management in response to inquiries from the Contract Review Committee regarding the Fund’s expense ratio relative to comparable funds.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund, to the Portfolio and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their relationships with the Fund and the Portfolio, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Portfolio and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund and the Portfolio, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and the Portfolio increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a
30 |
Eaton Vance
Greater India Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund and the Portfolio, the structure of the advisory fee, which includes breakpoints at several asset levels, will allow the Fund and the Portfolio to continue to benefit from any economies of scale in the future.
31 |
Eaton Vance
Greater India Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Greater India Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Officers of Greater India Portfolio
Edward J. Perkin
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Greater India Fund and Greater India Portfolio
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
32 |
Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
33 |
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Investment Adviser of Eaton Vance Greater India Fund and Greater India Portfolio
Boston Management and Research
Two International Place
Boston, MA 02110
Sub-Adviser of Eaton Vance Greater India Fund and Greater India Portfolio
Goldman Sachs Asset Management International
Christchurch Court
10 -15 Newgate Street
London, England EC1A 7HD
Administrator of Eaton Vance Greater India Fund
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7693 6.30.17
Eaton Vance
Growth Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Growth Fund
Table of Contents
Performance | 2 | |||
Fund Profile | 2 | |||
Endnotes and Additional Disclosures | 3 | |||
Fund Expenses | 4 | |||
Financial Statements | 5 | |||
Board of Trustees’ Contract Approval | 25 | |||
Officers and Trustees | 29 | |||
Important Notices | 30 |
Eaton Vance
Growth Fund
June 30, 2017
Performance1,2
Portfolio Managers Lewis R. Piantedosi and Yana S. Barton, CFA
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 09/09/2002 | 09/09/2002 | 14.17 | % | 19.31 | % | 14.89 | % | 7.67 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | 7.61 | 12.46 | 13.54 | 7.04 | ||||||||||||||||||
Class C at NAV | 09/09/2002 | 09/09/2002 | 13.76 | 18.39 | 14.03 | 6.87 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 12.76 | 17.39 | 14.03 | 6.87 | ||||||||||||||||||
Class I at NAV | 05/03/2007 | 09/09/2002 | 14.31 | 19.60 | 15.18 | 7.93 | ||||||||||||||||||
Class R at NAV | 08/03/2009 | 09/09/2002 | 14.03 | 18.98 | 14.60 | 7.46 | ||||||||||||||||||
Russell 1000® Growth Index | — | — | 13.99 | % | 20.42 | % | 15.29 | % | 8.90 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | Class R | ||||||||||||||||||||
Gross | 1.13 | % | 1.88 | % | 0.88 | % | 1.38 | % | ||||||||||||||||
Net | 1.05 | 1.80 | 0.80 | 1.30 |
Fund Profile4
Sector Allocation (% of net assets)5
Top 10 Holdings (% of net assets)5
Amazon.com, Inc. | 6.2 | % | ||
Facebook, Inc., Class A | 5.7 | |||
Alphabet, Inc., Class C | 4.1 | |||
Visa, Inc., Class A | 3.7 | |||
Alphabet, Inc., Class A | 3.5 | |||
Celgene Corp. | 3.5 | |||
Apple, Inc. | �� | 2.9 | ||
salesforce.com, inc. | 2.5 | |||
Allergan PLC | 2.5 | |||
FedEx Corp. | 2.3 | |||
Total | 36.9 | % |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Growth Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | Russell 1000® Growth Index is an unmanaged index of U.S. large-cap growth stocks. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class R is linked to Class A. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. |
3 | Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 4/30/18. Without the reimbursement, performance would have been lower. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Fund invests in an affiliated investment company (Portfolio) with the same objective(s) and policies as the Fund. References to investments are to the Portfolio’s holdings. |
5 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Growth Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense | |||||||||||||
Actual |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,141.70 | $ | 5.58 | ** | 1.05 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,137.60 | $ | 9.54 | ** | 1.80 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,143.10 | $ | 4.25 | ** | 0.80 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,140.30 | $ | 6.90 | ** | 1.30 | % | |||||||
Hypothetical |
| |||||||||||||||
(5% return per year before expenses) |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,019.60 | $ | 5.26 | ** | 1.05 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,015.90 | $ | 9.00 | ** | 1.80 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,020.80 | $ | 4.01 | ** | 0.80 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,018.30 | $ | 6.51 | ** | 1.30 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. The Example reflects the expenses of both the Fund and the Portfolio. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
4 |
Eaton Vance
Growth Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Investment in Growth Portfolio, at value (identified cost, $206,779,183) | $ | 318,142,484 | ||
Receivable for Fund shares sold | 289,833 | |||
Receivable from affiliate | 22,944 | |||
Total assets | $ | 318,455,261 | ||
Liabilities | ||||
Payable for Fund shares redeemed | $ | 289,670 | ||
Payable to affiliates: | ||||
Distribution and service fees | 78,459 | |||
Trustees’ fees | 125 | |||
Accrued expenses | 84,886 | |||
Total liabilities | $ | 453,140 | ||
Net Assets | $ | 318,002,121 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 206,311,650 | ||
Accumulated net realized loss from Portfolio | (65,317 | ) | ||
Accumulated undistributed net investment income | 392,487 | |||
Net unrealized appreciation from Portfolio | 111,363,301 | |||
Total | $ | 318,002,121 | ||
Class A Shares | ||||
Net Assets | $ | 202,562,587 | ||
Shares Outstanding | 7,956,049 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 25.46 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 27.01 | ||
Class C Shares | ||||
Net Assets | $ | 42,210,467 | ||
Shares Outstanding | 1,911,550 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 22.08 | ||
Class I Shares | ||||
Net Assets | $ | 70,110,103 | ||
Shares Outstanding | 2,683,817 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 26.12 | ||
Class R Shares | ||||
Net Assets | $ | 3,118,964 | ||
Shares Outstanding | 124,987 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 24.95 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
* | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
5 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends allocated from Portfolio | $ | 1,619,982 | ||
Securities lending income allocated from Portfolio, net | 8,218 | |||
Expenses allocated from Portfolio | (1,083,990 | ) | ||
Total investment income from Portfolio | $ | 544,210 | ||
Expenses | ||||
Distribution and service fees | ||||
Class A | $ | 247,130 | ||
Class C | 211,919 | |||
Class R | 8,556 | |||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 12,394 | |||
Transfer and dividend disbursing agent fees | 154,208 | |||
Legal and accounting services | 17,053 | |||
Printing and postage | 17,517 | |||
Registration fees | 30,718 | |||
Miscellaneous | 10,723 | |||
Total expenses | $ | 710,468 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 95,785 | ||
Total expense reductions | $ | 95,785 | ||
Net expenses | $ | 614,683 | ||
Net investment loss | $ | (70,473 | ) | |
Realized and Unrealized Gain (Loss) from Portfolio | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 11,333,095 | ||
Net realized gain | $ | 11,333,095 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 29,514,425 | ||
Foreign currency | 2,199 | |||
Net change in unrealized appreciation (depreciation) | $ | 29,516,624 | ||
Net realized and unrealized gain | $ | 40,849,719 | ||
Net increase in net assets from operations | $ | 40,779,246 |
6 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income (loss) | $ | (70,473 | ) | $ | 484,695 | |||
Net realized gain from investment transactions | 11,333,095 | 13,231,793 | ||||||
Net change in unrealized appreciation (depreciation) from investments and foreign currency | 29,516,624 | (6,878,867 | ) | |||||
Net increase in net assets from operations | $ | 40,779,246 | $ | 6,837,621 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | — | $ | (812,306 | ) | |||
Class I | — | (337,812 | ) | |||||
Class R | — | (815 | ) | |||||
From net realized gain | ||||||||
Class A | — | (3,261,590 | ) | |||||
Class C | — | (805,648 | ) | |||||
Class I | — | (852,989 | ) | |||||
Class R | — | (49,035 | ) | |||||
Total distributions to shareholders | $ | — | $ | (6,120,195 | ) | |||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 8,548,896 | $ | 19,900,559 | ||||
Class C | 2,661,819 | 4,277,357 | ||||||
Class I | 14,709,764 | 18,770,246 | ||||||
Class R | 308,818 | 626,972 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | — | 3,763,727 | ||||||
Class C | — | 684,919 | ||||||
Class I | — | 986,742 | ||||||
Class R | — | 31,537 | ||||||
Cost of shares redeemed | ||||||||
Class A | (26,370,301 | ) | (44,640,211 | ) | ||||
Class C | (7,228,569 | ) | (11,742,357 | ) | ||||
Class I | (14,093,101 | ) | (17,578,931 | ) | ||||
Class R | (858,349 | ) | (1,605,644 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (22,321,023 | ) | $ | (26,525,084 | ) | ||
Net increase (decrease) in net assets | $ | 18,458,223 | $ | (25,807,658 | ) | |||
Net Assets | ||||||||
At beginning of period | $ | 299,543,898 | $ | 325,351,556 | ||||
At end of period | $ | 318,002,121 | $ | 299,543,898 | ||||
Accumulated undistributed net investment income included in net assets |
| |||||||
At end of period | $ | 392,487 | $ | 462,960 |
7 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 22.300 | $ | 22.230 | $ | 21.670 | $ | 20.920 | $ | 17.540 | $ | 15.730 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | 0.001 | $ | 0.047 | $ | 0.140 | $ | (0.000 | )(2) | $ | 0.012 | $ | 0.002 | |||||||||||
Net realized and unrealized gain | 3.159 | 0.451 | 1.387 | 2.889 | 6.069 | 1.992 | ||||||||||||||||||
Total income from operations | $ | 3.160 | $ | 0.498 | $ | 1.527 | $ | 2.889 | $ | 6.081 | $ | 1.994 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (0.085 | ) | $ | — | $ | — | $ | (0.001 | ) | $ | — | ||||||||||
From net realized gain | — | (0.343 | ) | (0.967 | ) | (2.139 | ) | (2.700 | ) | (0.184 | ) | |||||||||||||
Total distributions | $ | — | $ | (0.428 | ) | $ | (0.967 | ) | $ | (2.139 | ) | $ | (2.701 | ) | $ | (0.184 | ) | |||||||
Net asset value — End of period | $ | 25.460 | $ | 22.300 | $ | 22.230 | $ | 21.670 | $ | 20.920 | $ | 17.540 | ||||||||||||
Total Return(3)(4) | 14.17 | %(5) | 2.32 | % | 7.04 | % | 14.23 | % | 35.35 | % | 12.66 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 202,563 | $ | 194,018 | $ | 214,135 | $ | 88,448 | $ | 89,426 | $ | 86,843 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(4)(7) | 1.05 | %(8) | 1.05 | % | 1.05 | % | 1.15 | % | 1.25 | % | 1.25 | % | ||||||||||||
Net investment income (loss) | 0.01 | %(8) | 0.22 | % | 0.62 | % | (0.00 | )%(9) | 0.06 | % | 0.01 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 27 | %(5) | 60 | % | 55 | % | 38 | % | 42 | % | 40 | % |
(1) | Computed using average shares outstanding. |
(2) | Amount is less than $(0.0005). |
(3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(4) | The administrator reimbursed certain operating expenses (equal to 0.06%, 0.08%, 0.07%, 0.12%, 0.10% and 0.13% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent the reimbursement, total return would be lower. |
(5) | Not annualized. |
(6) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(7) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(8) | Annualized. |
(9) | Amount is less than (0.005)%. |
8 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2017
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 19.410 | $ | 19.460 | $ | 19.230 | $ | 18.920 | $ | 16.190 | $ | 14.630 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.078 | ) | $ | (0.101 | ) | $ | (0.025 | ) | $ | (0.149 | ) | $ | (0.127 | ) | $ | (0.118 | ) | ||||||
Net realized and unrealized gain | 2.748 | 0.394 | 1.222 | 2.598 | 5.558 | 1.862 | ||||||||||||||||||
Total income from operations | $ | 2.670 | $ | 0.293 | $ | 1.197 | $ | 2.449 | $ | 5.431 | $ | 1.744 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | (0.001 | ) | $ | — | |||||||||||
From net realized gain | — | (0.343 | ) | (0.967 | ) | (2.139 | ) | (2.700 | ) | (0.184 | ) | |||||||||||||
Total distributions | $ | — | $ | (0.343 | ) | $ | (0.967 | ) | $ | (2.139 | ) | $ | (2.701 | ) | $ | (0.184 | ) | |||||||
Net asset value — End of period | $ | 22.080 | $ | 19.410 | $ | 19.460 | $ | 19.230 | $ | 18.920 | $ | 16.190 | ||||||||||||
Total Return(2)(3) | 13.76 | %(4) | 1.57 | % | 6.20 | % | 13.41 | % | 34.27 | % | 11.91 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 42,210 | $ | 41,272 | $ | 48,285 | $ | 30,552 | $ | 29,318 | $ | 22,422 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 1.80 | %(7) | 1.80 | % | 1.80 | % | 1.90 | % | 2.00 | % | 2.00 | % | ||||||||||||
Net investment loss | (0.74 | )%(7) | (0.53 | )% | (0.13 | )% | (0.75 | )% | (0.68 | )% | (0.74 | )% | ||||||||||||
Portfolio Turnover of the Portfolio | 27 | %(4) | 60 | % | 55 | % | 38 | % | 42 | % | 40 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | The administrator reimbursed certain operating expenses (equal to 0.06%, 0.08%, 0.07%, 0.12%, 0.10% and 0.13% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent the reimbursement, total return would be lower. |
(4) | Not annualized. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
9 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 22.850 | $ | 22.760 | $ | 22.120 | $ | 21.250 | $ | 17.750 | $ | 15.910 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.032 | $ | 0.108 | $ | 0.192 | $ | 0.056 | $ | 0.063 | $ | 0.050 | ||||||||||||
Net realized and unrealized gain | 3.238 | 0.461 | 1.415 | 2.953 | 6.138 | 2.012 | ||||||||||||||||||
Total income from operations | $ | 3.270 | $ | 0.569 | $ | 1.607 | $ | 3.009 | $ | 6.201 | $ | 2.062 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (0.136 | ) | $ | — | $ | — | $ | (0.001 | ) | $ | (0.038 | ) | |||||||||
From net realized gain | — | (0.343 | ) | (0.967 | ) | (2.139 | ) | (2.700 | ) | (0.184 | ) | |||||||||||||
Total distributions | $ | — | $ | (0.479 | ) | $ | (0.967 | ) | $ | (2.139 | ) | $ | (2.701 | ) | $ | (0.222 | ) | |||||||
Net asset value — End of period | $ | 26.120 | $ | 22.850 | $ | 22.760 | $ | 22.120 | $ | 21.250 | $ | 17.750 | ||||||||||||
Total Return(2)(3) | 14.31 | %(4) | 2.59 | % | 7.26 | % | 14.58 | % | 35.61 | % | 13.01 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 70,110 | $ | 61,036 | $ | 58,746 | $ | 32,051 | $ | 28,336 | $ | 29,920 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 0.80 | %(7) | 0.80 | % | 0.80 | % | 0.90 | % | 1.00 | % | 1.00 | % | ||||||||||||
Net investment income | 0.26 | %(7) | 0.48 | % | 0.84 | % | 0.25 | % | 0.31 | % | 0.29 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 27 | %(4) | 60 | % | 55 | % | 38 | % | 42 | % | 40 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | The administrator reimbursed certain operating expenses (equal to 0.06%, 0.08%, 0.07%, 0.12%, 0.10% and 0.13% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent the reimbursement, total return would be lower. |
(4) | Not annualized. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
10 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2017
Financial Highlights — continued
Class R | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 21.880 | $ | 21.800 | $ | 21.320 | $ | 20.660 | $ | 17.400 | $ | 15.640 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | (0.028 | ) | $ | (0.010 | ) | $ | 0.059 | $ | (0.052 | ) | $ | (0.037 | ) | $ | (0.038 | ) | |||||||
Net realized and unrealized gain | 3.098 | 0.439 | 1.388 | 2.851 | 5.998 | 1.982 | ||||||||||||||||||
Total income from operations | $ | 3.070 | $ | 0.429 | $ | 1.447 | $ | 2.799 | $ | 5.961 | $ | 1.944 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (0.006 | ) | $ | — | $ | — | $ | (0.001 | ) | $ | — | ||||||||||
From net realized gain | — | (0.343 | ) | (0.967 | ) | (2.139 | ) | (2.700 | ) | (0.184 | ) | |||||||||||||
Total distributions | $ | — | $ | (0.349 | ) | $ | (0.967 | ) | $ | (2.139 | ) | $ | (2.701 | ) | $ | (0.184 | ) | |||||||
Net asset value — End of period | $ | 24.950 | $ | 21.880 | $ | 21.800 | $ | 21.320 | $ | 20.660 | $ | 17.400 | ||||||||||||
Total Return(2)(3) | 14.03 | %(4) | 2.03 | % | 6.77 | % | 13.98 | % | 34.94 | % | 12.42 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 3,119 | $ | 3,217 | $ | 4,186 | $ | 2,932 | $ | 2,417 | $ | 1,729 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 1.30 | %(7) | 1.30 | % | 1.30 | % | 1.40 | % | 1.50 | % | 1.50 | % | ||||||||||||
Net investment income (loss) | (0.24 | )%(7) | (0.05 | )% | 0.27 | % | (0.24 | )% | (0.18 | )% | (0.22 | )% | ||||||||||||
Portfolio Turnover of the Portfolio | 27 | %(4) | 60 | % | 55 | % | 38 | % | 42 | % | 40 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | The administrator reimbursed certain operating expenses (equal to 0.06%, 0.08%, 0.07%, 0.12%, 0.10% and 0.13% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent the reimbursement, total return would be lower. |
(4) | Not annualized. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
11 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Growth Fund (the Fund) is a diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund offers four classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I and Class R shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class-specific expenses. The Fund invests all of its investable assets in interests in Growth Portfolio (the Portfolio), a Massachusetts business trust, having the same investment objective and policies as the Fund. The value of the Fund’s investment in the Portfolio reflects the Fund’s proportionate interest in the net assets of the Portfolio (99.9% at June 30, 2017). The performance of the Fund is directly affected by the performance of the Portfolio. The financial statements of the Portfolio, including the portfolio of investments, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio’s Notes to Financial Statements, which are included elsewhere in this report.
B Income — The Fund’s net investment income or loss consists of the Fund’s pro-rata share of the net investment income or loss of the Portfolio, less all actual and accrued expenses of the Fund.
C Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
D Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
E Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
F Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
G Other — Investment transactions are accounted for on a trade date basis.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders and Income Tax Information
It is the present policy of the Fund to make at least one distribution annually (normally in December) of all or substantially all of its net investment income and to distribute annually all or substantially all of its net realized capital gains. Distributions to shareholders are recorded on the ex-dividend date. Distributions are declared separately for each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date or, at the election of the shareholder, receive distributions in cash. Distributions to
12 |
Eaton Vance
Growth Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
At December 31, 2016, the Fund, for federal income tax purposes, had capital loss carryforwards of $11,371,348 which would reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus would reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. The capital loss carryforwards will expire on December 31, 2017 and their character is short-term. Under tax regulations, capital losses incurred in taxable years beginning after December 2010 are considered deferred capital losses and are treated as arising on the first day of the Fund’s next taxable year, retaining the same short-term or long-term character as when originally deferred. Deferred capital losses are required to be used prior to capital loss carryforwards, which carry an expiration date. As a result of this ordering rule, capital loss carryforwards may be more likely to expire unused.
The capital loss carryforwards of $11,371,348 are available to the Fund as a result of a reorganization which occurred in a prior year. Utilization of these capital loss carryforwards may be limited in accordance with certain income tax regulations.
3 Transactions with Affiliates
Eaton Vance Management (EVM) serves as the administrator of the Fund, but currently receives no compensation. EVM has agreed to reimburse the Fund’s expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only) exceed 1.05%, 1.80%, 0.80% and 1.30% of the Fund’s average daily net assets for Class A, Class C, Class I and Class R, respectively. This agreement may be changed or terminated after April 30, 2018. Pursuant to this agreement, EVM was allocated $95,785 of the Fund’s operating expenses for the six months ended June 30, 2017. The Portfolio has engaged Boston Management and Research (BMR), a subsidiary of EVM, to render investment advisory services. See Note 2 of the Portfolio’s Notes to Financial Statements which are included elsewhere in this report. EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $24,852 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $12,579 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A, Class C and Class R shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee. Certain officers and Trustees of the Fund and the Portfolio are officers of the above organizations.
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $247,130 for Class A shares. The Fund also has in effect distribution plans for Class C shares (Class C Plan) and Class R shares (Class R Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class C shares for providing ongoing distribution services and facilities to the Fund. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $158,939 for Class C shares. The Class R Plan requires the Fund to pay EVD an amount up to 0.50% per annum of its average daily net assets attributable to Class R shares for providing ongoing distribution services and facilities to the Fund. The Trustees of the Trust have currently limited Class R distribution payments to 0.25% per annum of the average daily net assets attributable to Class R shares. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $4,278 for Class R shares.
Pursuant to the Class C and Class R Plans, the Fund also makes payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended June 30, 2017 amounted to $52,980 and $4,278 for Class C and Class R shares, respectively.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is imposed on redemptions of Class C shares made within one year of purchase. Class A shares may be subject to a 1% CDSC if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six months ended June 30, 2017, the Fund was informed that EVD received approximately $1,000 and $400 of CDSCs paid by Class A and Class C shareholders, respectively.
13 |
Eaton Vance
Growth Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
6 Investment Transactions
For the six months ended June 30, 2017, increases and decreases in the Fund’s investment in the Portfolio aggregated $2,854,050 and $26,215,182, respectively.
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
Sales | 347,526 | 933,592 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 175,793 | ||||||
Redemptions | (1,092,724 | ) | (2,041,500 | ) | ||||
Net decrease | (745,198 | ) | (932,115 | ) | ||||
Class C | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
Sales | 125,943 | 226,588 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 36,588 | ||||||
Redemptions | (340,646 | ) | (617,599 | ) | ||||
Net decrease | (214,703 | ) | (354,423 | ) | ||||
Class I | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
Sales | 590,646 | 834,782 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 45,036 | ||||||
Redemptions | (577,916 | ) | (789,435 | ) | ||||
Net increase | 12,730 | 90,383 | ||||||
Class R | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
Sales | 12,932 | 29,986 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 1,499 | ||||||
Redemptions | (34,978 | ) | (76,527 | ) | ||||
Net decrease | (22,046 | ) | (45,042 | ) |
14 |
Growth Portfolio
June 30, 2017
Portfolio of Investments (Unaudited)
Common Stocks — 98.9% | ||||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 1.8% |
| |||||||
Raytheon Co. | 34,921 | $ | 5,639,043 | |||||
$ | 5,639,043 | |||||||
Air Freight & Logistics — 2.3% |
| |||||||
FedEx Corp. | 32,945 | $ | 7,159,937 | |||||
$ | 7,159,937 | |||||||
Auto Components — 1.4% |
| |||||||
Delphi Automotive PLC | 50,142 | $ | 4,394,946 | |||||
$ | 4,394,946 | |||||||
Banks — 2.1% |
| |||||||
JPMorgan Chase & Co. | 37,399 | $ | 3,418,269 | |||||
KeyCorp | 171,411 | 3,212,242 | ||||||
$ | 6,630,511 | |||||||
Beverages — 2.2% |
| |||||||
Constellation Brands, Inc., Class A | 23,342 | $ | 4,522,046 | |||||
PepsiCo, Inc. | 22,248 | 2,569,421 | ||||||
$ | 7,091,467 | |||||||
Biotechnology — 7.0% |
| |||||||
Alexion Pharmaceuticals, Inc.(1) | 15,748 | $ | 1,916,059 | |||||
Biogen, Inc.(1) | 8,519 | 2,311,716 | ||||||
Celgene Corp.(1) | 85,370 | 11,087,002 | ||||||
Incyte Corp.(1) | 26,813 | 3,376,025 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 27,480 | 3,541,347 | ||||||
$ | 22,232,149 | |||||||
Capital Markets — 2.7% |
| |||||||
CBOE Holdings, Inc.(2) | 22,355 | $ | 2,043,247 | |||||
Charles Schwab Corp. (The) | 100,479 | 4,316,578 | ||||||
S&P Global, Inc. | 14,243 | 2,079,335 | ||||||
$ | 8,439,160 | |||||||
Chemicals — 3.5% |
| |||||||
Ecolab, Inc. | 49,841 | $ | 6,616,393 | |||||
Monsanto Co. | 20,442 | 2,419,515 | ||||||
Olin Corp. | 66,383 | 2,010,077 | ||||||
$ | 11,045,985 | |||||||
Security | Shares | Value | ||||||
Communications Equipment — 1.0% |
| |||||||
Palo Alto Networks, Inc.(1) | 24,077 | $ | 3,221,743 | |||||
$ | 3,221,743 | |||||||
Distributors — 1.7% |
| |||||||
LKQ Corp.(1) | 159,976 | $ | 5,271,209 | |||||
$ | 5,271,209 | |||||||
Energy Equipment & Services — 1.4% |
| |||||||
Halliburton Co. | 106,341 | $ | 4,541,824 | |||||
$ | 4,541,824 | |||||||
Food & Staples Retailing — 2.1% |
| |||||||
Costco Wholesale Corp. | 19,076 | $ | 3,050,825 | |||||
US Foods Holding Corp.(1) | 130,036 | 3,539,580 | ||||||
$ | 6,590,405 | |||||||
Food Products — 2.1% |
| |||||||
Mondelez International, Inc., Class A | 85,808 | $ | 3,706,048 | |||||
Pinnacle Foods, Inc. | 48,458 | 2,878,405 | ||||||
$ | 6,584,453 | |||||||
Health Care Equipment & Supplies — 1.7% |
| |||||||
Danaher Corp. | 35,954 | $ | 3,034,158 | |||||
Hologic, Inc.(1) | 55,529 | 2,519,906 | ||||||
$ | 5,554,064 | |||||||
Health Care Providers & Services — 1.1% |
| |||||||
Aetna, Inc. | 22,160 | $ | 3,364,553 | |||||
$ | 3,364,553 | |||||||
Hotels, Restaurants & Leisure — 1.0% |
| |||||||
Starbucks Corp. | 53,225 | $ | 3,103,550 | |||||
$ | 3,103,550 | |||||||
Household Durables — 1.9% |
| |||||||
Newell Brands, Inc. | 111,658 | $ | 5,987,102 | |||||
$ | 5,987,102 | |||||||
Internet & Direct Marketing Retail — 6.8% |
| |||||||
Amazon.com, Inc.(1) | 20,521 | $ | 19,864,328 | |||||
Priceline Group, Inc. (The)(1) | 914 | 1,709,655 | ||||||
$ | 21,573,983 | |||||||
15 | See Notes to Financial Statements. |
Growth Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Internet Software & Services — 15.0% |
| |||||||
Alphabet, Inc., Class A(1) | 12,048 | $ | 11,200,785 | |||||
Alphabet, Inc., Class C(1) | 14,357 | 13,046,637 | ||||||
Facebook, Inc., Class A(1) | 119,143 | 17,988,210 | ||||||
GoDaddy, Inc., Class A(1) | 132,401 | 5,616,450 | ||||||
$ | 47,852,082 | |||||||
IT Services — 3.7% |
| |||||||
Visa, Inc., Class A(2) | 126,251 | $ | 11,839,819 | |||||
$ | 11,839,819 | |||||||
Leisure Products — 0.9% |
| |||||||
Mattel, Inc.(2) | 140,130 | $ | 3,016,999 | |||||
$ | 3,016,999 | |||||||
Machinery — 1.9% |
| |||||||
Dover Corp. | 76,184 | $ | 6,111,480 | |||||
$ | 6,111,480 | |||||||
Media — 1.8% |
| |||||||
Walt Disney Co. (The) | 54,175 | $ | 5,756,094 | |||||
$ | 5,756,094 | |||||||
Oil, Gas & Consumable Fuels — 0.4% |
| |||||||
EOG Resources, Inc. | 13,779 | $ | 1,247,275 | |||||
$ | 1,247,275 | |||||||
Personal Products — 1.0% |
| |||||||
Estee Lauder Cos., Inc. (The), Class A | 16,734 | $ | 1,606,129 | |||||
Unilever NV - NY Shares | 28,662 | 1,584,149 | ||||||
$ | 3,190,278 | |||||||
Pharmaceuticals — 6.5% |
| |||||||
Allergan PLC | 32,248 | $ | 7,839,166 | |||||
Eli Lilly & Co. | 38,788 | 3,192,252 | ||||||
Johnson & Johnson | 25,267 | 3,342,572 | ||||||
Pacira Pharmaceuticals, Inc.(1) | 51,607 | 2,461,654 | ||||||
Zoetis, Inc. | 63,989 | 3,991,634 | ||||||
$ | 20,827,278 | |||||||
Road & Rail — 2.8% |
| |||||||
CSX Corp. | 90,079 | $ | 4,914,710 | |||||
J.B. Hunt Transport Services, Inc. | 27,527 | 2,515,418 | ||||||
Norfolk Southern Corp. | 13,436 | 1,635,161 | ||||||
$ | 9,065,289 | |||||||
Security | Shares | Value | ||||||
Semiconductors & Semiconductor Equipment — 3.1% |
| |||||||
Broadcom, Ltd. | 29,511 | $ | 6,877,539 | |||||
Texas Instruments, Inc. | 39,452 | 3,035,042 | ||||||
$ | 9,912,581 | |||||||
Software — 10.3% |
| |||||||
Adobe Systems, Inc.(1) | 41,269 | $ | 5,837,087 | |||||
Ellie Mae, Inc.(1)(2) | 26,266 | 2,886,896 | ||||||
FireEye, Inc.(1)(2) | 211,137 | 3,211,394 | ||||||
Intuit, Inc. | 25,030 | 3,324,234 | ||||||
Microsoft Corp. | 99,437 | 6,854,192 | ||||||
Proofpoint, Inc.(1)(2) | 29,160 | 2,531,963 | ||||||
salesforce.com, inc.(1) | 93,243 | 8,074,844 | ||||||
$ | 32,720,610 | |||||||
Specialty Retail — 3.0% |
| |||||||
Advance Auto Parts, Inc. | 30,085 | $ | 3,507,610 | |||||
Burlington Stores, Inc.(1) | 21,361 | 1,964,999 | ||||||
Home Depot, Inc. (The) | 27,130 | 4,161,742 | ||||||
$ | 9,634,351 | |||||||
Technology Hardware, Storage & Peripherals — 2.9% |
| |||||||
Apple, Inc. | 63,058 | $ | 9,081,613 | |||||
$ | 9,081,613 | |||||||
Textiles, Apparel & Luxury Goods — 1.8% |
| |||||||
Lululemon Athletica, Inc.(1) | 46,767 | $ | 2,790,587 | |||||
NIKE, Inc., Class B | 52,353 | 3,088,827 | ||||||
$ | 5,879,414 | |||||||
Total Common Stocks |
| $ | 314,561,247 | |||||
16 | See Notes to Financial Statements. |
Growth Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Short-Term Investments — 2.1% | ||||||||
Description | Units/Shares | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 1.20%(3) | 3,506,506 | $ | 3,507,208 | |||||
State Street Navigator Securities Lending Government Money Market Portfolio(4) | 3,203,760 | 3,203,760 | ||||||
Total Short-Term Investments |
| $ | 6,710,968 | |||||
Total Investments — 101.0% |
| $ | 321,272,215 | |||||
Other Assets, Less Liabilities — (1.0)% |
| $ | (3,129,694 | ) | ||||
Net Assets — 100.0% |
| $ | 318,142,521 | |||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
(1) | Non-income producing security. |
(2) | All or a portion of this security was on loan at June 30, 2017. |
(3) | Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2017. |
(4) | Represents investment of cash collateral received in connection with securities lending. |
17 | See Notes to Financial Statements. |
Growth Portfolio
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Unaffiliated investments, at value including $23,079,118 of securities on loan (identified cost, $200,453,247) | $ | 317,765,007 | ||
Affiliated investment, at value (identified cost, $3,507,259) | 3,507,208 | |||
Dividends receivable | 118,864 | |||
Dividends receivable from affiliated investment | 3,786 | |||
Securities lending income receivable | 2,733 | |||
Tax reclaims receivable | 173,071 | |||
Total assets | $ | 321,570,669 | ||
Liabilities | ||||
Collateral for securities loaned | $ | 3,203,760 | ||
Payable to affiliates: | ||||
Investment adviser fee | 171,461 | |||
Trustees’ fees | 4,585 | |||
Accrued expenses | 48,342 | |||
Total liabilities | $ | 3,428,148 | ||
Net Assets applicable to investors’ interest in Portfolio | $ | 318,142,521 | ||
Sources of Net Assets | ||||
Investors’ capital | $ | 200,826,073 | ||
Net unrealized appreciation | 117,316,448 | |||
Total | $ | 318,142,521 |
18 | See Notes to Financial Statements. |
Growth Portfolio
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends | $ | 1,608,494 | ||
Dividends from affiliated investment | 11,488 | |||
Securities lending income, net | 8,218 | |||
Total investment income | $ | 1,628,200 | ||
Expenses | ||||
Investment adviser fee | $ | 1,001,429 | ||
Trustees’ fees and expenses | 9,614 | |||
Custodian fee | 44,232 | |||
Legal and accounting services | 22,152 | |||
Miscellaneous | 6,563 | |||
Total expenses | $ | 1,083,990 | ||
Net investment income | $ | 544,210 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 11,334,065 | ||
Investment transactions — affiliated investment | (970 | ) | ||
Net realized gain | $ | 11,333,095 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 29,513,731 | ||
Investments — affiliated investment | 698 | |||
Foreign currency | 2,199 | |||
Net change in unrealized appreciation (depreciation) | $ | 29,516,628 | ||
Net realized and unrealized gain | $ | 40,849,723 | ||
Net increase in net assets from operations | $ | 41,393,933 |
19 | See Notes to Financial Statements. |
Growth Portfolio
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 544,210 | $ | 1,755,570 | ||||
Net realized gain from investment transactions | 11,333,095 | 13,231,793 | ||||||
Net change in unrealized appreciation (depreciation) from investments and foreign currency | 29,516,628 | (6,878,887 | ) | |||||
Net increase in net assets from operations | $ | 41,393,933 | $ | 8,108,476 | ||||
Capital transactions — | ||||||||
Contributions | $ | 2,854,050 | $ | 11,816,465 | ||||
Withdrawals | (26,215,182 | ) | (44,801,381 | ) | ||||
Net decrease in net assets from capital transactions | $ | (23,361,132 | ) | $ | (32,984,916 | ) | ||
Net increase (decrease) in net assets | $ | 18,032,801 | $ | (24,876,440 | ) | |||
Net Assets | ||||||||
At beginning of period | $ | 300,109,720 | $ | 324,986,160 | ||||
At end of period | $ | 318,142,521 | $ | 300,109,720 |
20 | See Notes to Financial Statements. |
Growth Portfolio
June 30, 2017
Financial Highlights
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
Ratios/Supplemental Data | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(1) | 0.70 | %(2) | 0.70 | % | 0.70 | % | 0.72 | % | 0.73 | % | 0.73 | % | ||||||||||||
Net investment income | 0.35 | %(2) | 0.57 | % | 0.96 | % | 0.43 | % | 0.58 | % | 0.54 | % | ||||||||||||
Portfolio Turnover | 27 | %(3) | 60 | % | 55 | % | 38 | % | 42 | % | 40 | % | ||||||||||||
Total Return | 14.37 | %(3) | 2.67 | % | 7.41 | % | 14.73 | % | 36.04 | % | 13.25 | % | ||||||||||||
Net assets, end of period (000’s omitted) | $ | 318,143 | $ | 300,110 | $ | 324,986 | $ | 153,862 | $ | 159,965 | $ | 158,059 |
(1) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(2) | Annualized. |
(3) | Not annualized. |
21 | See Notes to Financial Statements. |
Growth Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Growth Portfolio (the Portfolio) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Portfolio’s investment objective is to seek total return. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At June 30, 2017, Eaton Vance Growth Fund held an interest of 99.9% in the Portfolio.
The following is a summary of significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Portfolio is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.
Affiliated Fund. The Portfolio may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Other. Investments in registered investment companies (including money market funds) that do not trade on an exchange are valued at the net asset value per share on the valuation day.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Portfolio in a manner that fairly reflects the security’s value, or the amount that the Portfolio might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.
D 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 ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the Portfolio’s investors is a regulated investment company that invests all or substantially all of its 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 losses and any other items of income, gain, loss, deduction or credit.
As of June 30, 2017, the Portfolio had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Portfolio files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E Foreign Currency Translation — Other assets and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions.
F Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications — Under the Portfolio’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Under Massachusetts law, if certain conditions prevail, interestholders in the Portfolio could be deemed to have personal liability for the obligations of the Portfolio. However, the Portfolio’s Declaration of Trust contains an express disclaimer of
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Notes to Financial Statements (Unaudited) — continued
liability on the part of Portfolio interestholders and the By-laws provide that the Portfolio shall assume the defense on behalf of any Portfolio interestholder. Moreover, the By-laws also provide for indemnification out of Portfolio property of any interestholder held personally liable solely by reason of being or having been an interestholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Portfolio’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of EVM, as compensation for investment advisory services rendered to the Portfolio. The fee is computed at an annual rate of 0.65% of the Portfolio’s average daily net assets up to $500 million and is payable monthly. On net assets of $500 million and over, the annual fee is reduced. For the six months ended June 30, 2017, the Portfolio’s investment adviser fee amounted to $1,001,429 or 0.65% (annualized) of the Portfolio’s average daily net assets. The Portfolio invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund.
Trustees and officers of the Portfolio who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Portfolio out of the investment adviser fee. Trustees of the Portfolio who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Portfolio are officers of the above organizations.
3 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $84,458,830 and $103,179,041, respectively, for the six months ended June 30, 2017.
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Portfolio at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 204,142,278 | ||
Gross unrealized appreciation | $ | 119,785,732 | ||
Gross unrealized depreciation | (2,655,795 | ) | ||
Net unrealized appreciation | $ | 117,129,937 |
5 Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Portfolio based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Portfolio, it may be unable to borrow some or all of its requested amounts at any particular time. The Portfolio did not have any significant borrowings or allocated fees during the six months ended June 30, 2017.
6 Securities Lending Agreement
The Portfolio has established a securities lending agreement with State Street Bank and Trust Company (SSBT) as securities lending agent in which the Portfolio lends portfolio securities to qualified borrowers in exchange for collateral consisting of either cash or securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities in an amount at least equal to the market value of the securities on loan. The market value of securities loaned is determined daily and any additional required collateral is delivered to the Portfolio on the next business day. Cash collateral is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market fund registered under the 1940 Act. The Portfolio earns
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June 30, 2017
Notes to Financial Statements (Unaudited) — continued
interest on the amount invested but it must pay (and at times receive from) the broker a loan rebate fee computed as a varying percentage of the collateral received. For security loans secured by non-cash collateral, the Portfolio earns a negotiated lending fee from the borrower. A portion of the income earned by the Portfolio from its investment of cash collateral, net of rebate fees, and lending fees received is allocated to SSBT for its services as lending agent and the portion allocated to the Portfolio is presented as securities lending income, net on the Statement of Operations. Non-cash collateral is held by the lending agent on behalf of the Portfolio and cannot be sold or re-pledged by the Portfolio; accordingly, such collateral is not reflected in the Statement of Assets and Liabilities.
The Portfolio is subject to possible delay in the recovery of loaned securities. Pursuant to the securities lending agreement, SSBT has provided indemnification to the Portfolio in the event of default by a borrower with respect to a loan. The Portfolio bears the risk of loss with respect to the investment of cash collateral.
At June 30, 2017, the value of the securities loaned and the value of the collateral received, which exceeded the value of the securities loaned, amounted to $23,079,118 and $23,651,843, respectively. Collateral received included cash of $3,203,760 and non-cash U.S. Government securities of $20,448,083. The securities lending transactions have no contractual maturity date and each of the Portfolio and borrower has the option to terminate a loan at any time. The carrying amount of the liability for collateral for securities loaned at June 30, 2017 approximated its fair value. If measured at fair value, such liability would have been considered as Level 2 in the fair value hierarchy (see Note 7) at June 30, 2017.
7 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At June 30, 2017, the hierarchy of inputs used in valuing the Portfolio’s investments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 314,561,247 | * | $ | — | $ | — | $ | 314,561,247 | |||||||
Short-Term Investments | 3,203,760 | 3,507,208 | — | 6,710,968 | ||||||||||||
Total Investments | $ | 317,765,007 | $ | 3,507,208 | $ | — | $ | 321,272,215 |
* | The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments. |
The Portfolio held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
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Eaton Vance
Growth Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio-level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
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Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Growth Portfolio (the “Portfolio”), the portfolio in which Eaton Vance Growth Fund (the “Fund”) invests, with Boston Management and Research (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Portfolio.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement of the Portfolio, the Board evaluated the nature, extent and quality of services provided to the Portfolio by the Adviser.
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by the Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Portfolio. The Board specifically noted that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Portfolio, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Portfolio, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing the Portfolio.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio
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valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2016 for the Fund. The Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Portfolio and by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also received and considered information about the services offered and the fee rates charged by the Adviser to other types of clients with investment objectives and strategies that are substantially similar to and/or managed in a similar investment style as the Fund. In this regard, the Board received information about the differences in the nature and scope of services the Adviser provides to the Fund as compared to other types of clients and the material differences in compliance, reporting and other legal burdens and risks to the Adviser as between the Fund and other types of clients. The Board also considered factors that had an impact on Fund expense ratios relative to comparable funds.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund, to the Portfolio and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their relationships with the Fund and the Portfolio, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Portfolio and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund and the Portfolio, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and the Portfolio increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits
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Growth Fund
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Board of Trustees’ Contract Approval — continued
from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund and the Portfolio, the structure of the advisory fee, which includes breakpoints at several asset levels, will allow the Fund and the Portfolio to continue to benefit from any economies of scale in the future.
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Growth Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Growth Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Officers of Growth Portfolio
Edward J. Perkin
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Growth Fund and Growth Portfolio
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
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Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
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Investment Adviser of Growth Portfolio
Boston Management and Research
Two International Place
Boston, MA 02110
Administrator of Eaton Vance Growth Fund
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7729 6.30.17
Eaton Vance
Large-Cap Value Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Large-Cap Value Fund
Table of Contents
Performance | 2 | |||
Fund Profile | 2 | |||
Endnotes and Additional Disclosures | 3 | |||
Fund Expenses | 4 | |||
Financial Statements | 5 | |||
Board of Trustees’ Contract Approval | 28 | |||
Officers and Trustees | 32 | |||
Important Notices | 33 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Performance1,2
Portfolio Managers Edward J. Perkin, CFA and John D. Crowley
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 09/23/1931 | 09/23/1931 | 4.11 | % | 12.36 | % | 11.62 | % | 4.37 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | –1.88 | 5.88 | 10.31 | 3.76 | ||||||||||||||||||
Class C at NAV | 11/04/1994 | 09/23/1931 | 3.70 | 11.55 | 10.78 | 3.59 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 2.70 | 10.55 | 10.78 | 3.59 | ||||||||||||||||||
Class I at NAV | 12/28/2004 | 09/23/1931 | 4.27 | 12.66 | 11.91 | 4.65 | ||||||||||||||||||
Class R at NAV | 02/18/2004 | 09/23/1931 | 3.99 | 12.12 | 11.34 | 4.11 | ||||||||||||||||||
Class R6 at NAV | 07/01/2014 | 09/23/1931 | 4.32 | 12.76 | 11.96 | 4.67 | ||||||||||||||||||
Russell 1000® Value Index | — | — | 4.66 | % | 15.53 | % | 13.93 | % | 5.56 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | Class R | Class R6 | |||||||||||||||||||
1.06 | % | 1.81 | % | 0.81 | % | 1.31 | % | 0.71 | % |
Fund Profile4
Common Stock Sector Allocation (% of net assets)
Top 10 Holdings (% of net assets)5
JPMorgan Chase & Co. | 4.7 | % | ||
Johnson & Johnson | 3.9 | |||
Wells Fargo & Co. | 3.8 | |||
Verizon Communications, Inc. | 3.2 | |||
Chevron Corp. | 2.8 | |||
NextEra Energy, Inc. | 2.5 | |||
iShares Russell 1000 Value ETF | 2.5 | |||
Philip Morris International, Inc. | 2.5 | |||
Pfizer, Inc. | 2.5 | |||
Chubb, Ltd. | 2.4 | |||
Total | 30.8 | % |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | Russell 1000® Value Index is an unmanaged index of U.S. large-cap value stocks. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class R6 is linked to Class I. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. |
3 | Source: Fund prospectus. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Fund invests in an affiliated investment company (Portfolio) with the same objective(s) and policies as the Fund. References to investments are to the Portfolio’s holdings. |
5 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense Ratio | |||||||||||||
Actual |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,041.10 | $ | 5.31 | 1.05 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,037.00 | $ | 9.09 | 1.80 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,042.70 | $ | 4.05 | 0.80 | % | ||||||||
Class R | $ | 1,000.00 | $ | 1,039.90 | $ | 6.58 | 1.30 | % | ||||||||
Class R6 | $ | 1,000.00 | $ | 1,043.20 | $ | 3.60 | 0.71 | % | ||||||||
Hypothetical |
| |||||||||||||||
(5% return per year before expenses) |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,019.60 | $ | 5.26 | 1.05 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,015.90 | $ | 9.00 | 1.80 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,020.80 | $ | 4.01 | 0.80 | % | ||||||||
Class R | $ | 1,000.00 | $ | 1,018.30 | $ | 6.51 | 1.30 | % | ||||||||
Class R6 | $ | 1,000.00 | $ | 1,021.30 | $ | 3.56 | 0.71 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. The Example reflects the expenses of both the Fund and the Portfolio. |
4 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Investment in Large-Cap Value Portfolio, at value (identified cost, $2,402,286,235) | $ | 2,766,615,640 | ||
Receivable for Fund shares sold | 3,756,131 | |||
Total assets | $ | 2,770,371,771 | ||
Liabilities | ||||
Payable for Fund shares redeemed | $ | 15,750,758 | ||
Payable to affiliates: | ||||
Distribution and service fees | 421,734 | |||
Trustees’ fees | 125 | |||
Accrued expenses | 629,698 | |||
Total liabilities | $ | 16,802,315 | ||
Net Assets | $ | 2,753,569,456 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 2,360,725,596 | ||
Accumulated net realized gain from Portfolio | 26,933,367 | |||
Accumulated undistributed net investment income | 1,581,088 | |||
Net unrealized appreciation from Portfolio | 364,329,405 | |||
Total | $ | 2,753,569,456 | ||
Class A Shares | ||||
Net Assets | $ | 835,261,094 | ||
Shares Outstanding | 44,789,999 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 18.65 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 19.79 | ||
Class C Shares | ||||
Net Assets | $ | 252,914,247 | ||
Shares Outstanding | 13,552,465 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 18.66 | ||
Class I Shares | ||||
Net Assets | $ | 1,486,893,672 | ||
Shares Outstanding | 79,442,942 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 18.72 | ||
Class R Shares | ||||
Net Assets | $ | 91,433,754 | ||
Shares Outstanding | 4,915,899 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 18.60 | ||
Class R6 Shares | ||||
Net Assets | $ | 87,066,689 | ||
Shares Outstanding | 4,648,412 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 18.73 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
* | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
5 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends allocated from Portfolio | $ | 33,391,236 | ||
Securities lending income allocated from Portfolio, net | 209,023 | |||
Expenses allocated from Portfolio | (9,250,567 | ) | ||
Total investment income from Portfolio | $ | 24,349,692 | ||
Expenses | ||||
Distribution and service fees |
| |||
Class A | $ | 1,089,198 | ||
Class C | 1,408,483 | |||
Class R | 242,418 | |||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 30,126 | |||
Transfer and dividend disbursing agent fees | 1,283,789 | |||
Legal and accounting services | 39,207 | |||
Printing and postage | 107,872 | |||
Registration fees | 43,700 | |||
ReFlow liquidity program fees | 513,116 | |||
Miscellaneous | 15,020 | |||
Total expenses | $ | 4,773,179 | ||
Net investment income | $ | 19,576,513 | ||
Realized and Unrealized Gain (Loss) from Portfolio | ||||
Net realized gain (loss) — |
| |||
Investment transactions | $ | 112,025,140 | (1) | |
Foreign currency transactions | 37,207 | |||
Net realized gain | $ | 112,062,347 | ||
Change in unrealized appreciation (depreciation) — |
| |||
Investments | $ | (14,738,029 | ) | |
Foreign currency | 376,373 | |||
Net change in unrealized appreciation (depreciation) | $ | (14,361,656 | ) | |
Net realized and unrealized gain | $ | 97,700,691 | ||
Net increase in net assets from operations | $ | 117,277,204 |
(1) | Includes $40,892,610 of net realized gains from redemptions in-kind. |
6 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 19,576,513 | $ | 51,180,831 | ||||
Net realized gain from investment and foreign currency transactions | 112,062,347 | (1) | 69,381,024 | (2) | ||||
Net change in unrealized appreciation (depreciation) from investments and foreign currency | (14,361,656 | ) | 140,159,424 | |||||
Net increase in net assets from operations | $ | 117,277,204 | $ | 260,721,279 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (5,675,683 | ) | $ | (14,039,899 | ) | ||
Class C | (714,220 | ) | (2,096,597 | ) | ||||
Class I | (11,571,842 | ) | (25,584,674 | ) | ||||
Class R | (504,396 | ) | (1,188,547 | ) | ||||
Class R6 | (559,450 | ) | (596,999 | ) | ||||
Total distributions to shareholders | $ | (19,025,591 | ) | $ | (43,506,716 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 42,529,604 | $ | 72,339,670 | ||||
Class C | 5,914,946 | 14,124,941 | ||||||
Class I | 391,300,459 | 799,973,948 | ||||||
Class R | 6,578,790 | 15,317,597 | ||||||
Class R6 | 51,380,793 | 8,904,007 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 5,185,055 | 12,912,252 | ||||||
Class C | 580,648 | 1,618,286 | ||||||
Class I | 10,155,981 | 22,038,265 | ||||||
Class R | 466,555 | 1,113,814 | ||||||
Class R6 | 559,078 | 596,255 | ||||||
Cost of shares redeemed | ||||||||
Class A | (185,854,430 | ) | (341,314,035 | ) | ||||
Class C | (63,867,765 | ) | (83,615,163 | ) | ||||
Class I | (521,970,711 | ) | (1,045,866,362 | ) | ||||
Class R | (19,969,497 | ) | (32,211,966 | ) | ||||
Class R6 | (4,889,190 | ) | (6,203,845 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (281,899,684 | ) | $ | (560,272,336 | ) | ||
Net decrease in net assets | $ | (183,648,071 | ) | $ | (343,057,773 | ) | ||
Net Assets | ||||||||
At beginning of period | $ | 2,937,217,527 | $ | 3,280,275,300 | ||||
At end of period | $ | 2,753,569,456 | $ | 2,937,217,527 | ||||
Accumulated undistributed net investment income included in net assets |
| |||||||
At end of period | $ | 1,581,088 | $ | 1,030,166 |
(1) | Includes $40,892,610 of net realized gains from redemptions in-kind. |
(2) | Includes $98,751,998 of net realized gains from redemptions in-kind. |
7 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 18.030 | $ | 16.690 | $ | 18.740 | $ | 23.910 | $ | 19.500 | $ | 17.130 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.122 | $ | 0.279 | $ | 0.246 | $ | 0.317 | $ | 0.267 | $ | 0.289 | ||||||||||||
Net realized and unrealized gain (loss) | 0.618 | 1.301 | (0.456 | ) | 2.001 | 5.402 | 2.399 | |||||||||||||||||
Total income (loss) from operations | $ | 0.740 | $ | 1.580 | $ | (0.210 | ) | $ | 2.318 | $ | 5.669 | $ | 2.688 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.120 | ) | $ | (0.240 | ) | $ | (0.260 | ) | $ | (0.320 | ) | $ | (0.266 | ) | $ | (0.318 | ) | ||||||
From net realized gain | — | — | (1.580 | ) | (7.168 | ) | (0.993 | ) | — | |||||||||||||||
Total distributions | $ | (0.120 | ) | $ | (0.240 | ) | $ | (1.840 | ) | $ | (7.488 | ) | $ | (1.259 | ) | $ | (0.318 | ) | ||||||
Net asset value — End of period | $ | 18.650 | $ | 18.030 | $ | 16.690 | $ | 18.740 | $ | 23.910 | $ | 19.500 | ||||||||||||
Total Return(2) | 4.11 | %(3) | 9.56 | % | (1.08 | )% | 10.96 | % | 29.34 | % | 15.77 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 835,261 | $ | 942,192 | $ | 1,127,754 | $ | 1,486,142 | $ | 2,912,022 | $ | 3,327,753 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.05 | %(6) | 1.06 | % | 1.05 | % | 1.01 | % | 0.99 | % | 0.99 | % | ||||||||||||
Net investment income | 1.33 | %(6) | 1.67 | % | 1.33 | % | 1.29 | % | 1.20 | % | 1.56 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 46 | %(3) | 94 | % | 98 | % | 75 | % | 49 | % | 31 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(6) | Annualized. |
8 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 18.040 | $ | 16.700 | $ | 18.750 | $ | 23.920 | $ | 19.510 | $ | 17.130 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.053 | $ | 0.154 | $ | 0.107 | $ | 0.132 | $ | 0.100 | $ | 0.156 | ||||||||||||
Net realized and unrealized gain (loss) | 0.615 | 1.298 | (0.453 | ) | 1.999 | 5.401 | 2.400 | |||||||||||||||||
Total income (loss) from operations | $ | 0.668 | $ | 1.452 | $ | (0.346 | ) | $ | 2.131 | $ | 5.501 | $ | 2.556 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.048 | ) | $ | (0.112 | ) | $ | (0.124 | ) | $ | (0.133 | ) | $ | (0.098 | ) | $ | (0.176 | ) | ||||||
From net realized gain | — | — | (1.580 | ) | (7.168 | ) | (0.993 | ) | — | |||||||||||||||
Total distributions | $ | (0.048 | ) | $ | (0.112 | ) | $ | (1.704 | ) | $ | (7.301 | ) | $ | (1.091 | ) | $ | (0.176 | ) | ||||||
Net asset value — End of period | $ | 18.660 | $ | 18.040 | $ | 16.700 | $ | 18.750 | $ | 23.920 | $ | 19.510 | ||||||||||||
Total Return(2) | 3.70 | %(3) | 8.74 | % | (1.82 | )% | 10.12 | % | 28.37 | % | 14.96 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 252,914 | $ | 300,456 | $ | 345,531 | $ | 419,453 | $ | 454,829 | $ | 420,095 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.80 | %(6) | 1.81 | % | 1.80 | % | 1.76 | % | 1.74 | % | 1.74 | % | ||||||||||||
Net investment income | 0.58 | %(6) | 0.92 | % | 0.58 | % | 0.54 | % | 0.45 | % | 0.83 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 46 | %(3) | 94 | % | 98 | % | 75 | % | 49 | % | 31 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(6) | Annualized. |
9 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 18.090 | $ | 16.750 | $ | 18.800 | $ | 23.970 | $ | 19.550 | $ | 17.170 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.145 | $ | 0.323 | $ | 0.293 | $ | 0.383 | $ | 0.326 | $ | 0.340 | ||||||||||||
Net realized and unrealized gain (loss) | 0.628 | 1.300 | (0.458 | ) | 2.002 | 5.411 | 2.408 | |||||||||||||||||
Total income (loss) from operations | $ | 0.773 | $ | 1.623 | $ | (0.165 | ) | $ | 2.385 | $ | 5.737 | $ | 2.748 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.143 | ) | $ | (0.283 | ) | $ | (0.305 | ) | $ | (0.387 | ) | $ | (0.324 | ) | $ | (0.368 | ) | ||||||
From net realized gain | — | — | (1.580 | ) | (7.168 | ) | (0.993 | ) | — | |||||||||||||||
Total distributions | $ | (0.143 | ) | $ | (0.283 | ) | $ | (1.885 | ) | $ | (7.555 | ) | $ | (1.317 | ) | $ | (0.368 | ) | ||||||
Net asset value — End of period | $ | 18.720 | $ | 18.090 | $ | 16.750 | $ | 18.800 | $ | 23.970 | $ | 19.550 | ||||||||||||
Total Return(2) | 4.27 | %(3) | 9.80 | % | (0.83 | )% | 11.22 | % | 29.65 | % | 16.10 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 1,486,894 | $ | 1,555,075 | $ | 1,664,998 | $ | 1,969,601 | $ | 2,892,359 | $ | 3,186,538 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 0.80 | %(6) | 0.81 | % | 0.80 | % | 0.76 | % | 0.74 | % | 0.74 | % | ||||||||||||
Net investment income | 1.57 | %(6) | 1.92 | % | 1.58 | % | 1.55 | % | 1.46 | % | 1.82 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 46 | %(3) | 94 | % | 98 | % | 75 | % | 49 | % | 31 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | Not annualized. |
(4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(6) | Annualized. |
10 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Financial Highlights — continued
Class R | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 17.980 | $ | 16.650 | $ | 18.690 | $ | 23.870 | $ | 19.470 | $ | 17.100 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.098 | $ | 0.237 | $ | 0.199 | $ | 0.255 | $ | 0.212 | $ | 0.245 | ||||||||||||
Net realized and unrealized gain (loss) | 0.619 | 1.292 | (0.445 | ) | 1.993 | 5.391 | 2.395 | |||||||||||||||||
Total income (loss) from operations | $ | 0.717 | $ | 1.529 | $ | (0.246 | ) | $ | 2.248 | $ | 5.603 | $ | 2.640 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.097 | ) | $ | (0.199 | ) | $ | (0.214 | ) | $ | (0.260 | ) | $ | (0.210 | ) | $ | (0.270 | ) | ||||||
From net realized gain | — | — | (1.580 | ) | (7.168 | ) | (0.993 | ) | — | |||||||||||||||
Total distributions | $ | (0.097 | ) | $ | (0.199 | ) | $ | (1.794 | ) | $ | (7.428 | ) | $ | (1.203 | ) | $ | (0.270 | ) | ||||||
Net asset value — End of period | $ | 18.600 | $ | 17.980 | $ | 16.650 | $ | 18.690 | $ | 23.870 | $ | 19.470 | ||||||||||||
Total Return(2) | 3.99 | %(3) | 9.26 | % | (1.33 | )% | 10.71 | % | 29.01 | % | 15.51 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 91,434 | $ | 101,010 | $ | 109,468 | $ | 151,329 | $ | 162,242 | $ | 181,565 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.30 | %(6) | 1.31 | % | 1.30 | % | 1.26 | % | 1.24 | % | 1.24 | % | ||||||||||||
Net investment income | 1.07 | %(6) | 1.42 | % | 1.08 | % | 1.04 | % | 0.95 | % | 1.32 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 46 | %(3) | 94 | % | 98 | % | 75 | % | 49 | % | 31 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | Not annualized. |
(4) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(6) | Annualized. |
11 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Financial Highlights — continued
Class R6 | ||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | Period Ended December 31, 2014(1) | ||||||||||||||
2016 | 2015 | |||||||||||||||
Net asset value — Beginning of period | $ | 18.100 | $ | 16.760 | $ | 18.810 | $ | 25.890 | ||||||||
Income (Loss) From Operations | ||||||||||||||||
Net investment income(2) | $ | 0.153 | $ | 0.339 | $ | 0.321 | $ | 0.194 | ||||||||
Net realized and unrealized gain (loss) | 0.628 | 1.301 | (0.469 | ) | 0.089 | |||||||||||
Total income (loss) from operations | $ | 0.781 | $ | 1.640 | $ | (0.148 | ) | $ | 0.283 | |||||||
Less Distributions | ||||||||||||||||
From net investment income | $ | (0.151 | ) | $ | (0.300 | ) | $ | (0.322 | ) | $ | (0.195 | ) | ||||
From net realized gain | — | — | (1.580 | ) | (7.168 | ) | ||||||||||
Total distributions | $ | (0.151 | ) | $ | (0.300 | ) | $ | (1.902 | ) | $ | (7.363 | ) | ||||
Net asset value — End of period | $ | 18.730 | $ | 18.100 | $ | 16.760 | $ | 18.810 | ||||||||
Total Return(3) | 4.32 | %(4) | 9.90 | % | (0.79 | )% | 2.28 | %(4) | ||||||||
Ratios/Supplemental Data | ||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 87,067 | $ | 38,485 | $ | 32,525 | $ | 1 | ||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||
Expenses(6) | 0.71 | %(7) | 0.71 | % | 0.71 | % | 0.65 | %(7) | ||||||||
Net investment income | 1.66 | %(7) | 2.01 | % | 1.73 | % | 1.54 | %(7) | ||||||||
Portfolio Turnover of the Portfolio | 46 | %(4) | 94 | % | 98 | % | 75 | %(8) |
(1) | For the period from the commencement of operations, July 1, 2014, to December 31, 2014. |
(2) | Computed using average shares outstanding. |
(3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(4) | Not annualized. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
(8) | For the Portfolio’s year ended December 31, 2014. |
12 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Large-Cap Value Fund (the Fund) is a diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund offers five classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I, Class R and Class R6 shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Sub-accounting, recordkeeping and similar administrative fees payable to financial intermediaries, which are a component of transfer and dividend disbursing agent fees on the Statement of Operations, are not allocated to Class R6 shares. Each class of shares differs in its distribution plan and certain other class-specific expenses. The Fund invests all of its investable assets in interests in Large-Cap Value Portfolio (the Portfolio), a Massachusetts business trust, having the same investment objective and policies as the Fund. The value of the Fund’s investment in the Portfolio reflects the Fund’s proportionate interest in the net assets of the Portfolio (99.9% at June 30, 2017). The performance of the Fund is directly affected by the performance of the Portfolio. The financial statements of the Portfolio, including the portfolio of investments, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio’s Notes to Financial Statements, which are included elsewhere in this report.
B Income — The Fund’s net investment income or loss consists of the Fund’s pro-rata share of the net investment income or loss of the Portfolio, less all actual and accrued expenses of the Fund.
C Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
D Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
E Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
F Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
G Other — Investment transactions are accounted for on a trade date basis.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders and Income Tax Information
It is the present policy of the Fund to make quarterly distributions of all or substantially all of its net investment income and to distribute annually all or substantially all of its net realized capital gains. Distributions to shareholders are recorded on the ex-dividend date. Distributions are declared separately for
13 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
At December 31, 2016, the Fund, for federal income tax purposes, had deferred capital losses of $52,442,242 which would reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus would reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the first day of the Fund’s next taxable year and retain the same short-term or long-term character as when originally deferred. Of the deferred capital losses at December 31, 2016, $52,442,242 are short-term.
3 Transactions with Affiliates
Eaton Vance Management (EVM) serves as the administrator of the Fund, but receives no compensation. The Portfolio has engaged Boston Management and Research (BMR), a subsidiary of EVM, to render investment advisory services. See Note 2 of the Portfolio’s Notes to Financial Statements which are included elsewhere in this report.
EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $39,915 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $11,441 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A, Class C and Class R shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee. Certain officers and Trustees of the Fund and the Portfolio are officers of the above organizations.
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $1,089,198 for Class A shares.
The Fund also has in effect distribution plans for Class C shares (Class C Plan) and Class R shares (Class R Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class C shares for providing ongoing distribution services and facilities to the Fund. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $1,056,362 for Class C shares.
The Class R Plan requires the Fund to pay EVD an amount up to 0.50% per annum of its average daily net assets attributable to Class R shares for providing ongoing distribution services and facilities to the Fund. The Trustees of the Trust have currently limited Class R distribution payments to 0.25% per annum of the average daily net assets attributable to Class R shares. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $121,209 for Class R shares.
Pursuant to the Class C and Class R Plans, the Fund also makes payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended June 30, 2017 amounted to $352,121 and $121,209 for Class C and Class R shares, respectively.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is imposed on redemptions of Class C shares made within one year of purchase. Class A shares may be subject to a 1% CDSC if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six months ended June 30, 2017, the Fund was informed that EVD received approximately $1,000 and $3,000 of CDSCs paid by Class A and Class C shareholders, respectively.
14 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
6 Investment Transactions
For the six months ended June 30, 2017, increases and decreases in the Fund’s investment in the Portfolio aggregated $2,909,023 and $307,459,476, respectively. Decreases in the Fund’s investment in the Portfolio include distributions of securities as the result of redemptions in-kind of $255,642,539.
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Sales and redemptions of Class I shares include shares purchased and redeemed in connection with the ReFlow liquidity program, a program designed to provide an alternative liquidity source for mutual funds experiencing net redemptions of their shares. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 2,305,557 | 4,341,764 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 278,791 | 762,382 | ||||||
Redemptions | (10,065,715 | ) | (20,399,369 | ) | ||||
Net decrease | (7,481,367 | ) | (15,295,223 | ) | ||||
Class C | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 321,107 | 851,053 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 31,192 | 95,824 | ||||||
Redemptions | (3,459,083 | ) | (4,977,084 | ) | ||||
Net decrease | (3,106,784 | ) | (4,030,207 | ) | ||||
Class I | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 21,121,958 | 47,580,028 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 544,126 | 1,294,081 | ||||||
Redemptions | (28,186,147 | ) | (62,311,167 | ) | ||||
Net decrease | (6,520,063 | ) | (13,437,058 | ) | ||||
Class R | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 357,540 | 915,141 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 25,147 | 65,906 | ||||||
Redemptions | (1,085,302 | ) | (1,937,523 | ) | ||||
Net decrease | (702,615 | ) | (956,476 | ) |
15 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
Class R6 | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 2,756,003 | 524,365 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 29,927 | 34,900 | ||||||
Redemptions | (263,365 | ) | (373,764 | ) | ||||
Net increase | 2,522,565 | 185,501 |
16 |
Large-Cap Value Portfolio
June 30, 2017
Portfolio of Investments (Unaudited)
Common Stocks — 94.9% | ||||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 2.1% | ||||||||
United Technologies Corp. | 478,786 | $ | 58,464,558 | |||||
$ | 58,464,558 | |||||||
Air Freight & Logistics — 2.2% | ||||||||
C.H. Robinson Worldwide, Inc.(1) | 889,395 | $ | 61,083,649 | |||||
$ | 61,083,649 | |||||||
Auto Components — 1.5% | ||||||||
Goodyear Tire & Rubber Co. (The) | 1,211,450 | $ | 42,352,292 | |||||
$ | 42,352,292 | |||||||
Banks — 13.3% | ||||||||
Bank of America Corp. | 1,176,105 | $ | 28,532,307 | |||||
Great Western Bancorp, Inc. | 502,530 | 20,508,249 | ||||||
JPMorgan Chase & Co. | 1,411,241 | 128,987,428 | ||||||
KeyCorp | 1,528,850 | 28,650,649 | ||||||
U.S. Bancorp | 1,047,664 | 54,394,715 | ||||||
Wells Fargo & Co. | 1,909,481 | 105,804,342 | ||||||
$ | 366,877,690 | |||||||
Capital Markets — 4.7% | ||||||||
Charles Schwab Corp. (The)(1) | 543,148 | $ | 23,333,638 | |||||
Credit Suisse Group AG | 2,943,737 | 42,834,290 | ||||||
E*TRADE Financial Corp.(2) | 822,674 | 31,286,292 | ||||||
Goldman Sachs Group, Inc. (The) | 147,848 | 32,807,471 | ||||||
$ | 130,261,691 | |||||||
Containers & Packaging — 1.0% | ||||||||
International Paper Co.(1) | 459,967 | $ | 26,038,732 | |||||
$ | 26,038,732 | |||||||
Diversified Telecommunication Services — 3.2% | ||||||||
Verizon Communications, Inc. | 1,961,737 | $ | 87,611,174 | |||||
$ | 87,611,174 | |||||||
Electric Utilities — 2.5% | ||||||||
NextEra Energy, Inc. | 499,841 | $ | 70,042,719 | |||||
$ | 70,042,719 | |||||||
Energy Equipment & Services — 2.0% | ||||||||
Halliburton Co. | 904,149 | $ | 38,616,204 | |||||
Oceaneering International, Inc. | 727,749 | 16,621,787 | ||||||
$ | 55,237,991 | |||||||
Security | Shares | Value | ||||||
Equity Real Estate Investment Trusts (REITs) — 5.9% |
| |||||||
DDR Corp. | 2,194,349 | $ | 19,902,745 | |||||
Equity Residential | 598,397 | 39,392,475 | ||||||
Public Storage | 188,015 | 39,206,768 | ||||||
Simon Property Group, Inc. | 400,318 | 64,755,440 | ||||||
$ | 163,257,428 | |||||||
Food Products — 3.5% | ||||||||
McCormick & Co., Inc.(1) | 278,436 | $ | 27,150,295 | |||||
Mondelez International, Inc., Class A | 1,275,548 | 55,090,918 | ||||||
TreeHouse Foods, Inc.(1)(2) | 186,077 | 15,200,630 | ||||||
$ | 97,441,843 | |||||||
Health Care Equipment & Supplies — 2.3% | ||||||||
Boston Scientific Corp.(2) | 1,048,359 | $ | 29,060,511 | |||||
Zimmer Biomet Holdings, Inc. | 275,069 | 35,318,860 | ||||||
$ | 64,379,371 | |||||||
Health Care Providers & Services — 1.5% | ||||||||
Aetna, Inc. | 271,135 | $ | 41,166,427 | |||||
$ | 41,166,427 | |||||||
Household Products — 1.3% | ||||||||
Colgate-Palmolive Co.(1) | 475,250 | $ | 35,230,283 | |||||
$ | 35,230,283 | |||||||
Industrial Conglomerates — 0.7% | ||||||||
General Electric Co. | 727,087 | $ | 19,638,620 | |||||
$ | 19,638,620 | |||||||
Insurance — 5.5% | ||||||||
Alleghany Corp.(2) | 60,279 | $ | 35,853,949 | |||||
American Financial Group, Inc. | 152,363 | 15,140,311 | ||||||
Chubb, Ltd. | 465,399 | 67,659,707 | ||||||
WR Berkley Corp.(1) | 463,789 | 32,080,285 | ||||||
$ | 150,734,252 | |||||||
Internet Software & Services — 2.8% | ||||||||
Alphabet, Inc., Class C(2) | 44,918 | $ | 40,818,334 | |||||
eBay, Inc.(2) | 1,056,183 | 36,881,911 | ||||||
$ | 77,700,245 | |||||||
IT Services — 1.0% | ||||||||
Leidos Holdings, Inc. | 508,564 | $ | 26,287,673 | |||||
$ | 26,287,673 | |||||||
17 | See Notes to Financial Statements. |
Large-Cap Value Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Leisure Products — 0.6% |
| |||||||
Mattel, Inc. | 732,393 | $ | 15,768,421 | |||||
$ | 15,768,421 | |||||||
Life Sciences Tools & Services — 0.7% | ||||||||
Thermo Fisher Scientific, Inc. | 115,680 | $ | 20,182,690 | |||||
$ | 20,182,690 | |||||||
Machinery — 1.5% | ||||||||
Caterpillar, Inc.(1) | 394,728 | $ | 42,417,471 | |||||
$ | 42,417,471 | |||||||
Multi-Utilities — 3.0% | ||||||||
CMS Energy Corp. | 991,821 | $ | 45,871,721 | |||||
Sempra Energy(1) | 331,377 | 37,362,757 | ||||||
$ | 83,234,478 | |||||||
Oil, Gas & Consumable Fuels — 9.1% | ||||||||
Chevron Corp. | 736,762 | $ | 76,866,380 | |||||
ConocoPhillips | 1,376,091 | 60,492,960 | ||||||
EOG Resources, Inc. | 468,212 | 42,382,550 | ||||||
Exxon Mobil Corp. | 201,420 | 16,260,637 | ||||||
Phillips 66 | 300,418 | 24,841,565 | ||||||
Pioneer Natural Resources Co.(1) | 189,730 | 30,277,113 | ||||||
$ | 251,121,205 | |||||||
Personal Products — 1.4% | ||||||||
Estee Lauder Cos., Inc. (The), Class A(1) | 413,044 | $ | 39,643,963 | |||||
$ | 39,643,963 | |||||||
Pharmaceuticals — 10.6% | ||||||||
Allergan PLC(1) | 264,724 | $ | 64,351,757 | |||||
Eli Lilly & Co. | 480,754 | 39,566,054 | ||||||
Johnson & Johnson | 817,759 | 108,181,338 | ||||||
Pfizer, Inc. | 2,025,672 | 68,042,323 | ||||||
Zoetis, Inc. | 215,469 | 13,440,956 | ||||||
$ | 293,582,428 | |||||||
Road & Rail — 1.9% | ||||||||
CSX Corp. | 965,272 | $ | 52,665,240 | |||||
$ | 52,665,240 | |||||||
Semiconductors & Semiconductor Equipment — 2.4% |
| |||||||
Intel Corp.(1) | 1,578,881 | $ | 53,271,445 | |||||
NXP Semiconductors NV(2) | 112,640 | 12,328,448 | ||||||
$ | 65,599,893 | |||||||
Security | Shares | Value | ||||||
Specialty Retail — 0.9% |
| |||||||
Home Depot, Inc. (The) | 166,171 | $ | 25,490,631 | |||||
$ | 25,490,631 | |||||||
Technology Hardware, Storage & Peripherals — 0.7% |
| |||||||
Apple, Inc. | 141,548 | $ | 20,385,743 | |||||
$ | 20,385,743 | |||||||
Textiles, Apparel & Luxury Goods — 1.9% |
| |||||||
Lululemon Athletica, Inc.(2) | 520,021 | $ | 31,029,653 | |||||
VF Corp.(1) | 381,650 | 21,983,040 | ||||||
$ | 53,012,693 | |||||||
Tobacco — 3.2% | ||||||||
Altria Group, Inc. | 273,355 | $ | 20,356,747 | |||||
Philip Morris International, Inc. | 588,793 | 69,153,738 | ||||||
$ | 89,510,485 | |||||||
Total Common Stocks |
| $ | 2,626,421,979 | |||||
Exchange-Traded Funds — 2.5% | ||||||||
Security | Shares | Value | ||||||
Equity Funds — 2.5% |
| |||||||
iShares Russell 1000 Value ETF | 594,015 | $ | 69,161,166 | |||||
Total Exchange-Traded Funds |
| $ | 69,161,166 | |||||
Short-Term Investments — 1.8% | ||||||||
Description | Units/Shares | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 1.20%(3) | 36,342,057 | $ | 36,349,325 | |||||
State Street Navigator Securities Lending Government Money Market Portfolio(4) | 13,677,278 | 13,677,278 | ||||||
Total Short-Term Investments |
| $ | 50,026,603 | |||||
Total Investments — 99.2% |
| $ | 2,745,609,748 | |||||
Other Assets, Less Liabilities — 0.8% |
| $ | 21,005,927 | |||||
Net Assets — 100.0% |
| $ | 2,766,615,675 | |||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
18 | See Notes to Financial Statements. |
Large-Cap Value Portfolio
June 30, 2017
Portfolio of Investments (Unaudited) — continued
(1) | All or a portion of this security was on loan at June 30, 2017. |
(2) | Non-income producing security. |
(3) | Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2017. |
(4) | Represents investment of cash collateral received in connection with securities lending. |
19 | See Notes to Financial Statements. |
Large-Cap Value Portfolio
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Unaffiliated investments, at value including $210,405,360 of securities on loan (identified cost, $2,340,329,890) | $ | 2,709,260,423 | ||
Affiliated investment, at value (identified cost, $36,350,562) | 36,349,325 | |||
Dividends receivable | 2,815,470 | |||
Dividends receivable from affiliated investment | 25,781 | |||
Receivable for investments sold | 109,152,812 | |||
Securities lending income receivable | 27,455 | |||
Tax reclaims receivable | 7,361,126 | |||
Total assets | $ | 2,864,992,392 | ||
Liabilities | ||||
Collateral for securities loaned | $ | 13,677,278 | ||
Payable for investments purchased | 83,038,566 | |||
Due to custodian — foreign currency, at value (identified cost, $140) | 142 | |||
Payable to affiliates: | ||||
Investment adviser fee | 1,427,705 | |||
Trustees’ fees | 25,375 | |||
Accrued expenses | 207,651 | |||
Total liabilities | $ | 98,376,717 | ||
Net Assets applicable to investors’ interest in Portfolio | $ | 2,766,615,675 | ||
Sources of Net Assets | ||||
Investors’ capital | $ | 2,397,472,007 | ||
Net unrealized appreciation | 369,143,668 | |||
Total | $ | 2,766,615,675 |
20 | See Notes to Financial Statements. |
Large-Cap Value Portfolio
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends | $ | 33,236,356 | ||
Dividends from affiliated investment | 154,880 | |||
Securities lending income, net | 209,023 | |||
Total investment income | $ | 33,600,259 | ||
Expenses | ||||
Investment adviser fee | $ | 8,825,751 | ||
Trustees’ fees and expenses | 59,125 | |||
Custodian fee | 263,772 | |||
Legal and accounting services | 46,443 | |||
Miscellaneous | 55,476 | |||
Total expenses | $ | 9,250,567 | ||
Net investment income | $ | 24,349,692 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 112,027,566 | (1) | |
Investment transactions — affiliated investment | (2,426 | ) | ||
Foreign currency transactions | 37,207 | |||
Net realized gain | $ | 112,062,347 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (14,739,741 | ) | |
Investments — affiliated investment | 1,712 | |||
Foreign currency | 376,373 | |||
Net change in unrealized appreciation (depreciation) | $ | (14,361,656 | ) | |
Net realized and unrealized gain | $ | 97,700,691 | ||
Net increase in net assets from operations | $ | 122,050,383 |
(1) | Includes $40,892,610 of net realized gains from redemptions in-kind. |
21 | See Notes to Financial Statements. |
Large-Cap Value Portfolio
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 24,349,692 | $ | 62,070,651 | ||||
Net realized gain from investment and foreign currency transactions | 112,062,347 | (1) | 69,381,024 | (2) | ||||
Net change in unrealized appreciation (depreciation) from investments and foreign currency | (14,361,656 | ) | 140,159,426 | |||||
Net increase in net assets from operations | $ | 122,050,383 | $ | 271,611,101 | ||||
Capital transactions — | ||||||||
Contributions | $ | 2,909,023 | $ | 26,154,090 | ||||
Withdrawals | (307,459,476 | ) | (650,945,387 | ) | ||||
Net decrease in net assets from capital transactions | $ | (304,550,453 | ) | $ | (624,791,297 | ) | ||
Net decrease in net assets | $ | (182,500,070 | ) | $ | (353,180,196 | ) | ||
Net Assets | ||||||||
At beginning of period | $ | 2,949,115,745 | $ | 3,302,295,941 | ||||
At end of period | $ | 2,766,615,675 | $ | 2,949,115,745 |
(1) | Includes $40,892,610 of net realized gains from redemptions in-kind. |
(2) | Includes $98,751,999 of net realized gains from redemptions in-kind. |
22 | See Notes to Financial Statements. |
Large-Cap Value Portfolio
June 30, 2017
Financial Highlights
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
Ratios/Supplemental Data | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(1) | 0.65 | %(2) | 0.65 | % | 0.64 | % | 0.63 | % | 0.62 | % | 0.61 | % | ||||||||||||
Net investment income | 1.72 | %(2) | 2.07 | % | 1.73 | % | 1.66 | % | 1.57 | % | 1.93 | % | ||||||||||||
Portfolio Turnover | 46 | %(3) | 94 | % | 98 | % | 75 | % | 49 | % | 31 | % | ||||||||||||
Total Return | 4.32 | %(3) | 10.01 | % | (0.67 | )% | 11.38 | % | 29.81 | % | 16.20 | % | ||||||||||||
Net assets, end of period (000’s omitted) | $ | 2,766,616 | $ | 2,949,116 | $ | 3,302,296 | $ | 4,132,913 | $ | 6,494,345 | $ | 7,214,818 |
(1) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(2) | Annualized. |
(3) | Not annualized. |
23 | See Notes to Financial Statements. |
Large-Cap Value Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Large-Cap Value Portfolio (the Portfolio) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Portfolio’s investment objective is to seek total return. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At June 30, 2017, Eaton Vance Large-Cap Value Fund held a 99.9% interest in the Portfolio.
The following is a summary of significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Portfolio is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.
Foreign Securities and Currencies. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. When valuing foreign equity securities that meet certain criteria, the Portfolio’s Trustees have approved the use of a fair value service that values such securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities.
Affiliated Fund. The Portfolio may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Other. Investments in registered investment companies (including money market funds) that do not trade on an exchange are valued at the net asset value per share on the valuation day.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Portfolio in a manner that fairly reflects the security’s value, or the amount that the Portfolio might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. 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. Distributions from investment companies are recorded as dividend income, capital gains or return of capital based on the nature of the distribution. 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. In consideration of recent decisions rendered by European courts, the Portfolio has filed additional tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative and judicial proceedings within these countries. Due to the uncertainty as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, no amounts are reflected in the financial statements for such outstanding reclaims. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.
D 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 ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the Portfolio’s investors is a regulated investment company that invests all or substantially all of its 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 losses and any other items of income, gain, loss, deduction or credit.
24 |
Large-Cap Value Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
As of June 30, 2017, the Portfolio had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Portfolio files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E Foreign Currency Translation — Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to changes in foreign currency exchange 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 results from fluctuations in foreign currency exchange rates is not separately disclosed.
F Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications — Under the Portfolio’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Under Massachusetts law, if certain conditions prevail, interestholders in the Portfolio could be deemed to have personal liability for the obligations of the Portfolio. However, the Portfolio’s Declaration of Trust contains an express disclaimer of liability on the part of Portfolio interestholders and the By-laws provide that the Portfolio shall assume the defense on behalf of any Portfolio interestholder. Moreover, the By-laws also provide for indemnification out of Portfolio property of any interestholder held personally liable solely by reason of being or having been an interestholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Portfolio’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of EVM, as compensation for investment advisory services rendered to the Portfolio. Pursuant to the investment advisory agreement and subsequent fee reduction agreements between the Portfolio and BMR, the fee is computed at an annual rate of 0.625% of the Portfolio’s average daily net assets up to $2 billion, 0.60% on net assets of $2 billion but less than $5 billion, 0.575% on net assets of $5 billion but less than $10 billion, 0.555% on net assets of $10 billion but less than $15 billion, 0.54% on net assets of $15 billion but less than $20 billion and at reduced rates on daily net assets of $20 billion and over, and is payable monthly. The fee reductions cannot be terminated or reduced without the approval of a majority vote of the Trustees of the Portfolio who are not interested persons of BMR or the Portfolio and by the vote of a majority of the holders of interest in the Portfolio. For the six months ended June 30, 2017, the Portfolio’s investment adviser fee amounted to $8,825,751 or 0.62% (annualized) of the Portfolio’s average daily net assets. The Portfolio invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund.
Trustees and officers of the Portfolio who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Portfolio out of the investment adviser fee. Trustees of the Portfolio who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Portfolio are officers of the above organizations.
3 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations and in-kind transactions, aggregated $1,286,266,414 and $1,342,198,912, respectively, for the six months ended June 30, 2017. In-kind sales for the six months ended June 30, 2017 aggregated $255,642,539.
25 |
Large-Cap Value Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Portfolio at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 2,383,264,104 | ||
Gross unrealized appreciation | $ | 393,408,116 | ||
Gross unrealized depreciation | (31,062,472 | ) | ||
Net unrealized appreciation | $ | 362,345,644 |
5 Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Portfolio based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Portfolio, it may be unable to borrow some or all of its requested amounts at any particular time. The Portfolio did not have any significant borrowings or allocated fees during the six months ended June 30, 2017.
6 Securities Lending Agreement
The Portfolio has established a securities lending agreement with State Street Bank and Trust Company (SSBT) as securities lending agent in which the Portfolio lends portfolio securities to qualified borrowers in exchange for collateral consisting of either cash or securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities in an amount at least equal to the market value of the securities on loan. The market value of securities loaned is determined daily and any additional required collateral is delivered to the Portfolio on the next business day. Cash collateral is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market fund registered under the 1940 Act. The Portfolio earns interest on the amount invested but it must pay (and at times receive from) the broker a loan rebate fee computed as a varying percentage of the collateral received. For security loans secured by non-cash collateral, the Portfolio earns a negotiated lending fee from the borrower. A portion of the income earned by the Portfolio from its investment of cash collateral, net of rebate fees, and lending fees received is allocated to SSBT for its services as lending agent and the portion allocated to the Portfolio is presented as securities lending income, net on the Statement of Operations. Non-cash collateral is held by the lending agent on behalf of the Portfolio and cannot be sold or re-pledged by the Portfolio; accordingly, such collateral is not reflected in the Statement of Assets and Liabilities.
The Portfolio is subject to possible delay in the recovery of loaned securities. Pursuant to the securities lending agreement, SSBT has provided indemnification to the Portfolio in the event of default by a borrower with respect to a loan. The Portfolio bears the risk of loss with respect to the investment of cash collateral.
At June 30, 2017, the value of the securities loaned (all common stock) and the value of the collateral received, which exceeded the value of the securities loaned, amounted to $210,405,360 and $214,022,035, respectively. Collateral received included cash of $13,677,278 and non-cash U.S. Government securities of $200,344,757. The securities lending transactions have no contractual maturity date and each of the Portfolio and borrower has the option to terminate a loan at any time. The carrying amount of the liability for collateral for securities loaned at June 30, 2017 approximated its fair value. If measured at fair value, such liability would have been considered as Level 2 in the fair value hierarchy (see Note 7) at June 30, 2017.
7 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
26 |
Large-Cap Value Portfolio
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At June 30, 2017, the hierarchy of inputs used in valuing the Portfolio’s investments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | ||||||||||||||||
Consumer Discretionary | $ | 136,624,037 | $ | — | $ | — | $ | 136,624,037 | ||||||||
Consumer Staples | 261,826,574 | — | — | 261,826,574 | ||||||||||||
Energy | 306,359,196 | — | — | 306,359,196 | ||||||||||||
Financials | 605,039,343 | 42,834,290 | — | 647,873,633 | ||||||||||||
Health Care | 419,310,916 | — | — | 419,310,916 | ||||||||||||
Industrials | 234,269,538 | — | — | 234,269,538 | ||||||||||||
Information Technology | 189,973,554 | — | — | 189,973,554 | ||||||||||||
Materials | 26,038,732 | — | — | 26,038,732 | ||||||||||||
Real Estate | 163,257,428 | — | — | 163,257,428 | ||||||||||||
Telecommunication Services | 87,611,174 | — | — | 87,611,174 | ||||||||||||
Utilities | 153,277,197 | — | — | 153,277,197 | ||||||||||||
Total Common Stocks | $ | 2,583,587,689 | $ | 42,834,290 | * | $ | — | $ | 2,626,421,979 | |||||||
Exchange-Traded Funds | $ | 69,161,166 | $ | — | $ | — | $ | 69,161,166 | ||||||||
Short-Term Investments | 13,677,278 | 36,349,325 | — | 50,026,603 | ||||||||||||
Total Investments | $ | 2,666,426,133 | $ | 79,183,615 | $ | — | $ | 2,745,609,748 |
* | Includes foreign equity securities whose values were adjusted to reflect market trading of comparable securities or other correlated instruments that occurred after the close of trading in their applicable foreign markets. |
The Portfolio held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
27 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio-level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
28 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | �� | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Large-Cap Value Portfolio (the “Portfolio”), the portfolio in which Eaton Vance Large-Cap Value Fund (the “Fund”) invests, with Boston Management and Research (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Portfolio.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement of the Portfolio, the Board evaluated the nature, extent and quality of services provided to the Portfolio by the Adviser.
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by the Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Portfolio. The Board specifically noted that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Portfolio, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Portfolio, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing the Portfolio.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio
29 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2016 for the Fund. On the basis of the foregoing and other relevant information provided by the Adviser in response to inquiries from the Contract Review Committee, the Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Portfolio and by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also received and considered information about the services offered and the fee rates charged by the Adviser to other types of clients with investment objectives and strategies that are substantially similar to and/or managed in a similar investment style as the Fund. In this regard, the Board received information about the differences in the nature and scope of services the Adviser provides to the Fund as compared to other types of clients and the material differences in compliance, reporting and other legal burdens and risks to the Adviser as between the Fund and other types of clients. The Board also considered certain Fund specific factors that had an impact on Fund expense ratios relative to comparable funds, as identified by management in response to inquiries from the Contract Review Committee.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund, to the Portfolio and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their relationships with the Fund and the Portfolio, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Portfolio and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
30 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund and the Portfolio, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and the Portfolio increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund and the Portfolio, the structure of the advisory fee, which includes breakpoints at several asset levels, will allow the Fund and the Portfolio to continue to benefit from any economies of scale in the future.
31 |
Eaton Vance
Large-Cap Value Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Large-Cap Value Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Officers of Large-Cap Value Portfolio
Edward J. Perkin
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Large-Cap Value Fund and Large-Cap Value Portfolio
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
32 |
Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
33 |
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Investment Adviser of Large-Cap Value Portfolio
Boston Management and Research
Two International Place
Boston, MA 02110
Administrator of Eaton Vance Large-Cap Value Fund
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7702 6.30.17
Eaton Vance
Real Estate Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Real Estate Fund
Table of Contents
Performance | 2 | |||
Fund Profile | 2 | |||
Endnotes and Additional Disclosures | 3 | |||
Fund Expenses | 4 | |||
Financial Statements | 5 | |||
Board of Trustees’ Contract Approval | 16 | |||
Officers and Trustees | 19 | |||
Important Notices | 20 |
Eaton Vance
Real Estate Fund
June 30, 2017
Performance1,2
Portfolio Manager J. Scott Craig
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 06/09/2010 | 04/28/2006 | 0.81 | % | –2.75 | % | 8.51 | % | 5.98 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | –5.02 | –8.35 | 7.23 | 5.35 | ||||||||||||||||||
Class I at NAV | 04/28/2006 | 04/28/2006 | 0.90 | –2.55 | 8.77 | 6.15 | ||||||||||||||||||
Dow Jones U.S. Select Real Estate Securities Index | — | — | 1.36 | % | –2.43 | % | 8.97 | % | 5.32 | % | ||||||||||||||
S&P 500 Index | — | — | 9.34 | 17.90 | 14.62 | 7.18 | ||||||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class I | ||||||||||||||||||||||
Gross | 1.48 | % | 1.23 | % | ||||||||||||||||||||
Net | 1.25 | 1.00 |
Fund Profile
Sector Allocation (% of net assets)4
Top 10 Holdings (% of net assets)4
|
| |||
Simon Property Group, Inc. | 9.9 | % | ||
Public Storage | 6.6 | |||
Equity Residential | 6.1 | |||
AvalonBay Communities, Inc. | 5.3 | |||
Boston Properties, Inc. | 4.8 | |||
GGP, Inc. | 4.0 | |||
Essex Property Trust, Inc. | 3.5 | |||
ProLogis, Inc. | 3.0 | |||
Mid-America Apartment Communities, Inc. | 3.0 | |||
Welltower, Inc. | 2.9 | |||
Total | 49.1 | % |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Real Estate Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | Dow Jones U.S. Select Real Estate Securities Index is an unmanaged index of publicly traded real estate securities. S&P 500 Index is an unmanaged index of large-cap stocks commonly used as a measure of U.S. stock market performance. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class A is linked to Class I. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. |
3 | Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 4/30/18. Without the reimbursement, performance would have been lower. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Real Estate Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense Ratio | |||||||||||||
Actual |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,008.10 | $ | 6.22 | ** | 1.25 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,009.00 | $ | 4.98 | ** | 1.00 | % | |||||||
Hypothetical | ||||||||||||||||
(5% return per year before expenses) | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.60 | $ | 6.26 | ** | 1.25 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,019.80 | $ | 5.01 | ** | 1.00 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
4 |
Eaton Vance
Real Estate Fund
June 30, 2017
Portfolio of Investments (Unaudited)
Common Stocks — 98.1% | ||||||||
Security | Shares | Value | ||||||
Hotels, Restaurants & Leisure — 2.8% | ||||||||
Hilton Worldwide Holdings, Inc. | 11,603 | $ | 717,646 | |||||
Marriott International, Inc., Class A | 8,304 | 832,974 | ||||||
$ | 1,550,620 | |||||||
Other — 1.2% | ||||||||
CBRE Group, Inc., Class A(1) | 8,780 | $ | 319,592 | |||||
Jones Lang LaSalle, Inc. | 2,639 | 329,875 | ||||||
$ | 649,467 | |||||||
Real Estate Investment Trusts — 94.1% | ||||||||
Security | Shares | Value | ||||||
Diversified, Specialty & Other — 10.4% | ||||||||
CoreSite Realty Corp. | 6,388 | $ | 661,350 | |||||
Cousins Properties, Inc. | 79,540 | 699,156 | ||||||
Digital Realty Trust, Inc. | 8,075 | 912,071 | ||||||
National Retail Properties, Inc. | 22,967 | 898,010 | ||||||
PS Business Parks, Inc. | 3,602 | 476,869 | ||||||
STORE Capital Corp. | 31,289 | 702,438 | ||||||
Vornado Realty Trust | 15,116 | 1,419,392 | ||||||
$ | 5,769,286 | |||||||
Health Care — 7.1% | ||||||||
HCP, Inc. | 28,556 | $ | 912,650 | |||||
Ventas, Inc. | 20,177 | 1,401,898 | ||||||
Welltower, Inc. | 21,238 | 1,589,664 | ||||||
$ | 3,904,212 | |||||||
Hotels & Resorts — 3.6% | ||||||||
DiamondRock Hospitality Co. | 36,280 | $ | 397,266 | |||||
Host Hotels & Resorts, Inc. | 31,804 | 581,059 | ||||||
Park Hotels & Resorts, Inc. | 13,182 | 355,387 | ||||||
Sunstone Hotel Investors, Inc. | 42,067 | 678,120 | ||||||
$ | 2,011,832 | |||||||
Industrial — 7.6% | ||||||||
DCT Industrial Trust, Inc. | 17,548 | $ | 937,765 | |||||
Duke Realty Corp. | 20,612 | 576,106 | ||||||
EastGroup Properties, Inc. | 7,989 | 669,478 | ||||||
First Industrial Realty Trust, Inc. | 12,215 | 349,593 | ||||||
ProLogis, Inc. | 28,228 | 1,655,290 | ||||||
$ | 4,188,232 | |||||||
Security | Shares | Value | ||||||
Malls and Factory Outlets — 14.5% | ||||||||
GGP, Inc. | 93,784 | $ | 2,209,551 | |||||
Simon Property Group, Inc. | 33,917 | 5,486,414 | ||||||
Tanger Factory Outlet Centers, Inc. | 11,925 | 309,811 | ||||||
$ | 8,005,776 | |||||||
Multifamily — 23.2% | ||||||||
American Campus Communities, Inc. | 10,068 | $ | 476,216 | |||||
AvalonBay Communities, Inc. | 15,268 | 2,934,051 | ||||||
Camden Property Trust | 12,635 | 1,080,419 | ||||||
Education Realty Trust, Inc. | 16,585 | 642,669 | ||||||
Equity Residential | 51,543 | 3,393,076 | ||||||
Essex Property Trust, Inc. | 7,489 | 1,926,695 | ||||||
Invitation Homes, Inc. | 34,046 | 736,415 | ||||||
Mid-America Apartment Communities, Inc. | 15,684 | 1,652,780 | ||||||
$ | 12,842,321 | |||||||
Office — 10.3% | ||||||||
Boston Properties, Inc. | 21,404 | $ | 2,633,120 | |||||
Corporate Office Properties Trust | 11,925 | 417,733 | ||||||
Douglas Emmett, Inc. | 8,785 | 335,675 | ||||||
Highwoods Properties, Inc. | 18,561 | 941,228 | ||||||
Hudson Pacific Properties, Inc. | 18,402 | 629,164 | ||||||
Parkway, Inc. | 32,448 | 742,735 | ||||||
$ | 5,699,655 | |||||||
Self Storage — 9.5% | ||||||||
CubeSmart | 35,395 | $ | 850,896 | |||||
Extra Space Storage, Inc. | 9,546 | 744,588 | ||||||
Public Storage | 17,517 | 3,652,820 | ||||||
$ | 5,248,304 | |||||||
Strip Centers — 7.9% | ||||||||
Acadia Realty Trust | 24,113 | $ | 670,342 | |||||
DDR Corp. | 86,753 | 786,850 | ||||||
Federal Realty Investment Trust | 9,403 | 1,188,445 | ||||||
Kimco Realty Corp. | 24,609 | 451,575 | ||||||
Regency Centers Corp. | 19,991 | 1,252,236 | ||||||
$ | 4,349,448 | |||||||
Total Real Estate Investment Trusts |
| $ | 52,019,066 | |||||
Total Common Stocks |
| $ | 54,219,153 | |||||
5 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Short-Term Investments — 2.0% | ||||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 1.20%(2) | 1,065,745 | $ | 1,065,959 | |||||
Total Short-Term Investments |
| $ | 1,065,959 | |||||
Total Investments — 100.1% |
| $ | 55,285,112 | |||||
Other Assets, Less Liabilities — (0.1)% |
| $ | (28,634 | ) | ||||
Net Assets — 100.0% |
| $ | 55,256,478 | |||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
(1) | Non-income producing security. |
(2) | Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2017. |
6 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Unaffiliated investments, at value (identified cost, $47,088,463) | $ | 54,219,153 | ||
Affiliated investment, at value (identified cost, $1,065,995) | 1,065,959 | |||
Dividends receivable | 176,469 | |||
Dividends receivable from affiliated investment | 801 | |||
Receivable for investments sold | 422,514 | |||
Receivable for Fund shares sold | 27,667 | |||
Receivable from affiliate | 6,775 | |||
Total assets | $ | 55,919,338 | ||
Liabilities | ||||
Payable for investments purchased | $ | 437,458 | ||
Payable for Fund shares redeemed | 142,033 | |||
Payable to affiliates: | ||||
Investment adviser fee | 30,197 | |||
Administration fee | 6,969 | |||
Distribution and service fees | 2,705 | |||
Trustees’ fees | 823 | |||
Accrued expenses | 42,675 | |||
Total liabilities | $ | 662,860 | ||
Net Assets | $ | 55,256,478 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 48,784,735 | ||
Accumulated distributions in excess of net realized gain | (653,261 | ) | ||
Accumulated distributions in excess of net investment income | (5,650 | ) | ||
Net unrealized appreciation | 7,130,654 | |||
Total | $ | 55,256,478 | ||
Class A Shares | ||||
Net Assets | $ | 13,054,858 | ||
Shares Outstanding | 955,263 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 13.67 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 14.50 | ||
Class I Shares | ||||
Net Assets | $ | 42,201,620 | ||
Shares Outstanding | 3,088,554 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 13.66 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
7 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends | $ | 912,271 | ||
Dividends from affiliated investment | 4,765 | |||
Total investment income | $ | 917,036 | ||
Expenses | ||||
Investment adviser fee | $ | 170,952 | ||
Administration fee | 39,450 | |||
Distribution and service fees | ||||
Class A | 20,180 | |||
Trustees’ fees and expenses | 1,710 | |||
Custodian fee | 17,709 | |||
Transfer and dividend disbursing agent fees | 23,508 | |||
Legal and accounting services | 20,700 | |||
Printing and postage | 7,861 | |||
Registration fees | 16,571 | |||
Miscellaneous | 7,001 | |||
Total expenses | $ | 325,642 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 42,433 | ||
Total expense reductions | $ | 42,433 | ||
Net expenses | $ | 283,209 | ||
Net investment income | $ | 633,827 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | (126,879 | ) | |
Investment transactions — affiliated investment | 84 | |||
Net realized loss | $ | (126,795 | ) | |
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (48,204 | ) | |
Investments — affiliated investment | 7 | |||
Net change in unrealized appreciation (depreciation) | $ | (48,197 | ) | |
Net realized and unrealized loss | $ | (174,992 | ) | |
Net increase in net assets from operations | $ | 458,835 |
8 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 633,827 | $ | 568,240 | ||||
Net realized gain (loss) from investment transactions and capital gain distributions received | (126,795 | ) | 1,764,854 | |||||
Net change in unrealized appreciation (depreciation) from investments | (48,197 | ) | (1,014,693 | ) | ||||
Net increase in net assets from operations | $ | 458,835 | $ | 1,318,401 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (133,873 | ) | $ | (262,599 | ) | ||
Class I | (505,604 | ) | (445,914 | ) | ||||
From net realized gain | ||||||||
Class A | — | (800,351 | ) | |||||
Class I | — | (1,034,112 | ) | |||||
Total distributions to shareholders | $ | (639,477 | ) | $ | (2,542,976 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 2,421,819 | $ | 15,088,652 | ||||
Class I | 24,120,864 | 20,332,240 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 130,830 | 1,053,230 | ||||||
Class I | 384,362 | 1,418,262 | ||||||
Cost of shares redeemed | ||||||||
Class A | (10,272,679 | ) | (16,190,741 | ) | ||||
Class I | (8,356,827 | ) | (12,392,144 | ) | ||||
Net increase in net assets from Fund share transactions | $ | 8,428,369 | $ | 9,309,499 | ||||
Net increase in net assets | $ | 8,247,727 | $ | 8,084,924 | ||||
Net Assets | ||||||||
At beginning of period | $ | 47,008,751 | $ | 38,923,827 | ||||
At end of period | $ | 55,256,478 | $ | 47,008,751 | ||||
Accumulated distributions in excess of net investment income included in net assets |
| |||||||
At end of period | $ | (5,650 | ) | $ | — |
9 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.700 | $ | 13.790 | $ | 14.030 | $ | 11.090 | $ | 11.300 | $ | 9.960 | ||||||||||||
Income (Loss) From Operations | �� | |||||||||||||||||||||||
Net investment income(1) | $ | 0.130 | $ | 0.158 | $ | 0.192 | $ | 0.165 | $ | 0.123 | $ | 0.121 | ||||||||||||
Net realized and unrealized gain (loss) | (0.020 | ) | 0.518 | 0.660 | 3.253 | (0.072 | ) | 1.423 | ||||||||||||||||
Total income from operations | $ | 0.110 | $ | 0.676 | $ | 0.852 | $ | 3.418 | $ | 0.051 | $ | 1.544 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.140 | ) | $ | (0.226 | ) | $ | (0.227 | ) | $ | (0.264 | ) | $ | (0.117 | ) | $ | (0.131 | ) | ||||||
From net realized gain | — | (0.540 | ) | (0.865 | ) | (0.214 | ) | (0.144 | ) | (0.073 | ) | |||||||||||||
Total distributions | $ | (0.140 | ) | $ | (0.766 | ) | $ | (1.092 | ) | $ | (0.478 | ) | $ | (0.261 | ) | $ | (0.204 | ) | ||||||
Net asset value — End of period | $ | 13.670 | $ | 13.700 | $ | 13.790 | $ | 14.030 | $ | 11.090 | $ | 11.300 | ||||||||||||
Total Return(2)(3) | 0.81 | %(4) | 4.94 | % | 6.40 | % | 31.19 | % | 0.41 | % | 15.54 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 13,055 | $ | 21,078 | $ | 21,880 | $ | 11,204 | $ | 7,438 | $ | 8,692 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(3) | 1.25 | %(5) | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.29 | % | ||||||||||||
Net investment income | 1.91 | %(5) | 1.13 | % | 1.38 | % | 1.29 | % | 1.05 | % | 1.10 | % | ||||||||||||
Portfolio Turnover | 17 | %(4) | 52 | % | 72 | % | 31 | % | 22 | % | 33 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | The administrator reimbursed certain operating expenses (equal to 0.16%, 0.23%, 0.30%, 0.30%, 0.27% and 0.24% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(4) | Not annualized. |
(5) | Annualized. |
10 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.700 | $ | 13.800 | $ | 14.030 | $ | 11.100 | $ | 11.300 | $ | 9.960 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.178 | $ | 0.200 | $ | 0.192 | $ | 0.182 | $ | 0.151 | $ | 0.149 | ||||||||||||
Net realized and unrealized gain (loss) | (0.056 | ) | 0.501 | 0.703 | 3.258 | (0.060 | ) | 1.421 | ||||||||||||||||
Total income from operations | $ | 0.122 | $ | 0.701 | $ | 0.895 | $ | 3.440 | $ | 0.091 | $ | 1.570 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.162 | ) | $ | (0.261 | ) | $ | (0.260 | ) | $ | (0.296 | ) | $ | (0.147 | ) | $ | (0.157 | ) | ||||||
From net realized gain | — | (0.540 | ) | (0.865 | ) | (0.214 | ) | (0.144 | ) | (0.073 | ) | |||||||||||||
Total distributions | $ | (0.162 | ) | $ | (0.801 | ) | $ | (1.125 | ) | $ | (0.510 | ) | $ | (0.291 | ) | $ | (0.230 | ) | ||||||
Net asset value — End of period | $ | 13.660 | $ | 13.700 | $ | 13.800 | $ | 14.030 | $ | 11.100 | $ | 11.300 | ||||||||||||
Total Return(2)(3) | 0.90 | %(4) | 5.12 | % | 6.73 | % | 31.40 | % | 0.76 | % | 15.81 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 42,202 | $ | 25,930 | $ | 17,044 | $ | 22,115 | $ | 18,955 | $ | 22,728 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(3) | 1.00 | %(5) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.04 | % | ||||||||||||
Net investment income | 2.63 | %(5) | 1.43 | % | 1.37 | % | 1.43 | % | 1.29 | % | 1.35 | % | ||||||||||||
Portfolio Turnover | 17 | %(4) | 52 | % | 72 | % | 31 | % | 22 | % | 33 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | The administrator reimbursed certain operating expenses (equal to 0.16%, 0.23%, 0.30%, 0.30%, 0.27% and 0.24% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(4) | Not annualized. |
(5) | Annualized. |
11 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Real Estate Fund (the Fund) is a non-diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund’s investment objective is to seek total return. The Fund offers two classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class I shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class-specific expenses.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.
Affiliated Fund. The Fund may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Fund in a manner that fairly reflects the security’s value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Dividends from real estate investment trusts (REITs) are recorded as income, capital gains or return of capital based on the nature of the distribution. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.
D Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
F Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of
12 |
Eaton Vance
Real Estate Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders and Income Tax Information
It is the present policy of the Fund to make at least quarterly distributions of substantially all of the distributions it receives from its REIT investments, less expenses, as well as income from other investments. Such distributions may be comprised of income, return of capital, and capital gains. The Fund may also realize capital gains on the sale of its REIT shares and other investments. Distributions of these gains, if any, will be made annually. In addition, the Fund may occasionally be required to make supplemental distributions at some other time during the year. Distributions to shareholders are recorded on the ex-dividend date. Distributions are declared separately for each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 48,680,923 | ||
Gross unrealized appreciation | $ | 7,092,435 | ||
Gross unrealized depreciation | (488,246 | ) | ||
Net unrealized appreciation | $ | 6,604,189 |
3 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by EVM as compensation for management and investment advisory services rendered to the Fund. The fee is computed at an annual rate of 0.65% of the Fund’s average daily net assets and is payable monthly. For the six months ended June 30, 2017, the Fund’s investment adviser fee amounted to $170,952. The Fund invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund. The administration fee is earned by EVM for administering the business affairs of the Fund and is computed at an annual rate of 0.15% of the Fund’s average daily net assets. For the six months ended June 30, 2017, the administration fee amounted to $39,450. EVM has agreed to reimburse the Fund’s expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only) exceed 1.25% and 1.00% of the Fund’s average daily net assets for Class A and Class I, respectively. This agreement may be changed or terminated after April 30, 2018. Pursuant to this agreement, EVM was allocated $42,433 of the Fund’s operating expenses for the six months ended June 30, 2017. EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $1,316 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $1,710 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A (see Note 4).
Trustees and officers of the Fund who are members of EVM’s organization receive remuneration for their services to the Fund out of the investment adviser fee. Trustees of the Fund who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of EVM.
4 Distribution Plan
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and
13 |
Eaton Vance
Real Estate Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $20,180 for Class A shares.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
Class A shares may be subject to a 1% contingent deferred sales charge (CDSC) if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six months ended June 30, 2017, the Fund was informed that EVD received no CDSCs paid by Class A shareholders.
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $16,509,361 and $8,612,729, respectively, for the six months ended June 30, 2017.
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
Sales | 176,461 | 1,078,893 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 9,606 | 76,171 | ||||||
Redemptions | (769,918 | ) | (1,202,395 | ) | ||||
Net decrease | (583,851 | ) | (47,331 | ) | ||||
Class I | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
Sales | 1,779,639 | 1,446,548 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 28,243 | 102,353 | ||||||
Redemptions | (611,982 | ) | (891,569 | ) | ||||
Net increase | 1,195,900 | 657,332 |
At June 30, 2017, donor advised funds (established and maintained by a public charity) managed by EVM and an Eaton Vance collective investment trust owned in the aggregate 16.2% of the value of the outstanding shares of the Fund.
8 Line of Credit
The Fund participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Fund solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Fund based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Fund, it may be unable to borrow some or all of its requested amounts at any particular time. The Fund did not have any significant borrowings or allocated fees during the six months ended June 30, 2017.
14 |
Eaton Vance
Real Estate Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
9 Concentration of Risk
In accordance with the Fund’s strategy, under normal market conditions, the Fund’s investments are concentrated in equity securities of companies primarily engaged in the real estate industry, such as REITs and other real estate related investments. Securities of companies in the real estate industry are subject to special risks including changes in real estate values, property taxes, interest rates, cash flow of underlying real estate assets, occupancy rates, government regulations affecting zoning, land use and rents, and the management skill and creditworthiness of the issuer.
10 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At June 30, 2017, the hierarchy of inputs used in valuing the Fund’s investments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 54,219,153 | * | $ | — | $ | — | $ | 54,219,153 | |||||||
Short-Term Investments | — | 1,065,959 | — | 1,065,959 | ||||||||||||
Total Investments | $ | 54,219,153 | $ | 1,065,959 | $ | — | $ | 55,285,112 |
* | The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments. |
The Fund held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
15 |
Eaton Vance
Real Estate Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio-level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
16 |
Eaton Vance
Real Estate Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Eaton Vance Real Estate Fund (the “Fund”) with Eaton Vance Management (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Fund.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement of the Fund, the Board evaluated the nature, extent and quality of services provided to the Fund by the Adviser.
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by the Fund, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Fund. The Board specifically noted that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Fund, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Fund, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing the Fund.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
17 |
Eaton Vance
Real Estate Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices. The Board’s review included comparative performance data for the one-, three- and five-year periods ended September 30, 2016 for the Fund. The Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered factors that had an impact on Fund expense ratios relative to comparable funds.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their relationships with the Fund, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Fund and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund, and in light of the level of the Adviser’s 2016 profits with respect to the Fund, the implementation of breakpoints in the advisory fee schedule is not warranted at this time.
18 |
Eaton Vance
Real Estate Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Real Estate Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Real Estate Fund
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
19 |
Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
20 |
Investment Adviser and Administrator
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7749 6.30.17
Eaton Vance
Small-Cap Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Small-Cap Fund
Table of Contents | ||||
Performance | 2 | |||
Fund Profile | 2 | |||
Endnotes and Additional Disclosures | 3 | |||
Fund Expenses | 4 | |||
Financial Statements | 5 | |||
Board of Trustees’ Contract Approval | 20 | |||
Officers and Trustees | 23 | |||
Important Notices | 24 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Performance1,2
Portfolio Managers Michael D. McLean, CFA and J. Griffith Noble, CFA
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 01/02/1997 | 01/02/1997 | 5.49 | % | 21.48 | % | 13.22 | % | 6.98 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | �� | –0.59 | 14.46 | 11.89 | 6.35 | |||||||||||||||||
Class C at NAV | 05/03/2002 | 01/02/1997 | 5.07 | 20.46 | 12.35 | 6.17 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 4.07 | 19.46 | 12.35 | 6.17 | ||||||||||||||||||
Class I at NAV | 09/02/2008 | 01/02/1997 | 5.56 | 21.70 | 13.48 | 7.51 | ||||||||||||||||||
Class R at NAV | 08/03/2009 | 01/02/1997 | 5.34 | 21.11 | 12.93 | 6.77 | ||||||||||||||||||
Russell 2000® Index | — | — | 4.99 | % | 24.60 | % | 13.69 | % | 6.91 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | Class R | ||||||||||||||||||||
Gross | 1.52 | % | 2.27 | % | 1.27 | % | 1.77 | % | ||||||||||||||||
Net | 1.35 | 2.10 | 1.10 | 1.60 |
Fund Profile
Common Stock Sector Allocation (% of net assets)
Top 10 Holdings (% of net assets)4
ServiceMaster Global Holdings, Inc. | 2.5 | % | ||
Integra LifeSciences Holdings Corp. | 2.5 | |||
RealPage, Inc. | 2.4 | |||
Ligand Pharmaceuticals, Inc. | 2.2 | |||
Balcham Corp. | 2.2 | |||
Hexcel Corp. | 2.2 | |||
West Pharmaceutical Services, Inc. | 2.1 | |||
Dolby Laboratories, Inc., Class A | 2.1 | |||
ACI Worldwide, Inc. | 2.0 | |||
Pinnacle Foods, Inc. | 2.0 | |||
Total | 22.2 | % |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | Russell 2000® Index is an unmanaged index of 2,000 U.S. small-cap stocks. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class I and Class R is linked to Class A. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. |
3 | Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 4/30/18. Without the reimbursement, performance would have been lower. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense Ratio | |||||||||||||
Actual |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,054.90 | $ | 7.59 | ** | 1.49 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,050.70 | $ | 11.34 | ** | 2.23 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,055.60 | $ | 6.22 | ** | 1.22 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,053.40 | $ | 8.81 | ** | 1.73 | % | |||||||
Hypothetical |
| |||||||||||||||
(5% return per year before expenses) |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,017.40 | $ | 7.45 | ** | 1.49 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,013.70 | $ | 11.13 | ** | 2.23 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,018.70 | $ | 6.11 | ** | 1.22 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,016.20 | $ | 8.65 | ** | 1.73 | % |
Effective May 1, 2017, contractual expense caps of the Fund were implemented. If the expense caps had been in place during the entire reporting period, the actual and hypothetical ending account values, expenses paid and annualized expense ratios would have been as follows:
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense Ratio | |||||||||||||
Actual |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,054.90 | $ | 6.88 | ** | 1.35 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,050.70 | $ | 10.68 | ** | 2.10 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,055.60 | $ | 5.61 | ** | 1.10 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,053.40 | $ | 8.15 | ** | 1.60 | % | |||||||
Hypothetical |
| |||||||||||||||
(5% return per year before expenses) |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.10 | $ | 6.76 | ** | 1.35 | %�� | |||||||
Class C | $ | 1,000.00 | $ | 1,014.40 | $ | 10.49 | ** | 2.10 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,019.30 | $ | 5.51 | ** | 1.10 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,016.90 | $ | 8.00 | ** | 1.60 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
4 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Portfolio of Investments (Unaudited)
Common Stocks — 98.5% | ||||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 3.6% |
| |||||||
Hexcel Corp. | 32,687 | $ | 1,725,547 | |||||
Mercury Systems, Inc.(1) | 27,247 | 1,146,826 | ||||||
$ | 2,872,373 | |||||||
Air Freight & Logistics — 0.8% |
| |||||||
Hub Group, Inc., Class A(1) | 16,925 | $ | 649,074 | |||||
$ | 649,074 | |||||||
Banks — 10.6% |
| |||||||
Ameris Bancorp | 16,210 | $ | 781,322 | |||||
Bank of the Ozarks, Inc. | 30,503 | 1,429,676 | ||||||
BankUnited, Inc. | 15,233 | 513,504 | ||||||
Columbia Banking System, Inc. | 25,863 | 1,030,640 | ||||||
First Hawaiian, Inc. | 30,990 | 948,914 | ||||||
Sterling Bancorp | 54,007 | 1,255,663 | ||||||
WesBanco, Inc. | 25,995 | 1,027,842 | ||||||
Western Alliance Bancorp(1) | 16,308 | 802,354 | ||||||
Wintrust Financial Corp. | 8,350 | 638,274 | ||||||
$ | 8,428,189 | |||||||
Biotechnology — 2.2% |
| |||||||
Ligand Pharmaceuticals, Inc.(1) | 14,752 | $ | 1,790,893 | |||||
$ | 1,790,893 | |||||||
Capital Markets — 3.7% |
| |||||||
CBOE Holdings, Inc. | 10,390 | $ | 949,646 | |||||
Cohen & Steers, Inc. | 28,015 | 1,135,728 | ||||||
Lazard, Ltd., Class A | 18,098 | 838,480 | ||||||
$ | 2,923,854 | |||||||
Chemicals — 2.2% |
| |||||||
Balchem Corp. | 22,222 | $ | 1,726,872 | |||||
$ | 1,726,872 | |||||||
Commercial Services & Supplies — 4.1% |
| |||||||
Brink’s Co. (The) | 9,680 | $ | 648,560 | |||||
Deluxe Corp. | 14,944 | 1,034,424 | ||||||
Multi-Color Corp. | 19,097 | 1,558,315 | ||||||
$ | 3,241,299 | |||||||
Security | Shares | Value | ||||||
Communications Equipment — 1.1% |
| |||||||
NETGEAR, Inc.(1) | 20,436 | $ | 880,791 | |||||
$ | 880,791 | |||||||
Construction Materials — 1.8% |
| |||||||
US Concrete, Inc.(1) | 18,207 | $ | 1,430,160 | |||||
$ | 1,430,160 | |||||||
Diversified Consumer Services — 5.4% |
| |||||||
Bright Horizons Family Solutions, Inc.(1) | 18,890 | $ | 1,458,497 | |||||
Grand Canyon Education, Inc.(1) | 10,454 | 819,698 | ||||||
ServiceMaster Global Holdings, Inc.(1) | 50,973 | 1,997,632 | ||||||
$ | 4,275,827 | |||||||
Electric Utilities — 0.5% |
| |||||||
ALLETE, Inc. | 5,512 | $ | 395,100 | |||||
$ | 395,100 | |||||||
Electrical Equipment — 1.9% |
| |||||||
AZZ, Inc. | 12,989 | $ | 724,786 | |||||
EnerSys | 10,429 | 755,581 | ||||||
$ | 1,480,367 | |||||||
Electronic Equipment, Instruments & Components — 2.5% |
| |||||||
Dolby Laboratories, Inc., Class A | 33,430 | $ | 1,636,733 | |||||
MTS Systems Corp. | 7,145 | 370,111 | ||||||
$ | 2,006,844 | |||||||
Energy Equipment & Services — 0.4% |
| |||||||
Oceaneering International, Inc. | 15,018 | $ | 343,011 | |||||
$ | 343,011 | |||||||
Equity Real Estate Investment Trusts (REITs) — 6.7% |
| |||||||
Acadia Realty Trust | 30,757 | $ | 855,045 | |||||
CubeSmart | 51,644 | 1,241,522 | ||||||
DCT Industrial Trust, Inc. | 20,905 | 1,117,163 | ||||||
Education Realty Trust, Inc. | 18,390 | 712,612 | ||||||
Parkway, Inc. | 30,720 | 703,181 | ||||||
STORE Capital Corp. | 30,794 | 691,325 | ||||||
$ | 5,320,848 | |||||||
Food & Staples Retailing — 1.8% |
| |||||||
Performance Food Group Co.(1) | 53,867 | $ | 1,475,956 | |||||
$ | 1,475,956 | |||||||
5 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Food Products — 2.0% |
| |||||||
Pinnacle Foods, Inc. | 26,362 | $ | 1,565,903 | |||||
$ | 1,565,903 | |||||||
Health Care Equipment & Supplies — 6.0% |
| |||||||
ICU Medical, Inc.(1) | 6,599 | $ | 1,138,328 | |||||
Integra LifeSciences Holdings Corp.(1) | 35,944 | 1,959,307 | ||||||
West Pharmaceutical Services, Inc. | 17,399 | 1,644,553 | ||||||
$ | 4,742,188 | |||||||
Health Care Providers & Services — 2.2% |
| |||||||
Amedisys, Inc.(1) | 16,580 | $ | 1,041,390 | |||||
Envision Healthcare Corp.(1) | 11,762 | 737,124 | ||||||
$ | 1,778,514 | |||||||
Hotels, Restaurants & Leisure — 1.0% |
| |||||||
Dave & Buster’s Entertainment, Inc.(1) | 7,314 | $ | 486,454 | |||||
Papa John’s International, Inc. | 3,960 | 284,170 | ||||||
$ | 770,624 | |||||||
Household Products — 0.5% |
| |||||||
Central Garden & Pet Co., Class A(1) | 12,184 | $ | 365,764 | |||||
$ | 365,764 | |||||||
Insurance — 4.1% |
| |||||||
First American Financial Corp. | 33,033 | $ | 1,476,245 | |||||
Horace Mann Educators Corp. | 31,362 | 1,185,483 | ||||||
RLI Corp. | 11,519 | 629,168 | ||||||
$ | 3,290,896 | |||||||
Internet Software & Services — 0.2% |
| |||||||
Okta, Inc.(1) | 7,221 | $ | 164,639 | |||||
$ | 164,639 | |||||||
IT Services — 4.7% |
| |||||||
Black Knight Financial Services, Inc., Class A(1) | 26,856 | $ | 1,099,753 | |||||
CSG Systems International, Inc. | 30,353 | 1,231,725 | ||||||
Euronet Worldwide, Inc.(1) | 16,008 | 1,398,619 | ||||||
$ | 3,730,097 | |||||||
Life Sciences Tools & Services — 2.9% |
| |||||||
Cambrex Corp.(1) | 20,891 | $ | 1,248,237 | |||||
Patheon NV(1) | 29,861 | 1,041,552 | ||||||
$ | 2,289,789 | |||||||
Security | Shares | Value | ||||||
Machinery — 2.5% |
| |||||||
Milacron Holdings Corp.(1) | 51,785 | $ | 910,898 | |||||
RBC Bearings, Inc.(1) | 10,509 | 1,069,396 | ||||||
$ | 1,980,294 | |||||||
Marine — 1.4% |
| |||||||
Kirby Corp.(1) | 17,208 | $ | 1,150,355 | |||||
$ | 1,150,355 | |||||||
Oil, Gas & Consumable Fuels — 3.8% |
| |||||||
Diamondback Energy, Inc.(1) | 5,080 | $ | 451,155 | |||||
Jagged Peak Energy, Inc.(1) | 18,222 | 243,264 | ||||||
PDC Energy, Inc.(1) | 21,083 | 908,888 | ||||||
Rice Energy, Inc.(1) | 53,469 | 1,423,879 | ||||||
$ | 3,027,186 | |||||||
Professional Services — 2.8% |
| |||||||
Dun & Bradstreet Corp. (The) | 7,592 | $ | 821,075 | |||||
WageWorks, Inc.(1) | 20,930 | 1,406,496 | ||||||
$ | 2,227,571 | |||||||
Road & Rail — 1.7% |
| |||||||
Landstar System, Inc. | 16,159 | $ | 1,383,210 | |||||
$ | 1,383,210 | |||||||
Semiconductors & Semiconductor Equipment — 2.7% |
| |||||||
PDF Solutions, Inc.(1) | 55,740 | $ | 916,923 | |||||
Veeco Instruments, Inc.(1) | 44,260 | 1,232,641 | ||||||
$ | 2,149,564 | |||||||
Software — 6.4% |
| |||||||
ACI Worldwide, Inc.(1) | 71,760 | $ | 1,605,271 | |||||
Blackbaud, Inc. | 15,052 | 1,290,709 | ||||||
Monotype Imaging Holdings, Inc. | 14,017 | 256,511 | ||||||
RealPage, Inc.(1) | 54,170 | 1,947,412 | ||||||
$ | 5,099,903 | |||||||
Specialty Retail — 2.2% |
| |||||||
Burlington Stores, Inc.(1) | 14,643 | $ | 1,347,010 | |||||
Lithia Motors, Inc., Class A | 4,540 | 427,804 | ||||||
$ | 1,774,814 | |||||||
Textiles, Apparel & Luxury Goods — 0.3% |
| |||||||
Steven Madden, Ltd.(1) | 6,176 | $ | 246,731 | |||||
$ | 246,731 | |||||||
6 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Thrifts & Mortgage Finance — 1.8% |
| |||||||
Essent Group, Ltd.(1) | 38,459 | $ | 1,428,367 | |||||
$ | 1,428,367 | |||||||
Total Common Stocks |
| $ | 78,407,867 | |||||
Exchange-Traded Funds — 1.3% | ||||||||
Security | Shares | Value | ||||||
Equity Funds — 1.3% |
| |||||||
iShares Russell 2000 ETF | 7,590 | $ | 1,069,583 | |||||
Total Exchange-Traded Funds |
| $ | 1,069,583 | |||||
Short-Term Investments — 0.6% | ||||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 1.20%(2) | 450,940 | $ | 451,030 | |||||
Total Short-Term Investments | $ | 451,030 | ||||||
Total Investments — 100.4% | $ | 79,928,480 | ||||||
Other Assets, Less Liabilities — (0.4)% | $ | (281,381 | ) | |||||
Net Assets — 100.0% | $ | 79,647,099 | ||||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
(1) | Non-income producing security. |
(2) | Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2017. |
7 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Unaffiliated investments, at value (identified cost, $63,070,048) | $ | 79,477,450 | ||
Affiliated investment, at value (identified cost, $451,062) | 451,030 | |||
Dividends receivable | 56,972 | |||
Dividends receivable from affiliated investment | 472 | |||
Receivable for Fund shares sold | 134,152 | |||
Receivable from affiliate | 6,194 | |||
Total assets | $ | 80,126,270 | ||
Liabilities | ||||
Payable for investments purchased | $ | 217,026 | ||
Payable for Fund shares redeemed | 152,489 | |||
Payable to affiliates: | ||||
Investment adviser fee | 49,012 | |||
Administration fee | 9,802 | |||
Distribution and service fees | 13,911 | |||
Trustees’ fees | 1,263 | |||
Accrued expenses | 35,668 | |||
Total liabilities | $ | 479,171 | ||
Net Assets | $ | 79,647,099 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 56,576,925 | ||
Accumulated net realized gain | 6,868,865 | |||
Accumulated net investment loss | (206,061 | ) | ||
Net unrealized appreciation | 16,407,370 | |||
Net Assets | $ | 79,647,099 | ||
Class A Shares | ||||
Net Assets | $ | 26,357,291 | ||
Shares Outstanding | 1,961,911 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 13.43 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 14.25 | ||
Class C Shares | ||||
Net Assets | $ | 9,954,949 | ||
Shares Outstanding | 858,025 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 11.60 | ||
Class I Shares | ||||
Net Assets | $ | 42,725,158 | ||
Shares Outstanding | 2,924,701 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.61 | ||
Class R Shares | ||||
Net Assets | $ | 609,701 | ||
Shares Outstanding | 46,860 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 13.01 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
* | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
8 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends | $ | 357,726 | ||
Dividends from affiliated investment | 5,433 | |||
Total investment income | $ | 363,159 | ||
Expenses | ||||
Investment adviser fee | $ | 292,406 | ||
Administration fee | 58,481 | |||
Distribution and service fees | ||||
Class A | 34,878 | |||
Class B | 3,065 | |||
Class C | 49,699 | |||
Class R | 1,642 | |||
Trustees’ fees and expenses | 2,718 | |||
Custodian fee | 21,916 | |||
Transfer and dividend disbursing agent fees | 48,560 | |||
Legal and accounting services | 22,096 | |||
Printing and postage | 13,409 | |||
Registration fees | 29,745 | |||
Miscellaneous | 9,201 | |||
Total expenses | $ | 587,816 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 18,596 | ||
Total expense reductions | $ | 18,596 | ||
Net expenses | $ | 569,220 | ||
Net investment loss | $ | (206,061 | ) | |
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 4,863,266 | ||
Investment transactions — affiliated investment | 187 | |||
Net realized gain | $ | 4,863,453 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (477,815 | ) | |
Investments — affiliated investment | 116 | |||
Net change in unrealized appreciation (depreciation) | $ | (477,699 | ) | |
Net realized and unrealized gain | $ | 4,385,754 | ||
Net increase in net assets from operations | $ | 4,179,693 |
9 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment loss | $ | (206,061 | ) | $ | (316,278 | ) | ||
Net realized gain from investment transactions | 4,863,453 | 12,354,057 | ||||||
Net change in unrealized appreciation (depreciation) from investments | (477,699 | ) | 971,881 | |||||
Net increase in net assets from operations | $ | 4,179,693 | $ | 13,009,660 | ||||
Distributions to shareholders — | ||||||||
From net realized gain | ||||||||
Class A | $ | — | $ | (3,775,338 | ) | |||
Class B | — | (165,944 | ) | |||||
Class C | — | (1,370,588 | ) | |||||
Class I | — | (4,384,612 | ) | |||||
Class R | — | (67,068 | ) | |||||
Total distributions to shareholders | $ | — | $ | (9,763,550 | ) | |||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 2,697,066 | $ | 7,592,286 | ||||
Class B | 35,944 | 120,617 | ||||||
Class C | 1,761,615 | 2,765,477 | ||||||
Class I | 11,219,228 | 6,166,627 | ||||||
Class R | 163,636 | 355,974 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | — | 3,539,397 | ||||||
Class B | — | 157,261 | ||||||
Class C | — | 1,211,411 | ||||||
Class I | — | 4,113,686 | ||||||
Class R | — | 67,068 | ||||||
Cost of shares redeemed | ||||||||
Class A | (8,985,220 | ) | (8,999,925 | ) | ||||
Class B | (112,082 | ) | (500,293 | ) | ||||
Class C | (2,312,280 | ) | (3,051,012 | ) | ||||
Class I | (5,498,047 | ) | (29,930,757 | ) | ||||
Class R | (156,121 | ) | (162,824 | ) | ||||
Net asset value of shares exchanged | ||||||||
Class A | 111,870 | 692,202 | ||||||
Class B | (111,870 | ) | (692,202 | ) | ||||
Net asset value of shares merged* | ||||||||
Class A | 878,745 | — | ||||||
Class B | (878,745 | ) | — | |||||
Net decrease in net assets from Fund share transactions | $ | (1,186,261 | ) | $ | (16,555,007 | ) | ||
Net increase (decrease) in net assets | $ | 2,993,432 | $ | (13,308,897 | ) | |||
Net Assets | ||||||||
At beginning of period | $ | 76,653,667 | $ | 89,962,564 | ||||
At end of period | $ | 79,647,099 | $ | 76,653,667 | ||||
Accumulated undistributed net investment income (loss) included in net assets |
| |||||||
At end of period | $ | (206,061 | ) | $ | — |
* | At the close of business on April 27, 2017, Class B shares were merged into Class A shares. |
10 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 12.740 | $ | 12.200 | $ | 15.320 | $ | 18.040 | $ | 14.170 | $ | 13.550 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.037 | ) | $ | (0.053 | ) | $ | (0.078 | ) | $ | (0.078 | ) | $ | (0.084 | ) | $ | (0.008 | ) | ||||||
Net realized and unrealized gain (loss) | 0.727 | 2.361 | (0.205 | ) | 0.618 | 5.031 | 1.611 | |||||||||||||||||
Total income (loss) from operations | $ | 0.690 | $ | 2.308 | $ | (0.283 | ) | $ | 0.540 | $ | 4.947 | $ | 1.603 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | (0.008 | ) | $ | (0.124 | ) | ||||||||||
From net realized gain | — | (1.768 | ) | (2.837 | ) | (3.260 | ) | (1.069 | ) | (0.859 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.768 | ) | $ | (2.837 | ) | $ | (3.260 | ) | $ | (1.077 | ) | $ | (0.983 | ) | |||||||
Net asset value — End of period | $ | 13.430 | $ | 12.740 | $ | 12.200 | $ | 15.320 | $ | 18.040 | $ | 14.170 | ||||||||||||
Total Return(2) | 5.49 | %(3)(4) | 19.32 | % | (2.78 | )% | 3.77 | %(5) | 35.25 | % | 11.85 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 26,357 | $ | 30,174 | $ | 26,391 | $ | 29,536 | $ | 37,128 | $ | 32,126 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 1.49 | %(4)(8) | 1.52 | % | 1.43 | % | 1.39 | % | 1.36 | % | 1.40 | % | ||||||||||||
Net investment loss | (0.56 | )%(8) | (0.43 | )% | (0.52 | )% | (0.44 | )% | (0.51 | )% | (0.06 | )% | ||||||||||||
Portfolio Turnover of the Portfolio(9) | — | — | — | — | — | 31 | %(3) | |||||||||||||||||
Portfolio Turnover of the Fund | 29 | %(3) | 76 | % | 71 | % | 66 | % | 44 | % | 31 | %(3)(10) |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | The administrator reimbursed certain operating expenses (equal to 0.05% of average daily net assets for the six months ended June 30, 2017). Absent this reimbursement, total return would be lower. |
(5) | During the year ended December 31, 2014, the investment adviser reimbursed the Fund for a net loss realized on the disposal of an investment which did not meet the Fund’s investment guidelines. The reimbursement had no effect on total return for the year ended December 31, 2014. |
(6) | Includes the Fund’s share of the Portfolio’s allocated expenses for the period while the Fund was investing in the Portfolio. |
(7) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(8) | Annualized. |
(9) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(10) | For the period from May 1, 2012 through December 31, 2012 when the Fund was making investments directly in securities. |
References to Portfolio herein are to Small-Cap Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to May 1, 2012 and which had the same investment objective and policies as the Fund during such period.
11 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 11.040 | $ | 10.850 | $ | 14.040 | $ | 16.930 | $ | 13.450 | $ | 12.900 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.073 | ) | $ | (0.129 | ) | $ | (0.173 | ) | $ | (0.198 | ) | $ | (0.195 | ) | $ | (0.107 | ) | ||||||
Net realized and unrealized gain (loss) | 0.633 | 2.087 | (0.180 | ) | 0.568 | 4.752 | 1.530 | |||||||||||||||||
Total income (loss) from operations | $ | 0.560 | $ | 1.958 | $ | (0.353 | ) | $ | 0.370 | $ | 4.557 | $ | 1.423 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | (0.008 | ) | $ | (0.014 | ) | ||||||||||
From net realized gain | — | (1.768 | ) | (2.837 | ) | (3.260 | ) | (1.069 | ) | (0.859 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.768 | ) | $ | (2.837 | ) | $ | (3.260 | ) | $ | (1.077 | ) | $ | (0.873 | ) | |||||||
Net asset value — End of period | $ | 11.600 | $ | 11.040 | $ | 10.850 | $ | 14.040 | $ | 16.930 | $ | 13.450 | ||||||||||||
Total Return(2) | 5.07 | %(3)(4) | 18.47 | % | (3.59 | )% | 3.02 | %(5) | 34.24 | % | 11.03 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 9,955 | $ | 10,001 | $ | 9,040 | $ | 10,883 | $ | 13,806 | $ | 11,099 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 2.23 | %(4)(8) | 2.27 | % | 2.18 | % | 2.14 | % | 2.11 | % | 2.16 | % | ||||||||||||
Net investment loss | (1.30 | )%(8) | (1.18 | )% | (1.27 | )% | (1.18 | )% | (1.25 | )% | (0.80 | )% | ||||||||||||
Portfolio Turnover of the Portfolio(9) | — | — | — | — | — | 31 | %(3) | |||||||||||||||||
Portfolio Turnover of the Fund | 29 | %(3) | 76 | % | 71 | % | 66 | % | 44 | % | 31 | %(3)(10) |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | The administrator reimbursed certain operating expenses (equal to 0.05% of average daily net assets for the six months ended June 30, 2017). Absent this reimbursement, total return would be lower. |
(5) | During the year ended December 31, 2014, the investment adviser reimbursed the Fund for a net loss realized on the disposal of an investment which did not meet the Fund’s investment guidelines. The reimbursement had no effect on total return for the year ended December 31, 2014. |
(6) | Includes the Fund’s share of the Portfolio’s allocated expenses for the period while the Fund was investing in the Portfolio. |
(7) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(8) | Annualized. |
(9) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(10) | For the period from May 1, 2012 through December 31, 2012 when the Fund was making investments directly in securities. |
References to Portfolio herein are to Small-Cap Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to May 1, 2012 and which had the same investment objective and policies as the Fund during such period.
12 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.840 | $ | 13.080 | $ | 16.190 | $ | 18.840 | $ | 14.720 | $ | 14.050 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | (0.020 | ) | $ | (0.027 | ) | $ | (0.043 | ) | $ | (0.040 | ) | $ | (0.036 | ) | $ | 0.030 | |||||||
Net realized and unrealized gain (loss) | 0.790 | 2.555 | (0.230 | ) | 0.650 | 5.233 | 1.665 | |||||||||||||||||
Total income (loss) from operations | $ | 0.770 | $ | 2.528 | $ | (0.273 | ) | $ | 0.610 | $ | 5.197 | $ | 1.695 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | (0.008 | ) | $ | (0.166 | ) | ||||||||||
From net realized gain | — | (1.768 | ) | (2.837 | ) | (3.260 | ) | (1.069 | ) | (0.859 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.768 | ) | $ | (2.837 | ) | $ | (3.260 | ) | $ | (1.077 | ) | $ | (1.025 | ) | |||||||
Net asset value — End of period | $ | 14.610 | $ | 13.840 | $ | 13.080 | $ | 16.190 | $ | 18.840 | $ | 14.720 | ||||||||||||
Total Return(2) | 5.56 | %(3)(4) | 19.70 | % | (2.57 | )% | 3.99 | %(5) | 35.63 | % | 12.08 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 42,725 | $ | 34,888 | $ | 52,335 | $ | 74,510 | $ | 171,120 | $ | 131,456 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 1.22 | %(4)(8) | 1.27 | % | 1.18 | % | 1.13 | % | 1.12 | % | 1.15 | % | ||||||||||||
Net investment income (loss) | (0.29 | )%(8) | (0.21 | )% | (0.27 | )% | (0.22 | )% | (0.21 | )% | 0.21 | % | ||||||||||||
Portfolio Turnover of the Portfolio(9) | — | — | — | — | — | 31 | %(3) | |||||||||||||||||
Portfolio Turnover of the Fund | 29 | %(3) | 76 | % | 71 | % | 66 | % | 44 | % | 31 | %(3)(10) |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | Not annualized. |
(4) | The administrator reimbursed certain operating expenses (equal to 0.05% of average daily net assets for the six months ended June 30, 2017). Absent this reimbursement, total return would be lower. |
(5) | During the year ended December 31, 2014, the investment adviser reimbursed the Fund for a net loss realized on the disposal of an investment which did not meet the Fund’s investment guidelines. The reimbursement had no effect on total return for the year ended December 31, 2014. |
(6) | Includes the Fund’s share of the Portfolio’s allocated expenses for the period while the Fund was investing in the Portfolio. |
(7) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(8) | Annualized. |
(9) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(10) | For the period from May 1, 2012 through December 31, 2012 when the Fund was making investments directly in securities. |
References to Portfolio herein are to Small-Cap Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to May 1, 2012 and which had the same investment objective and policies as the Fund during such period.
13 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Financial Highlights — continued
Class R | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 12.350 | $ | 11.900 | $ | 15.050 | $ | 17.820 | $ | 14.040 | $ | 13.460 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.050 | ) | $ | (0.078 | ) | $ | (0.113 | ) | $ | (0.111 | ) | $ | (0.110 | ) | $ | (0.027 | ) | ||||||
Net realized and unrealized gain (loss) | 0.710 | 2.296 | (0.200 | ) | 0.601 | 4.967 | 1.584 | |||||||||||||||||
Total income (loss) from operations | $ | 0.660 | $ | 2.218 | $ | (0.313 | ) | $ | 0.490 | $ | 4.857 | $ | 1.557 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | (0.008 | ) | $ | (0.118 | ) | ||||||||||
From net realized gain | — | (1.768 | ) | (2.837 | ) | (3.260 | ) | (1.069 | ) | (0.859 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.768 | ) | $ | (2.837 | ) | $ | (3.260 | ) | $ | (1.077 | ) | $ | (0.977 | ) | |||||||
Net asset value — End of period | $ | 13.010 | $ | 12.350 | $ | 11.900 | $ | 15.050 | $ | 17.820 | $ | 14.040 | ||||||||||||
Total Return(2) | 5.34 | %(3)(4) | 19.04 | % | (3.05 | )% | 3.54 | %(5) | 34.93 | % | 11.58 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 610 | $ | 567 | $ | 289 | $ | 305 | $ | 205 | $ | 65 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 1.73 | %(4)(8) | 1.77 | % | 1.68 | % | 1.63 | % | 1.61 | % | 1.65 | % | ||||||||||||
Net investment loss | (0.80 | )%(8) | (0.64 | )% | (0.77 | )% | (0.63 | )% | (0.66 | )% | (0.19 | )% | ||||||||||||
Portfolio Turnover of the Portfolio(9) | — | — | — | — | — | 31 | %(3) | |||||||||||||||||
Portfolio Turnover of the Fund | 29 | %(3) | 76 | % | 71 | % | 66 | % | 44 | % | 31 | %(3)(10) |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | Not annualized. |
(4) | The administrator reimbursed certain operating expenses (equal to 0.05% of average daily net assets for the six months ended June 30, 2017). Absent this reimbursement, total return would be lower. |
(5) | During the year ended December 31, 2014, the investment adviser reimbursed the Fund for a net loss realized on the disposal of an investment which did not meet the Fund’s investment guidelines. The reimbursement had no effect on total return for the year ended December 31, 2014. |
(6) | Includes the Fund’s share of the Portfolio’s allocated expenses for the period while the Fund was investing in the Portfolio. |
(7) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(8) | Annualized. |
(9) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(10) | For the period from May 1, 2012 through December 31, 2012 when the Fund was making investments directly in securities. |
References to Portfolio herein are to Small-Cap Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to May 1, 2012 and which had the same investment objective and policies as the Fund during such period.
14 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Small-Cap Fund (the Fund) is a diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund’s investment objective is to seek long-term capital appreciation. The Fund offers four classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I and Class R shares are sold at net asset value and are not subject to a sales charge. The Fund previously offered Class B shares, which beginning January 1, 2012, were only available for purchase upon exchange from another Eaton Vance fund or through reinvestment of distributions. Class B shares automatically converted to Class A shares eight years after their purchase as described in the Fund’s prospectus. At the close of business on April 27, 2017, Class B shares were merged into Class A shares. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class-specific expenses.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.
Affiliated Fund. The Fund may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Fund in a manner that fairly reflects the security’s value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Distributions from investment companies are recorded as dividend income, capital gains or return of capital based on the nature of the distribution.
D Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
F Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business
15 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders and Income Tax Information
It is the present policy of the Fund to make at least one distribution annually (normally in December) of all or substantially all of its net investment income and to distribute annually all or substantially all of its net realized capital gains. Distributions to shareholders are recorded on the ex-dividend date. Distributions are declared separately for each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 63,602,600 | ||
Gross unrealized appreciation | $ | 17,490,323 | ||
Gross unrealized depreciation | (1,164,443 | ) | ||
Net unrealized appreciation | $ | 16,325,880 |
3 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of EVM, as compensation for investment advisory services rendered to the Fund. The fee is computed at an annual rate of 0.75% of the Fund’s average daily net assets up to $500 million and is payable monthly. On net assets of $500 million and over, the annual fee is reduced. For the six months ended June 30, 2017, the Fund’s investment adviser fee amounted to $292,406 or 0.75% (annualized) of the Fund’s average daily net assets. The Fund invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund. The administration fee is earned by EVM for administering the business affairs of the Fund and is computed at an annual rate of 0.15% of the Fund’s average daily net assets. For the six months ended June 30, 2017, the administration fee amounted to $58,481.
Effective May 1, 2017, EVM has agreed to reimburse the Fund’s expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only) exceed 1.35%, 2.10%, 1.10% and 1.60% of the Fund’s average daily net assets for Class A, Class C, Class I and Class R, respectively, through April 30, 2018. Thereafter, the reimbursement may be changed or terminated at any time. Pursuant to this agreement, EVM was allocated $18,596 of the Fund’s operating expenses for the six months ended June 30, 2017.
EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $6,547 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $3,650 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A, Class B, Class C and Class R shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee. Trustees of the Fund who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of the above organizations.
16 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $34,878 for Class A shares.
The Fund also has in effect distribution plans for Class C shares (Class C Plan), Class R shares (Class R Plan) and, prior to the close of business on April 27, 2017, Class B shares (Class B Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class B and Class C Plans, the Fund paid/pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class B and Class C shares for providing ongoing distribution services and facilities to the Fund. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $2,299 and $37,274 for Class B and Class C shares, respectively.
The Class R Plan requires the Fund to pay EVD an amount up to 0.50% per annum of its average daily net assets attributable to Class R shares for providing ongoing distribution services and facilities to the Fund. The Trustees of the Trust have currently limited Class R distribution payments to 0.25% per annum of the average daily net assets attributable to Class R shares. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $821 for Class R shares.
Pursuant to the Class B (prior to the close of business on April 27, 2017), Class C and Class R Plans, the Fund also made/makes payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended June 30, 2017 amounted to $766, $12,425 and $821 for Class B, Class C and Class R shares, respectively.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) generally is imposed on redemptions of Class C shares made within one year of purchase and, prior to the close of business on April 27, 2017, on redemptions of Class B shares made within six years of purchase. Class A shares may be subject to a 1% CDSC if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. The CDSC for Class B shares was imposed at declining rates that began at 5% in the case of redemptions in the first and second year after purchase, declining one percentage point each subsequent year. Class C shares are subject to a 1% CDSC if redeemed within one year of purchase. For the six months ended June 30, 2017, the Fund was informed that EVD received approximately $100 of CDSCs paid by each of Class A, Class B and Class C shareholders.
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $23,018,400 and $22,820,622, respectively, for the six months ended June 30, 2017.
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 207,615 | 595,519 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 278,345 | ||||||
Redemptions | (688,216 | ) | (724,165 | ) | ||||
Merger from Class B shares | 65,809 | — | ||||||
Exchange from Class B shares | 8,496 | 54,526 | ||||||
Net increase (decrease) | (406,296 | ) | 204,225 |
17 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
Class B | Six Months Ended June 30, 2017 (Unaudited)(1) | Year Ended December 31, 2016 | ||||||
Sales | 2,995 | 10,193 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 13,409 | ||||||
Redemptions | (9,372 | ) | (44,577 | ) | ||||
Merger to Class A shares | (71,490 | ) | — | |||||
Exchange to Class A shares | (9,223 | ) | (58,531 | ) | ||||
Net decrease | (87,090 | ) | (79,506 | ) | ||||
Class C | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 156,583 | 241,766 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 109,350 | ||||||
Redemptions | (204,083 | ) | (278,425 | ) | ||||
Net increase (decrease) | (47,500 | ) | 72,691 | |||||
Class I | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 792,299 | 449,818 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 299,002 | ||||||
Redemptions | (388,800 | ) | (2,228,171 | ) | ||||
Net increase (decrease) | 403,499 | (1,479,351 | ) | |||||
Class R | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 13,102 | 30,282 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 5,417 | ||||||
Redemptions | (12,158 | ) | (14,025 | ) | ||||
Net increase | 944 | 21,674 |
(1) | Offering of Class B shares was discontinued during the six months ended June 30, 2017 (see Note 1). |
8 Line of Credit
The Fund participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Fund solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Fund based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Fund, it may be unable to borrow some or all of its requested amounts at any particular time. The Fund did not have any significant borrowings or allocated fees during the six months ended June 30, 2017.
18 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
9 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At June 30, 2017, the hierarchy of inputs used in valuing the Fund’s investments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 78,407,867 | * | $ | — | $ | — | $ | 78,407,867 | |||||||
Exchange-Traded Funds | 1,069,583 | — | — | 1,069,583 | ||||||||||||
Short-Term Investments | — | 451,030 | — | 451,030 | ||||||||||||
Total Investments | $ | 79,477,450 | $ | 451,030 | $ | — | $ | 79,928,480 |
* | The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments. |
The Fund held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
19 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio-level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
20 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Eaton Vance Small-Cap Fund (the “Fund”) with Boston Management and Research (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Fund.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement of the Fund, the Board evaluated the nature, extent and quality of services provided to the Fund by the Adviser.
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by the Fund, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Fund, including recent changes to such personnel. The Board specifically noted that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Fund, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Fund, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing the Fund.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
21 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2016 for the Fund. The Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also received and considered information about the services offered and the fee rates charged by the Adviser to other types of clients with investment objectives and strategies that are substantially similar to and/or managed in a similar investment style as the Fund. In this regard, the Board received information about the differences in the nature and scope of services the Adviser provides to the Fund as compared to other types of clients and the material differences in compliance, reporting and other legal burdens and risks to the Adviser as between the Fund and other types of clients. The Board considered certain factors identified by management in response to inquiries from the Contract Review Committee regarding the Fund’s expense ratio relative to comparable funds. The Board also considered the fact that the Adviser had undertaken to reimburse expenses of the Fund in an agreed upon amount, such expense reimbursement arrangement to be effective May 1, 2017.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their relationships with the Fund, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Fund and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund, the structure of the advisory fee, which includes breakpoints at several asset levels, will allow the Fund to continue to benefit from any economies of scale in the future.
22 |
Eaton Vance
Small-Cap Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Small-Cap Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Small-Cap Fund
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
23 |
Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
24 |
Investment Adviser
Boston Management and Research
Two International Place
Boston, MA 02110
Administrator
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7699 6.30.17
Eaton Vance
Global Small-Cap Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Global Small-Cap Fund
Table of Contents
Performance | 2 | |||
Fund Profile | 3 | |||
Endnotes and Additional Disclosures | 4 | |||
Fund Expenses | 5 | |||
Financial Statements | 6 | |||
Board of Trustees’ Contract Approval | 21 | |||
Officers and Trustees | 25 | |||
Important Notices | 26 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Performance1,2
Portfolio Manager Aidan M. Farrell, of Eaton Vance Management (International) Limited
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 06/28/2002 | 06/28/2002 | 11.78 | % | 21.89 | % | 9.75 | % | 4.90 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | 5.33 | 14.88 | 8.46 | 4.28 | ||||||||||||||||||
Class C at NAV | 07/03/2002 | 07/03/2002 | 11.41 | 21.02 | 8.94 | 4.12 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 10.41 | 20.02 | 8.94 | 4.12 | ||||||||||||||||||
Class I at NAV | 10/01/2009 | 06/28/2002 | 11.97 | 22.16 | 10.03 | 5.11 | ||||||||||||||||||
MSCI World Small Cap Index | — | — | 9.72 | % | 20.90 | % | 12.94 | % | 5.53 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | |||||||||||||||||||||
Gross | 2.17 | % | 2.92 | % | 1.92 | % | ||||||||||||||||||
Net | 1.40 | 2.15 | 1.15 |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Fund Profile
Sector Allocation (% of net assets)4
Top 10 Holdings (% of net assets)4
First Republic Bank | 1.7 | % | ||
Frutarom Industries, Ltd. | 1.3 | |||
Melrose Industries PLC | 1.3 | |||
Hexcel Corp. | 1.2 | |||
IWG PLC | 1.2 | |||
UDG Healthcare PLC | 1.1 | |||
Bright Horizons Family Solutions, Inc. | 1.1 | |||
Multi-Color Corp. | 1.1 | |||
US Concrete, Inc. | 1.1 | |||
CAE, Inc. | 1.1 | |||
Total | 12.2 | % |
Country Allocation (% of net assets)
See Endnotes and Additional Disclosures in this report.
3 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | MSCI World Small Cap Index is an unmanaged index of small-cap equity securities in the developed markets. MSCI indexes are net of foreign withholding taxes. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class I is linked to Class A. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. |
Effective July 6, 2015, the Fund changed its name, investment objective and investment strategy. Performance prior to July 2015 reflects the Fund’s performance under its former investment objective and policies. |
3 | Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 4/30/18. Without the reimbursement, performance would have been lower. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
4 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense | |||||||||||||
Actual |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,117.80 | $ | 7.35 | ** | 1.40 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,114.10 | $ | 11.27 | ** | 2.15 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,119.70 | $ | 6.04 | ** | 1.15 | % | |||||||
Hypothetical |
| |||||||||||||||
(5% return per year before expenses) |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,017.90 | $ | 7.00 | ** | 1.40 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,014.10 | $ | 10.74 | ** | 2.15 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,019.10 | $ | 5.76 | ** | 1.15 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. |
** | Absent an allocation of certain expenses to affiliates, expenses would be higher. |
5 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Portfolio of Investments (Unaudited)
Common Stocks — 98.8% | ||||||||
Security | Shares | Value | ||||||
Australia — 3.4% |
| |||||||
Amaysim Australia, Ltd. | 57,079 | $ | 68,447 | |||||
BWX, Ltd. | 19,872 | 89,852 | ||||||
Challenger, Ltd. | 11,618 | 119,148 | ||||||
Mirvac Group | 54,916 | 89,801 | ||||||
OZ Minerals, Ltd. | 6,248 | 35,566 | ||||||
Regis Resources, Ltd. | 19,042 | 55,416 | ||||||
Super Retail Group, Ltd. | 10,603 | 66,817 | ||||||
Tox Free Solutions, Ltd. | 60,208 | 111,041 | ||||||
$ | 636,088 | |||||||
Austria — 0.5% |
| |||||||
ams AG | 1,602 | $ | 103,957 | |||||
$ | 103,957 | |||||||
Belgium — 1.5% |
| |||||||
Kinepolis Group NV | 1,328 | $ | 73,731 | |||||
Warehouses De Pauw CVA | 795 | 83,545 | ||||||
X-Fab Silicon Foundries SE(1)(2) | 11,768 | 118,279 | ||||||
$ | 275,555 | |||||||
Bermuda — 0.6% |
| |||||||
Essent Group, Ltd.(1) | 2,972 | $ | 110,380 | |||||
$ | 110,380 | |||||||
Canada — 4.5% |
| |||||||
Boardwalk Real Estate Investment Trust | 2,326 | $ | 85,288 | |||||
CAE, Inc. | 11,478 | 197,909 | ||||||
CES Energy Solutions Corp. | 28,009 | 124,839 | ||||||
Detour Gold Corp.(1) | 4,190 | 49,047 | ||||||
Laurentian Bank of Canada | 2,094 | 87,471 | ||||||
North West Co., Inc. (The) | 3,565 | 85,936 | ||||||
Pan American Silver Corp. | 2,119 | 35,638 | ||||||
Seven Generations Energy, Ltd., Class A(1) | 8,895 | 152,343 | ||||||
Torex Gold Resources, Inc.(1) | 1,820 | 34,707 | ||||||
$ | 853,178 | |||||||
China — 0.6% |
| |||||||
TAL Education Group ADR | 1,002 | $ | 122,555 | |||||
$ | 122,555 | |||||||
Security | Shares | Value | ||||||
Finland — 0.9% |
| |||||||
Amer Sports Oyj | 3,309 | $ | 82,764 | |||||
Technopolis Oyj | 19,895 | 83,866 | ||||||
$ | 166,630 | |||||||
France — 1.4% |
| |||||||
Criteo SA ADR(1) | 1,446 | $ | 70,926 | |||||
Ipsen SA | 724 | 99,071 | ||||||
Rubis SCA | 795 | 90,171 | ||||||
$ | 260,168 | |||||||
Germany — 1.3% |
| |||||||
Axel Springer SE | 1,560 | $ | 93,836 | |||||
Carl Zeiss Meditec AG | 2,084 | 108,398 | ||||||
Salzgitter AG | 1,034 | 42,198 | ||||||
$ | 244,432 | |||||||
Hong Kong — 0.7% |
| |||||||
Hysan Development Co., Ltd. | 25,938 | $ | 123,786 | |||||
$ | 123,786 | |||||||
Ireland — 1.6% |
| |||||||
Irish Residential Properties REIT PLC | 50,756 | $ | 78,784 | |||||
UDG Healthcare PLC | 19,160 | 216,108 | ||||||
$ | 294,892 | |||||||
Israel — 1.3% |
| |||||||
Frutarom Industries, Ltd. | 3,570 | $ | 249,231 | |||||
$ | 249,231 | |||||||
Italy — 2.3% |
| |||||||
Amplifon SpA | 6,935 | $ | 91,515 | |||||
Banca Generali SpA | 5,072 | 151,350 | ||||||
MARR SpA | 3,201 | 76,154 | ||||||
Moncler SpA | 4,734 | 111,053 | ||||||
$ | 430,072 | |||||||
Japan — 11.6% |
| |||||||
77 Bank, Ltd. (The) | 20,786 | $ | 102,606 | |||||
Ariake Japan Co., Ltd. | 1,906 | 132,823 | ||||||
Daifuku Co., Ltd. | 3,829 | 114,857 | ||||||
Eiken Chemical Co., Ltd. | 2,385 | 72,104 | ||||||
FP Corp. | 2,110 | 114,256 | ||||||
GMO Internet, Inc. | 5,976 | 77,804 |
6 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Japan (continued) |
| |||||||
H.I.S. Co., Ltd. | 3,036 | $ | 91,504 | |||||
Heiwa Real Estate REIT, Inc. | 98 | 76,200 | ||||||
Japan Hotel REIT Investment Corp. | 108 | 76,479 | ||||||
LaSalle Logiport REIT | 77 | 77,579 | ||||||
Nomura Co., Ltd. | 4,500 | 102,772 | ||||||
Penta-Ocean Construction Co., Ltd. | 15,188 | 86,558 | ||||||
Relia, Inc. | 12,800 | 139,407 | ||||||
Sac’s Bar Holdings, Inc. | 8,117 | 91,220 | ||||||
Sakata INX Corp. | 10,500 | 167,817 | ||||||
Sakata Seed Corp. | 3,400 | 105,755 | ||||||
Sumco Corp. | 6,466 | 93,983 | ||||||
Toho Co., Ltd. | 3,917 | 120,800 | ||||||
Tokyo Century Corp. | 3,687 | 147,774 | ||||||
Yamaha Corp. | 2,535 | 87,759 | ||||||
Yokohama Reito Co., Ltd. | 10,900 | 102,876 | ||||||
$ | 2,182,933 | |||||||
Luxembourg — 0.2% |
| |||||||
APERAM SA | 771 | $ | 35,802 | |||||
$ | 35,802 | |||||||
Netherlands — 2.4% |
| |||||||
IMCD Group NV | 3,546 | $ | 192,113 | |||||
Patheon NV(1) | 4,441 | 154,902 | ||||||
Refresco Group NV(2) | 4,984 | 101,667 | ||||||
$ | 448,682 | |||||||
Norway — 0.4% |
| |||||||
XXL ASA(2) | 8,503 | $ | 81,782 | |||||
$ | 81,782 | |||||||
Spain — 0.4% |
| |||||||
Hispania Activos Inmobiliarios SOCIMI SA | 4,475 | $ | 74,022 | |||||
$ | 74,022 | |||||||
Sweden — 0.9% |
| |||||||
Boliden AB | 1,550 | $ | 42,369 | |||||
Trelleborg AB, Class B | 5,833 | 133,187 | ||||||
$ | 175,556 | |||||||
Switzerland — 0.9% |
| |||||||
Temenos Group AG | 948 | $ | 84,811 | |||||
VZ Holding AG | 287 | 92,170 | ||||||
$ | 176,981 | |||||||
Security | Shares | Value | ||||||
United Kingdom — 7.8% |
| |||||||
Bodycote PLC | 11,492 | $ | 112,810 | |||||
Cairn Energy PLC(1) | 23,129 | 51,929 | ||||||
Grainger PLC | 27,658 | 94,738 | ||||||
Halma PLC | 7,895 | 113,138 | ||||||
Hastings Group Holdings PLC(2) | 23,515 | 96,109 | ||||||
Hiscox, Ltd. | 6,034 | 99,631 | ||||||
Inchcape PLC | 9,471 | 93,098 | ||||||
IWG PLC | 52,633 | 221,894 | ||||||
Melrose Industries PLC | 74,585 | 235,630 | ||||||
St. James’s Place PLC | 7,557 | 116,480 | ||||||
Travis Perkins PLC | 6,807 | 129,040 | ||||||
WH Smith PLC | 4,699 | 104,889 | ||||||
$ | 1,469,386 | |||||||
United States — 53.6% |
| |||||||
Acadia Realty Trust | 3,403 | $ | 94,603 | |||||
ACI Worldwide, Inc.(1) | 7,151 | 159,968 | ||||||
Akamai Technologies, Inc.(1) | 1,948 | 97,030 | ||||||
ALLETE, Inc. | 654 | 46,879 | ||||||
Alliant Energy Corp. | 1,889 | 75,881 | ||||||
Amedisys, Inc.(1) | 2,286 | 143,584 | ||||||
Ameris Bancorp | 1,170 | 56,394 | ||||||
AMETEK, Inc. | 2,436 | 147,549 | ||||||
Avnet, Inc. | 2,458 | 95,567 | ||||||
AZZ, Inc. | 2,039 | 113,776 | ||||||
Balchem Corp. | 1,872 | 145,473 | ||||||
Bank of the Ozarks, Inc. | 2,079 | 97,443 | ||||||
BankUnited, Inc. | 1,706 | 57,509 | ||||||
Black Knight Financial Services, Inc., Class A(1) | 2,454 | 100,491 | ||||||
Blackbaud, Inc. | 1,927 | 165,240 | ||||||
Bright Horizons Family Solutions, Inc.(1) | 2,790 | 215,416 | ||||||
Brink’s Co. (The) | 1,390 | 93,130 | ||||||
Burlington Stores, Inc.(1) | 1,900 | 174,781 | ||||||
Cambrex Corp.(1) | 2,438 | 145,670 | ||||||
CBOE Holdings, Inc. | 720 | 65,808 | ||||||
Central Garden & Pet Co., Class A(1) | 1,778 | 53,376 | ||||||
CMS Energy Corp. | 1,682 | 77,792 | ||||||
Cohen & Steers, Inc. | 2,328 | 94,377 | ||||||
Columbia Banking System, Inc. | 3,112 | 124,013 | ||||||
CSG Systems International, Inc. | 946 | 38,389 | ||||||
CubeSmart | 5,859 | 140,850 | ||||||
Dave & Buster’s Entertainment, Inc.(1) | 1,128 | 75,023 | ||||||
DCT Industrial Trust, Inc. | 1,962 | 104,849 | ||||||
Deluxe Corp. | 1,966 | 136,087 | ||||||
Diamondback Energy, Inc.(1) | 1,610 | 142,984 | ||||||
Dolby Laboratories, Inc., Class A | 3,657 | 179,047 |
7 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
United States (continued) |
| |||||||
Douglas Emmett, Inc. | 2,207 | $ | 84,329 | |||||
Dun & Bradstreet Corp. (The) | 1,297 | 140,271 | ||||||
EastGroup Properties, Inc. | 1,322 | 110,784 | ||||||
Education Realty Trust, Inc. | 1,754 | 67,967 | ||||||
EnerSys | 1,727 | 125,121 | ||||||
Envision Healthcare Corp.(1) | 1,075 | 67,370 | ||||||
Essex Property Trust, Inc. | 595 | 153,076 | ||||||
Euronet Worldwide, Inc.(1) | 851 | 74,352 | ||||||
Federal Realty Investment Trust | 785 | 99,216 | ||||||
First American Financial Corp. | 2,524 | 112,798 | ||||||
First Hawaiian, Inc. | 2,691 | 82,398 | ||||||
First Republic Bank | 3,207 | 321,021 | ||||||
Grand Canyon Education, Inc.(1) | 968 | 75,901 | ||||||
Hexcel Corp. | 4,211 | 222,299 | ||||||
Horace Mann Educators Corp. | 1,859 | 70,270 | ||||||
Hub Group, Inc., Class A(1) | 1,780 | 68,263 | ||||||
ICU Medical, Inc.(1) | 410 | 70,725 | ||||||
Integra LifeSciences Holdings Corp.(1) | 2,739 | 149,303 | ||||||
Jagged Peak Energy, Inc.(1) | 2,951 | 39,396 | ||||||
Jazz Pharmaceuticals PLC(1) | 606 | 94,233 | ||||||
Kansas City Southern | 598 | 62,581 | ||||||
Kirby Corp.(1) | 1,337 | 89,378 | ||||||
Landstar System, Inc. | 1,544 | 132,166 | ||||||
Lazard, Ltd., Class A | 1,672 | 77,464 | ||||||
Ligand Pharmaceuticals, Inc.(1) | 1,370 | 166,318 | ||||||
Lithia Motors, Inc., Class A | 911 | 85,844 | ||||||
LKQ Corp.(1) | 4,492 | 148,011 | ||||||
Lululemon Athletica, Inc.(1) | 1,100 | 65,637 | ||||||
Mercury Systems, Inc.(1) | 1,599 | 67,302 | ||||||
Milacron Holdings Corp.(1) | 7,856 | 138,187 | ||||||
Monotype Imaging Holdings, Inc. | 975 | 17,842 | ||||||
MTS Systems Corp. | 880 | 45,584 | ||||||
Multi-Color Corp. | 2,542 | 207,427 | ||||||
National Retail Properties, Inc. | 2,391 | 93,488 | ||||||
NETGEAR, Inc.(1) | 3,129 | 134,860 | ||||||
NVR, Inc.(1) | 65 | 156,690 | ||||||
Oceaneering International, Inc. | 2,785 | 63,609 | ||||||
Okta, Inc.(1) | 836 | 19,061 | ||||||
Papa John’s International, Inc. | 471 | 33,799 | ||||||
Parkway, Inc. | 3,688 | 84,418 | ||||||
PDC Energy, Inc.(1) | 2,634 | 113,552 | ||||||
PDF Solutions, Inc.(1) | 7,593 | 124,905 | ||||||
Performance Food Group Co.(1) | 6,527 | 178,840 | ||||||
Pinnacle Foods, Inc. | 3,068 | 182,239 | ||||||
Pinnacle West Capital Corp. | 941 | 80,136 | ||||||
PS Business Parks, Inc. | 1,301 | 172,239 |
Security | Shares | Value | ||||||
United States (continued) |
| |||||||
RBC Bearings, Inc.(1) | 522 | $ | 53,119 | |||||
RealPage, Inc.(1) | 4,707 | 169,217 | ||||||
RLI Corp. | 2,183 | 119,235 | ||||||
ServiceMaster Global Holdings, Inc.(1) | 4,872 | 190,934 | ||||||
Sterling Bancorp | 6,641 | 154,403 | ||||||
Steven Madden, Ltd.(1) | 1,429 | 57,089 | ||||||
Teleflex, Inc. | 543 | 112,814 | ||||||
US Concrete, Inc.(1) | 2,546 | 199,988 | ||||||
Veeco Instruments, Inc.(1) | 5,201 | 144,848 | ||||||
WageWorks, Inc.(1) | 2,423 | 162,826 | ||||||
WesBanco, Inc. | 3,130 | 123,760 | ||||||
West Pharmaceutical Services, Inc. | 1,297 | 122,592 | ||||||
Wintrust Financial Corp. | 619 | 47,316 | ||||||
$ | 10,087,790 | |||||||
Total Common Stocks |
| $ | 18,603,858 | |||||
Short-Term Investments — 1.8% | ||||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 1.20%(3) | 341,661 | $ | 341,730 | |||||
Total Short-Term Investments |
| $ | 341,730 | |||||
Total Investments — 100.6% |
| $ | 18,945,588 | |||||
Other Assets, Less Liabilities — (0.6)% |
| $ | (112,560 | ) | ||||
Net Assets — 100.0% |
| $ | 18,833,028 | |||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
(1) | Non-income producing security. |
(2) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be sold in certain transactions in reliance on an exemption from registration (normally to qualified institutional buyers). At June 30, 2017, the aggregate value of these securities is $397,837 or 2.1% of the Fund’s net assets. |
(3) | Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2017. |
Abbreviations:
ADR | – | American Depositary Receipt |
8 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Sector Classification of Portfolio | ||||||||
Sector | Percentage of Net Assets | Value | ||||||
Industrials | 19.8 | % | $ | 3,736,700 | ||||
Financials | 14.5 | 2,727,328 | ||||||
Consumer Discretionary | 13.3 | 2,500,933 | ||||||
Information Technology | 11.8 | 2,229,299 | ||||||
Real Estate | 11.4 | 2,149,907 | ||||||
Health Care | 9.6 | 1,814,707 | ||||||
Materials | 6.4 | 1,207,508 | ||||||
Consumer Staples | 5.9 | 1,109,518 | ||||||
Energy | 3.7 | 688,652 | ||||||
Utilities | 2.0 | 370,859 | ||||||
Telecommunication Services | 0.4 | 68,447 | ||||||
Short-Term Investments | 1.8 | 341,730 | ||||||
Total Investments | 100.6 | % | $ | 18,945,588 | ||||
9 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Unaffiliated investments, at value (identified cost, $15,987,511) | $ | 18,603,858 | ||
Affiliated investment, at value (identified cost, $341,736) | 341,730 | |||
Foreign currency, at value (identified cost, $1,871) | 1,870 | |||
Dividends receivable | 19,142 | |||
Dividends receivable from affiliated investment | 135 | |||
Receivable for investments sold | 14,092 | |||
Receivable for Fund shares sold | 5,905 | |||
Tax reclaims receivable | 7,122 | |||
Receivable from affiliates | 11,483 | |||
Total assets | $ | 19,005,337 | ||
Liabilities | ||||
Payable for investments purchased | $ | 25,083 | ||
Payable for Fund shares redeemed | 95,754 | |||
Payable to affiliates: | ||||
Investment adviser fee | 11,788 | |||
Administration fee | 2,358 | |||
Distribution and service fees | 6,770 | |||
Trustees’ fees | 410 | |||
Accrued expenses | 30,146 | |||
Total liabilities | $ | 172,309 | ||
Net Assets | $ | 18,833,028 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 15,868,810 | ||
Accumulated net realized gain | 368,829 | |||
Accumulated net investment loss | (21,192 | ) | ||
Net unrealized appreciation | 2,616,581 | |||
Net Assets | $ | 18,833,028 | ||
Class A Shares | ||||
Net Assets | $ | 10,539,939 | ||
Shares Outstanding | 740,482 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.23 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 15.10 | ||
Class C Shares | ||||
Net Assets | $ | 5,559,874 | ||
Shares Outstanding | 441,247 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 12.60 | ||
Class I Shares | ||||
Net Assets | $ | 2,733,215 | ||
Shares Outstanding | 187,344 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.59 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
* | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
10 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends (net of foreign taxes, $11,299) | $ | 161,338 | ||
Dividends from affiliated investment | 510 | |||
Total investment income | $ | 161,848 | ||
Expenses | ||||
Investment adviser fee | $ | 71,391 | ||
Administration fee | 14,278 | |||
Distribution and service fees | ||||
Class A | 13,638 | |||
Class C | 28,173 | |||
Trustees’ fees and expenses | 847 | |||
Custodian fee | 20,390 | |||
Transfer and dividend disbursing agent fees | 18,789 | |||
Legal and accounting services | 18,938 | |||
Printing and postage | 6,219 | |||
Registration fees | 22,711 | |||
Miscellaneous | 9,050 | |||
Total expenses | $ | 224,424 | ||
Deduct — | ||||
Allocation of expenses to affiliates | $ | 73,116 | ||
Total expense reductions | $ | 73,116 | ||
Net expenses | $ | 151,308 | ||
Net investment income | $ | 10,540 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 1,045,870 | ||
Investment transactions — affiliated investment | (4 | ) | ||
Foreign currency transactions | 127 | |||
Net realized gain | $ | 1,045,993 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 1,068,346 | ||
Investments — affiliated investment | 3 | |||
Foreign currency | 409 | |||
Net change in unrealized appreciation (depreciation) | $ | 1,068,758 | ||
Net realized and unrealized gain | $ | 2,114,751 | ||
Net increase in net assets from operations | $ | 2,125,291 |
11 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment income | $ | 10,540 | $ | 163,739 | ||||
Net realized gain (loss) from investment and foreign currency transactions | 1,045,993 | (338,343 | ) | |||||
Net change in unrealized appreciation (depreciation) from investments and foreign currency | 1,068,758 | 1,651,106 | ||||||
Net increase in net assets from operations | $ | 2,125,291 | $ | 1,476,502 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | — | $ | (124,908 | ) | |||
Class C | — | (25,618 | ) | |||||
Class I | — | (24,504 | ) | |||||
Total distributions to shareholders | $ | — | $ | (175,030 | ) | |||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 771,406 | $ | 1,230,162 | ||||
Class C | 224,735 | 317,500 | ||||||
Class I | 1,297,507 | 559,330 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | — | 114,221 | ||||||
Class C | — | 21,733 | ||||||
Class I | — | 23,016 | ||||||
Cost of shares redeemed | ||||||||
Class A | (3,118,657 | ) | (4,212,632 | ) | ||||
Class C | (816,370 | ) | (1,494,991 | ) | ||||
Class I | (751,867 | ) | (3,207,582 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (2,393,246 | ) | $ | (6,649,243 | ) | ||
Net decrease in net assets | $ | (267,955 | ) | $ | (5,347,771 | ) | ||
Net Assets | ||||||||
At beginning of period | $ | 19,100,983 | $ | 24,448,754 | ||||
At end of period | $ | 18,833,028 | $ | 19,100,983 | ||||
Accumulated net investment loss included in net assets | ||||||||
At end of period | $ | (21,192 | ) | $ | (31,732 | ) |
12 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 12.730 | $ | 11.860 | $ | 17.120 | $ | 17.380 | $ | 14.230 | $ | 14.120 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | 0.019 | $ | 0.109 | $ | (0.030 | ) | $ | (0.057 | ) | $ | (0.053 | ) | $ | 0.020 | |||||||||
Net realized and unrealized gain (loss) | 1.481 | 0.898 | (1.220 | ) | 0.608 | 4.476 | 1.341 | |||||||||||||||||
Total income (loss) from operations | $ | 1.500 | $ | 1.007 | $ | (1.250 | ) | $ | 0.551 | $ | 4.423 | $ | 1.361 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (0.137 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
From net realized gain | — | — | (4.010 | ) | (0.811 | ) | (1.273 | ) | (1.251 | ) | ||||||||||||||
Total distributions | $ | — | $ | (0.137 | ) | $ | (4.010 | ) | $ | (0.811 | ) | $ | (1.273 | ) | $ | (1.251 | ) | |||||||
Net asset value — End of period | $ | 14.230 | $ | 12.730 | $ | 11.860 | $ | 17.120 | $ | 17.380 | $ | 14.230 | ||||||||||||
Total Return(2)(3) | 11.78 | %(4) | 8.49 | % | (7.84 | )% | 3.37 | % | 31.47 | % | 9.59 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 10,540 | $ | 11,659 | $ | 13,747 | $ | 19,438 | $ | 24,197 | $ | 19,174 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(3)(5) | 1.40 | %(6) | 1.40 | % | 1.45 | % | 1.45 | % | 1.45 | % | 1.45 | % | ||||||||||||
Net investment income (loss) | 0.28 | %(6) | 0.92 | % | (0.18 | )% | (0.33 | )% | (0.32 | )% | 0.14 | % | ||||||||||||
Portfolio Turnover | 25 | %(4) | 99 | % | 150 | % | 37 | % | 52 | % | 36 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | The investment adviser, administrator and sub-adviser reimbursed certain operating expenses (equal to 0.77%, 0.77%, 0.32%, 0.34%, 0.55% and 0.63% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(4) | Not annualized. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(6) | Annualized. |
13 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 11.310 | $ | 10.550 | $ | 15.820 | $ | 16.240 | $ | 13.460 | $ | 13.520 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | (0.026 | ) | $ | 0.017 | $ | (0.138 | ) | $ | (0.175 | ) | $ | (0.165 | ) | $ | (0.086 | ) | |||||||
Net realized and unrealized gain (loss) | 1.316 | 0.796 | (1.122 | ) | 0.566 | 4.218 | 1.277 | |||||||||||||||||
Total income (loss) from operations | $ | 1.290 | $ | 0.813 | $ | (1.260 | ) | $ | 0.391 | $ | 4.053 | $ | 1.191 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (0.053 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
From net realized gain | — | — | (4.010 | ) | (0.811 | ) | (1.273 | ) | (1.251 | ) | ||||||||||||||
Total distributions | $ | — | $ | (0.053 | ) | $ | (4.010 | ) | $ | (0.811 | ) | $ | (1.273 | ) | $ | (1.251 | ) | |||||||
Net asset value — End of period | $ | 12.600 | $ | 11.310 | $ | 10.550 | $ | 15.820 | $ | 16.240 | $ | 13.460 | ||||||||||||
Total Return(2)(3) | 11.41 | %(4) | 7.71 | % | (8.57 | )% | 2.62 | % | 30.51 | % | 8.76 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 5,560 | $ | 5,540 | $ | 6,316 | $ | 9,015 | $ | 9,876 | $ | 7,911 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(3)(5) | 2.15 | %(6) | 2.15 | % | 2.20 | % | 2.20 | % | 2.20 | % | 2.20 | % | ||||||||||||
Net investment income (loss) | (0.44 | )%(6) | 0.16 | % | (0.93 | )% | (1.07 | )% | (1.07 | )% | (0.61 | )% | ||||||||||||
Portfolio Turnover | 25 | %(4) | 99 | % | 150 | % | 37 | % | 52 | % | 36 | % |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | The investment adviser, administrator and sub-adviser reimbursed certain operating expenses (equal to 0.77%, 0.77%, 0.32%, 0.34%, 0.55% and 0.63% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(4) | Not annualized. |
(5) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(6) | Annualized. |
14 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.030 | $ | 12.130 | $ | 17.380 | $ | 17.590 | $ | 14.350 | $ | 14.190 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | 0.043 | $ | 0.184 | $ | 0.001 | $ | (0.000 | )(2) | $ | (0.010 | ) | $ | 0.061 | ||||||||||
Net realized and unrealized gain (loss) | 1.517 | 0.886 | (1.241 | ) | 0.601 | 4.523 | 1.350 | |||||||||||||||||
Total income (loss) from operations | $ | 1.560 | $ | 1.070 | $ | (1.240 | ) | $ | 0.601 | $ | 4.513 | $ | 1.411 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (0.170 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
From net realized gain | — | — | (4.010 | ) | (0.811 | ) | (1.273 | ) | (1.251 | ) | ||||||||||||||
Total distributions | $ | — | $ | (0.170 | ) | $ | (4.010 | ) | $ | (0.811 | ) | $ | (1.273 | ) | $ | (1.251 | ) | |||||||
Net asset value — End of period | $ | 14.590 | $ | 13.030 | $ | 12.130 | $ | 17.380 | $ | 17.590 | $ | 14.350 | ||||||||||||
Total Return(3)(4) | 11.97 | %(5) | 8.83 | % | (7.67 | )% | 3.61 | % | 31.84 | % | 9.89 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 2,733 | $ | 1,902 | $ | 4,386 | $ | 12,753 | $ | 2,428 | $ | 1,598 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(4)(6) | 1.15 | %(7) | 1.15 | % | 1.20 | % | 1.20 | % | 1.20 | % | 1.20 | % | ||||||||||||
Net investment income (loss) | 0.62 | %(7) | 1.53 | % | 0.01 | % | (0.00 | )%(8) | (0.06 | )% | 0.41 | % | ||||||||||||
Portfolio Turnover | 25 | %(5) | 99 | % | 150 | % | 37 | % | 52 | % | 36 | % |
(1) | Computed using average shares outstanding. |
(2) | Amount is less than $(0.0005). |
(3) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(4) | The investment adviser, administrator and sub-adviser reimbursed certain operating expenses (equal to 0.77%, 0.77%, 0.32%, 0.34%, 0.55% and 0.63% of average daily net assets for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively). Absent this reimbursement, total return would be lower. |
(5) | Not annualized. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
(8) | Amount is less than (0.005)%. |
15 | See Notes to Financial Statements. |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Global Small-Cap Fund (the Fund) is a diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund’s investment objective is to seek long-term total return. The Fund offers three classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class-specific expenses.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.
Foreign Securities and Currencies. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. When valuing foreign equity securities that meet certain criteria, the Fund’s Trustees have approved the use of a fair value service that values such securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities.
Affiliated Fund. The Fund may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Fund in a manner that fairly reflects the security’s value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Fund is informed of the ex-dividend date. Withholding taxes on foreign dividends and capital gains have been provided for in accordance with the Fund’s understanding of the applicable countries’ tax rules and rates.
D Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
16 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
F Foreign Currency Translation — Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to changes in foreign currency exchange 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 results from fluctuations in foreign currency exchange rates is not separately disclosed.
G Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
H Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
I Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders and Income Tax Information
It is the present policy of the Fund to make at least one distribution annually (normally in December) of all or substantially all of its net investment income and to distribute annually all or substantially all of its net realized capital gains. Distributions to shareholders are recorded on the ex-dividend date. Distributions are declared separately for each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
At December 31, 2016, the Fund, for federal income tax purposes, had deferred capital losses of $537,250 which would reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus would reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the first day of the Fund’s next taxable year and retain the same short-term or long-term character as when originally deferred. Of the deferred capital losses at December 31, 2016, $537,250 are short-term.
The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 16,500,893 | ||
Gross unrealized appreciation | $ | 2,894,296 | ||
Gross unrealized depreciation | (449,601 | ) | ||
Net unrealized appreciation | $ | 2,444,695 |
3 Investment Adviser and Administration Fees and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of EVM, as compensation for investment advisory services rendered to the Fund. Pursuant to the investment advisory agreement and subsequent fee reduction agreement between the Fund and BMR, the fee is computed at an annual rate of 0.75% of the Fund’s average daily net assets up to $500 million and is payable monthly. On net assets of $500 million and over, the annual fee is reduced. The fee reduction cannot be terminated or reduced without the approval of a majority vote of the Trustees of the Fund who are not interested persons of EVM or the Fund and by the vote of a majority of shareholders. For the six months ended June 30, 2017, the investment
17 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
adviser fee amounted to $71,391 or 0.75% (annualized) of the Fund’s average daily net assets. Pursuant to a sub-advisory agreement, BMR pays Eaton Vance Management (International) Limited (EVMI), an indirect, wholly-owned subsidiary of Eaton Vance Corp., a portion of its investment adviser fee for sub-advisory services provided to the Fund. The administration fee is earned by EVM for administering the business affairs of the Fund and is computed at an annual rate of 0.15% of the Fund’s average daily net assets. For the six months ended June 30, 2017, the administration fee amounted to $14,278. BMR, EVM and EVMI have agreed to reimburse the Fund’s expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only) exceed 1.40%, 2.15% and 1.15% of the Fund’s average daily net assets for Class A, Class C and Class I, respectively. Pursuant to this agreement, BMR, EVM and EVMI were allocated $73,116 in total of the Fund’s operating expenses for the six months ended June 30, 2017. This agreement may be changed or terminated after April 30, 2018. EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $2,381 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $723 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A and Class C shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee. Trustees of the Fund who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of the above organizations.
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $13,638 for Class A shares. The Fund also has in effect a distribution plan for Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class C shares for providing ongoing distribution services and facilities to the Fund. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $21,130 for Class C shares.
Pursuant to the Class C Plan, the Fund also makes payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended June 30, 2017 amounted to $7,043 for Class C shares.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is imposed on redemptions of Class C shares made within one year of purchase. Class A shares may be subject to a 1% CDSC if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six months ended June 30, 2017, the Fund was informed that EVD received less than $100 of CDSCs paid by Class A shareholders and no CDSCs paid by Class C shareholders.
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $4,789,604 and $7,366,544, respectively, for the six months ended June 30, 2017.
18 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 56,411 | 102,972 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 9,015 | ||||||
Redemptions | (231,604 | ) | (355,333 | ) | ||||
Net decrease | (175,193 | ) | (243,346 | ) | ||||
Class C | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 18,987 | 30,162 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 1,930 | ||||||
Redemptions | (67,399 | ) | (140,917 | ) | ||||
Net decrease | (48,412 | ) | (108,825 | ) | ||||
Class I | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 94,483 | 45,797 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 1,775 | ||||||
Redemptions | (53,031 | ) | (263,192 | ) | ||||
Net increase (decrease) | 41,452 | (215,620 | ) |
8 Line of Credit
The Fund participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Fund solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Fund based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Fund, it may be unable to borrow some or all of its requested amounts at any particular time. The Fund did not have any significant borrowings or allocated fees during the six months ended June 30, 2017.
9 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. Certain 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 Fund, political or financial instability or diplomatic and other developments which could affect such investments. Foreign securities 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.
19 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
10 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 — quoted prices in active markets for identical investments |
• | Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 — significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At June 30, 2017, the hierarchy of inputs used in valuing the Fund’s investments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | ||||||||||||||||
Asia/Pacific | $ | 122,555 | $ | 2,942,807 | $ | — | $ | 3,065,362 | ||||||||
Developed Europe | 344,107 | 3,893,810 | — | 4,237,917 | ||||||||||||
Developed Middle East | — | 249,231 | — | 249,231 | ||||||||||||
North America | 11,051,348 | — | — | 11,051,348 | ||||||||||||
Total Common Stocks | $ | 11,518,010 | $ | 7,085,848 | * | $ | — | $ | 18,603,858 | |||||||
Short-Term Investments | $ | — | $ | 341,730 | $ | — | $ | 341,730 | ||||||||
Total Investments | $ | 11,518,010 | $ | 7,427,578 | $ | — | $ | 18,945,588 |
* | Includes foreign equity securities whose values were adjusted to reflect market trading of comparable securities or other correlated instruments that occurred after the close of trading in their applicable foreign markets. |
The Fund held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
20 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio-level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
21 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Eaton Vance Global Small-Cap Fund (the “Fund”) with Boston Management and Research (the “Adviser”) and the sub-advisory agreement with Eaton Vance Management (International) Limited (the “Sub-adviser”), an affiliate of the Adviser and of Eaton Vance Management, including their fee structures, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of each agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreements. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory and the sub-advisory agreement for the Fund.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement and the sub-advisory agreement of the Fund, the Board evaluated the nature, extent and quality of services provided to the Fund by the Adviser and the Sub-adviser.
The Board considered the Adviser’s and the Sub-adviser’s management capabilities and investment process with respect to the types of investments held by the Fund, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Fund, including recent changes to such personnel. With respect to the Adviser, the Board considered the Adviser’s responsibilities overseeing the Sub-adviser and coordinating activities in implementing the Fund’s investment strategy. The Board specifically noted that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. The Board also considered the abilities and experience of the Sub-adviser’s investment professionals in investing in equity securities, including investing in both U.S. and foreign common stocks. The Board considered the international investment capabilities of the Sub-adviser, which is based in London, and the benefits to the Fund of having portfolio management services involving investments in international equities provided by investment professionals located abroad. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including
22 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
the Fund, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Fund, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing the Fund.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof, including the Sub-adviser. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser and Sub-adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement and the sub-advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2016 for the Fund. The Board noted that actions are being taken by the Adviser to address Fund performance and concluded that additional time is required to evaluate the effectiveness of such actions.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered factors that had an impact on Fund expense ratios relative to comparable funds.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser and the Sub-adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof, including the Sub-adviser, in providing investment advisory and administrative services to the Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates, including the Sub-adviser, in connection with their relationships with the Fund, including the benefits of research services that may be available to the Adviser or the Sub-adviser as a result of securities transactions effected for the Fund and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates, including the Sub-adviser, are deemed not to be excessive.
23 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund, the structure of the advisory fee, which includes breakpoints at several asset levels, will allow the Fund to continue to benefit from any economies of scale in the future.
24 |
Eaton Vance
Global Small-Cap Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Global Small-Cap Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Global Small-Cap Fund
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
25 |
Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
26 |
This Page Intentionally Left Blank
This Page Intentionally Left Blank
Investment Adviser
Boston Management and Research
Two International Place
Boston, MA 02110
Investment Sub-Adviser
Eaton Vance Management (International) Limited
125 Old Broad Street
London, EC2N 1AR
United Kingdom
Administrator
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7723 6.30.17
Eaton Vance
Special Equities Fund
Semiannual Report
June 30, 2017
Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator and a commodity trading advisor.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
This report must be preceded or accompanied by a current summary prospectus or prospectus. Before investing, investors should consider carefully the investment objective, risks, and charges and expenses of a mutual fund. This and other important information is contained in the summary prospectus and prospectus, which can be obtained from a financial advisor. Prospective investors should read the prospectus carefully before investing. For further information, please call 1-800-262-1122.
Semiannual Report June 30, 2017
Eaton Vance
Special Equities Fund
Table of Contents
Performance | 2 | |||
Fund Profile | 2 | |||
Endnotes and Additional Disclosures | 3 | |||
Fund Expenses | 4 | |||
Financial Statements | 5 | |||
Board of Trustees’ Contract Approval | 18 | |||
Officers and Trustees | 21 | |||
Important Notices | 22 |
Eaton Vance
Special Equities Fund
June 30, 2017
Performance1,2
Portfolio Managers Michael D. McLean, CFA and J. Griffith Noble, CFA
% Average Annual Total Returns | Class Inception Date | Performance Inception Date | Six Months | One Year | Five Years | Ten Years | ||||||||||||||||||
Class A at NAV | 04/22/1968 | 04/22/1968 | 6.49 | % | 17.95 | % | 11.44 | % | 5.23 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | 0.36 | 11.17 | 10.13 | 4.61 | ||||||||||||||||||
Class C at NAV | 11/17/1994 | 04/22/1968 | 6.07 | 17.04 | 10.62 | 4.46 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 5.07 | 16.04 | 10.62 | 4.46 | ||||||||||||||||||
Class I at NAV | 07/29/2011 | 04/22/1968 | 6.62 | 18.23 | 11.73 | 5.40 | ||||||||||||||||||
Russell 2500™ Index | — | — | 5.97 | % | 19.84 | % | 14.03 | % | 7.41 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | |||||||||||||||||||||
Gross | 1.41 | % | 2.16 | % | 1.16 | % | ||||||||||||||||||
Net | 1.35 | 2.10 | 1.10 |
Fund Profile
Common Stock Sector Allocation (% of net assets)
Top 10 Holdings (% of net assets)4
Dolby Laboratories, Inc., Class A | 2.2 | % | ||
First Republic Bank | 2.1 | |||
Hexcel Corp. | 2.1 | |||
ServiceMaster Global Holdings, Inc. | 2.1 | |||
Multi-Color Corp. | 2.0 | |||
ACI Worldwide, Inc. | 2.0 | |||
Pinnacle Foods, Inc. | 1.9 | |||
Bright Horizons Family Solutions, Inc. | 1.9 | |||
Performance Food Group Co. | 1.9 | |||
Balchem Corp. | 1.8 | |||
Total | 20.0 | % |
See Endnotes and Additional Disclosures in this report.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or offering price (as applicable) with all distributions reinvested. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than quoted. Returns are before taxes unless otherwise noted. For performance as of the most recent month-end, please refer to eatonvance.com.
2 |
Eaton Vance
Special Equities Fund
June 30, 2017
Endnotes and Additional Disclosures
1 | Russell 2500™ Index is an unmanaged index of approximately 2,500 small- and midcap U.S. stocks. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. |
2 | Total Returns at NAV do not include applicable sales charges. If sales charges were deducted, the returns would be lower. Total Returns shown with maximum sales charge reflect the stated maximum sales charge. Unless otherwise stated, performance does not reflect the deduction of taxes on Fund distributions or redemptions of Fund shares. |
Performance prior to the inception date of a class may be linked to the performance of an older class of the Fund. This linked performance is adjusted for any applicable sales charge, but is not adjusted for class expense differences. If adjusted for such differences, the performance would be different. The performance of Class I is linked to Class A. Performance since inception for an index, if presented, is the performance since the Fund’s or oldest share class’ inception, as applicable. Performance presented in the Financial Highlights included in the financial statements is not linked. |
3 | Source: Fund prospectus. Net expense ratios reflect a contractual expense reimbursement that continues through 4/30/18. Without the reimbursement, performance would have been lower. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report. |
4 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Special Equities Fund
June 30, 2017
Fund Expenses
Example: As a Fund shareholder, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of Fund investing and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 – June 30, 2017).
Actual Expenses: The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes: The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the actual Fund expense ratio and an assumed rate of return of 5% per year (before expenses), which is not the actual Fund return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher.
Beginning Account Value (1/1/17) | Ending Account Value (6/30/17) | Expenses Paid During Period* (1/1/17 – 6/30/17) | Annualized Expense | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,064.90 | $ | 7.01 | ** | 1.37 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,060.70 | $ | 10.83 | ** | 2.12 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,066.20 | $ | 5.74 | ** | 1.12 | % | |||||||
Hypothetical | ||||||||||||||||
(5% return per year before expenses) | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.00 | $ | 6.85 | ** | 1.37 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,014.30 | $ | 10.59 | ** | 2.12 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,019.20 | $ | 5.61 | ** | 1.12 | % |
* | Expenses are equal to the Fund’s annualized expense ratio for the indicated Class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on December 31, 2016. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
4 |
Eaton Vance
Special Equities Fund
June 30, 2017
Portfolio of Investments (Unaudited)
Common Stocks — 99.6% | ||||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 3.2% | ||||||||
Hexcel Corp. | 18,831 | $ | 994,088 | |||||
Mercury Systems, Inc.(1) | 13,576 | 571,414 | ||||||
$ | 1,565,502 | |||||||
Air Freight & Logistics — 0.7% | ||||||||
Hub Group, Inc., Class A(1) | 8,694 | $ | 333,415 | |||||
$ | 333,415 | |||||||
Banks — 8.3% | ||||||||
Ameris Bancorp | 5,326 | $ | 256,713 | |||||
Bank of the Ozarks, Inc. | 14,600 | 684,302 | ||||||
BankUnited, Inc. | 8,161 | 275,107 | ||||||
Columbia Banking System, Inc. | 6,655 | 265,202 | ||||||
First Hawaiian, Inc. | 18,939 | 579,912 | ||||||
First Republic Bank | 10,063 | 1,007,306 | ||||||
Sterling Bancorp | 19,543 | 454,375 | ||||||
WesBanco, Inc. | 6,687 | 264,404 | ||||||
Wintrust Financial Corp. | 3,327 | 254,316 | ||||||
$ | 4,041,637 | |||||||
Biotechnology — 1.8% | ||||||||
Ligand Pharmaceuticals, Inc.(1) | 7,110 | $ | 863,154 | |||||
$ | 863,154 | |||||||
Capital Markets — 3.6% | ||||||||
CBOE Holdings, Inc. | 8,316 | $ | 760,082 | |||||
Cohen & Steers, Inc. | 15,169 | 614,951 | ||||||
Lazard, Ltd., Class A | 8,253 | 382,362 | ||||||
$ | 1,757,395 | |||||||
Chemicals — 1.8% | ||||||||
Balchem Corp. | 11,427 | $ | 887,992 | |||||
$ | 887,992 | |||||||
Commercial Services & Supplies — 4.0% | ||||||||
Brink’s Co. (The) | 5,806 | $ | 389,002 | |||||
Deluxe Corp. | 8,455 | 585,255 | ||||||
Multi-Color Corp. | 12,079 | 985,647 | ||||||
$ | 1,959,904 | |||||||
Security | Shares | Value | ||||||
Communications Equipment — 1.1% | ||||||||
NETGEAR, Inc.(1) | 12,623 | $ | 544,051 | |||||
$ | 544,051 | |||||||
Construction Materials — 1.3% | ||||||||
US Concrete, Inc.(1) | 7,756 | $ | 609,234 | |||||
$ | 609,234 | |||||||
Distributors — 1.0% | ||||||||
LKQ Corp.(1) | 14,832 | $ | 488,714 | |||||
$ | 488,714 | |||||||
Diversified Consumer Services — 4.6% | ||||||||
Bright Horizons Family Solutions, Inc.(1) | 11,969 | $ | 924,126 | |||||
Grand Canyon Education, Inc.(1) | 3,750 | 294,038 | ||||||
ServiceMaster Global Holdings, Inc.(1) | 25,360 | 993,858 | ||||||
$ | 2,212,022 | |||||||
Electric Utilities — 2.2% | ||||||||
ALLETE, Inc. | 3,350 | $ | 240,128 | |||||
Alliant Energy Corp. | 10,129 | 406,882 | ||||||
Pinnacle West Capital Corp. | 4,772 | 406,384 | ||||||
$ | 1,053,394 | |||||||
Electrical Equipment — 3.8% | ||||||||
AMETEK, Inc. | 14,190 | $ | 859,488 | |||||
AZZ, Inc. | 7,809 | 435,742 | ||||||
EnerSys | 7,412 | 537,000 | ||||||
$ | 1,832,230 | |||||||
Electronic Equipment, Instruments & Components — 3.2% |
| |||||||
Avnet, Inc. | 8,178 | $ | 317,961 | |||||
Dolby Laboratories, Inc., Class A | 21,476 | 1,051,465 | ||||||
MTS Systems Corp. | 3,018 | 156,332 | ||||||
$ | 1,525,758 | |||||||
Energy Equipment & Services — 0.4% | ||||||||
Oceaneering International, Inc. | 8,925 | $ | 203,847 | |||||
$ | 203,847 | |||||||
Equity Real Estate Investment Trusts (REITs) — 8.3% |
| |||||||
Acadia Realty Trust | 10,180 | $ | 283,004 | |||||
CubeSmart | 27,617 | 663,913 | ||||||
DCT Industrial Trust, Inc. | 11,285 | 603,070 |
5 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Equity Real Estate Investment Trusts (REITs) (continued) |
| |||||||
Education Realty Trust, Inc. | 9,820 | $ | 380,525 | |||||
Essex Property Trust, Inc. | 2,161 | 555,960 | ||||||
Federal Realty Investment Trust | 2,539 | 320,904 | ||||||
National Retail Properties, Inc. | 10,215 | 399,407 | ||||||
Paramount Group, Inc. | 33,569 | 537,104 | ||||||
Parkway, Inc. | 10,981 | 251,355 | ||||||
$ | 3,995,242 | |||||||
Food & Staples Retailing — 1.9% |
| |||||||
Performance Food Group Co.(1) | 32,673 | $ | 895,240 | |||||
$ | 895,240 | |||||||
Food Products — 1.9% | ||||||||
Pinnacle Foods, Inc. | 15,725 | $ | 934,065 | |||||
$ | 934,065 | |||||||
Health Care Equipment & Supplies — 5.3% | ||||||||
ICU Medical, Inc.(1) | 2,253 | $ | 388,643 | |||||
Integra LifeSciences Holdings Corp.(1) | 14,348 | 782,109 | ||||||
Teleflex, Inc. | 3,133 | 650,912 | ||||||
West Pharmaceutical Services, Inc. | 7,842 | 741,226 | ||||||
$ | 2,562,890 | |||||||
Health Care Providers & Services — 2.4% | ||||||||
Amedisys, Inc.(1) | 10,445 | $ | 656,051 | |||||
Envision Healthcare Corp.(1) | 8,378 | 525,049 | ||||||
$ | 1,181,100 | |||||||
Hotels, Restaurants & Leisure — 1.0% | ||||||||
Dave & Buster’s Entertainment, Inc.(1) | 4,720 | $ | 313,927 | |||||
Papa John’s International, Inc. | 2,608 | 187,150 | ||||||
$ | 501,077 | |||||||
Household Durables — 0.9% | ||||||||
NVR, Inc.(1) | 180 | $ | 433,910 | |||||
$ | 433,910 | |||||||
Household Products — 0.5% | ||||||||
Central Garden & Pet Co., Class A(1) | 7,632 | $ | 229,113 | |||||
$ | 229,113 | |||||||
Insurance — 3.5% | ||||||||
First American Financial Corp. | 15,961 | $ | 713,297 |
Security | Shares | Value | ||||||
Insurance (continued) | ||||||||
Horace Mann Educators Corp. | 15,070 | $ | 569,646 | |||||
RLI Corp. | 7,357 | 401,839 | ||||||
$ | 1,684,782 | |||||||
Internet Software & Services — 1.1% | ||||||||
Akamai Technologies, Inc.(1) | 7,313 | $ | 364,260 | |||||
Okta, Inc.(1) | 6,407 | 146,080 | ||||||
$ | 510,340 | |||||||
IT Services — 3.3% | ||||||||
Black Knight Financial Services, Inc., Class A(1) | 9,517 | $ | 389,721 | |||||
CSG Systems International, Inc. | 14,249 | 578,225 | ||||||
Euronet Worldwide, Inc.(1) | 7,346 | 641,820 | ||||||
$ | 1,609,766 | |||||||
Life Sciences Tools & Services — 1.7% | ||||||||
Cambrex Corp.(1) | 6,843 | $ | 408,869 | |||||
Patheon NV(1) | 11,880 | 414,375 | ||||||
$ | 823,244 | |||||||
Machinery — 2.1% | ||||||||
Milacron Holdings Corp.(1) | 31,328 | $ | 551,059 | |||||
RBC Bearings, Inc.(1) | 4,447 | 452,527 | ||||||
$ | 1,003,586 | |||||||
Marine — 1.2% | ||||||||
Kirby Corp.(1) | 8,688 | $ | 580,793 | |||||
$ | 580,793 | |||||||
Multi-Utilities — 0.8% | ||||||||
CMS Energy Corp. | 8,825 | $ | 408,156 | |||||
$ | 408,156 | |||||||
Oil, Gas & Consumable Fuels — 3.9% | ||||||||
Diamondback Energy, Inc.(1) | 6,890 | $ | 611,901 | |||||
Jagged Peak Energy, Inc.(1) | 10,284 | 137,291 | ||||||
PDC Energy, Inc.(1) | 12,510 | 539,306 | ||||||
Rice Energy, Inc.(1) | 22,215 | 591,586 | ||||||
$ | 1,880,084 | |||||||
Pharmaceuticals — 1.2% | ||||||||
Jazz Pharmaceuticals PLC(1) | 3,775 | $ | 587,013 | |||||
$ | 587,013 | |||||||
6 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2017
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Professional Services — 2.8% | ||||||||
Dun & Bradstreet Corp. (The) | 5,281 | $ | 571,140 | |||||
WageWorks, Inc.(1) | 11,935 | 802,032 | ||||||
$ | 1,373,172 | |||||||
Road & Rail — 2.5% | ||||||||
Kansas City Southern | 8,302 | $ | 868,804 | |||||
Landstar System, Inc. | 3,715 | 318,004 | ||||||
$ | 1,186,808 | |||||||
Semiconductors & Semiconductor Equipment — 2.5% |
| |||||||
PDF Solutions, Inc.(1) | 32,824 | $ | 539,955 | |||||
Veeco Instruments, Inc.(1) | 24,879 | 692,880 | ||||||
$ | 1,232,835 | |||||||
Software — 5.6% |
| |||||||
ACI Worldwide, Inc.(1) | 42,298 | $ | 946,206 | |||||
Blackbaud, Inc. | 8,370 | 717,727 | ||||||
Monotype Imaging Holdings, Inc. | 7,825 | 143,198 | ||||||
RealPage, Inc.(1) | 24,523 | 881,602 | ||||||
$ | 2,688,733 | |||||||
Specialty Retail — 2.0% | ||||||||
Burlington Stores, Inc.(1) | 7,538 | $ | 693,421 | |||||
Lithia Motors, Inc., Class A | 2,885 | 271,853 | ||||||
$ | 965,274 | |||||||
Textiles, Apparel & Luxury Goods — 0.9% | ||||||||
Lululemon Athletica, Inc.(1) | 4,823 | $ | 287,788 | |||||
Steven Madden, Ltd.(1) | 3,986 | 159,241 | ||||||
$ | 447,029 | |||||||
Thrifts & Mortgage Finance — 1.3% | ||||||||
Essent Group, Ltd.(1) | 16,804 | $ | 624,101 | |||||
$ | 624,101 | |||||||
Total Common Stocks |
| $ | 48,216,602 | |||||
Exchange-Traded Funds — 0.3% | ||||||||
Security | Shares | Value | ||||||
Equity Funds — 0.3% |
| |||||||
iShares Russell 2000 ETF | 1,027 | $ | 144,725 | |||||
Total Exchange-Traded Funds |
| $ | 144,725 | |||||
Short-Term Investments — 0.3% | ||||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, | 149,452 | $ | 149,482 | |||||
Total Short-Term Investments |
| $ | 149,482 | |||||
Total Investments — 100.2% |
| $ | 48,510,809 | |||||
Other Assets, Less Liabilities — (0.2)% |
| $ | (95,557 | ) | ||||
Net Assets — 100.0% |
| $ | 48,415,252 | |||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
(1) | Non-income producing security. |
(2) | Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2017. |
7 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2017
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2017 | |||
Unaffiliated investments, at value (identified cost, $40,817,979) | $ | 48,361,327 | ||
Affiliated investment, at value (identified cost, $149,496) | 149,482 | |||
Dividends receivable | 33,825 | |||
Dividends receivable from affiliated investment | 1,004 | |||
Receivable for investments sold | 101,346 | |||
Receivable for Fund shares sold | 30,217 | |||
Receivable from affiliate | 3,247 | |||
Total assets | $ | 48,680,448 | ||
Liabilities | ||||
Payable for investments purchased | $ | 134,785 | ||
Payable for Fund shares redeemed | 55,722 | |||
Payable to affiliates: | ||||
Investment adviser fee | 24,941 | |||
Distribution and service fees | 9,040 | |||
Trustees’ fees | 723 | |||
Accrued expenses | 39,985 | |||
Total liabilities | $ | 265,196 | ||
Net Assets | $ | 48,415,252 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 38,541,884 | ||
Accumulated net realized gain | 2,414,894 | |||
Accumulated net investment loss | (84,860 | ) | ||
Net unrealized appreciation | 7,543,334 | |||
Net Assets | $ | 48,415,252 | ||
Class A Shares | ||||
Net Assets | $ | 34,603,010 | ||
Shares Outstanding | 1,540,297 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 22.47 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 23.84 | ||
Class C Shares | ||||
Net Assets | $ | 2,270,009 | ||
Shares Outstanding | 112,017 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 20.26 | ||
Class I Shares | ||||
Net Assets | $ | 11,542,233 | ||
Shares Outstanding | 504,569 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 22.88 |
On sales of $50,000 or more, the offering price of Class A shares is reduced.
* | Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge. |
8 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2017
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2017 | |||
Dividends | $ | 215,749 | ||
Dividends from affiliated investment | 3,853 | |||
Total investment income | $ | 219,602 | ||
Expenses | ||||
Investment adviser fee | $ | 140,994 | ||
Distribution and service fees | ||||
Class A | 41,853 | |||
Class C | 12,025 | |||
Trustees’ fees and expenses | 1,546 | |||
Custodian fee | 18,847 | |||
Transfer and dividend disbursing agent fees | 35,831 | |||
Legal and accounting services | 19,644 | |||
Printing and postage | 6,778 | |||
Registration fees | 23,006 | |||
Miscellaneous | 7,185 | |||
Total expenses | $ | 307,709 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 3,247 | ||
Total expense reductions | $ | 3,247 | ||
Net expenses | $ | 304,462 | ||
Net investment loss | $ | (84,860 | ) | |
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 1,839,401 | ||
Investment transactions — affiliated investment | 17 | |||
Net realized gain | $ | 1,839,418 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 990,005 | ||
Investments — affiliated investment | 24 | |||
Net change in unrealized appreciation (depreciation) | $ | 990,029 | ||
Net realized and unrealized gain | $ | 2,829,447 | ||
Net increase in net assets from operations | $ | 2,744,587 |
9 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2017
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2017 | Year Ended December 31, 2016 | ||||||
From operations — | ||||||||
Net investment loss | $ | (84,860 | ) | $ | (117,085 | ) | ||
Net realized gain from investment transactions | 1,839,418 | 2,693,902 | ||||||
Net change in unrealized appreciation (depreciation) from investments | 990,029 | 3,006,317 | ||||||
Net increase in net assets from operations | $ | 2,744,587 | $ | 5,583,134 | ||||
Distributions to shareholders — | ||||||||
From net realized gain | ||||||||
Class A | $ | — | $ | (2,109,378 | ) | |||
Class C | — | (174,108 | ) | |||||
Class I | — | (363,746 | ) | |||||
Total distributions to shareholders | $ | — | $ | (2,647,232 | ) | |||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 3,441,109 | $ | 1,088,799 | ||||
Class C | 248,309 | 153,915 | ||||||
Class I | 6,198,237 | 1,943,767 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | — | 1,785,310 | ||||||
Class C | — | 154,066 | ||||||
Class I | — | 134,724 | ||||||
Cost of shares redeemed | ||||||||
Class A | (2,899,275 | ) | (4,098,936 | ) | ||||
Class C | (435,902 | ) | (1,015,220 | ) | ||||
Class I | (1,156,786 | ) | (5,749,570 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | $ | 5,395,692 | $ | (5,603,145 | ) | |||
Net increase (decrease) in net assets | $ | 8,140,279 | $ | (2,667,243 | ) | |||
Net Assets | ||||||||
At beginning of period | $ | 40,274,973 | $ | 42,942,216 | ||||
At end of period | $ | 48,415,252 | $ | 40,274,973 | ||||
Accumulated net investment loss included in net assets |
| |||||||
At end of period | $ | (84,860 | ) | $ | — |
10 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2017
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 21.100 | $ | 19.550 | $ | 22.460 | $ | 22.070 | $ | 16.260 | $ | 15.250 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.043 | ) | $ | (0.058 | ) | $ | (0.111 | ) | $ | (0.113 | ) | $ | (0.087 | ) | $ | (0.030 | ) | ||||||
Net realized and unrealized gain (loss) | 1.413 | 3.025 | (0.539 | ) | 0.503 | 6.017 | 1.040 | |||||||||||||||||
Total income (loss) from operations | $ | 1.370 | $ | 2.967 | $ | (0.650 | ) | $ | 0.390 | $ | 5.930 | $ | 1.010 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | (0.120 | ) | $ | — | |||||||||||
From net realized gain | — | (1.417 | ) | (2.260 | ) | — | — | — | ||||||||||||||||
Total distributions | $ | — | $ | (1.417 | ) | $ | (2.260 | ) | $ | — | $ | (0.120 | ) | $ | — | |||||||||
Net asset value — End of period | $ | 22.470 | $ | 21.100 | $ | 19.550 | $ | 22.460 | $ | 22.070 | $ | 16.260 | ||||||||||||
Total Return(2) | 6.49 | %(3)(4) | 15.44 | % | (2.99 | )% | 1.77 | % | 36.54 | % | 6.62 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 34,603 | $ | 32,005 | $ | 30,930 | $ | 35,786 | $ | 42,046 | $ | 35,592 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(5)(6) | 1.37 | %(4)(7) | 1.41 | % | 1.32 | % | 1.31 | % | 1.31 | % | 1.43 | % | ||||||||||||
Net investment loss | (0.39 | )%(7) | (0.29 | )% | (0.48 | )% | (0.52 | )% | (0.45 | )% | (0.18 | )% | ||||||||||||
Portfolio Turnover of the Portfolio(8) | — | — | — | — | — | 26 | %(3) | |||||||||||||||||
Portfolio Turnover of the Fund | 34 | %(3) | 67 | % | 83 | % | 55 | % | 61 | % | 37 | %(3)(9) |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | The administrator reimbursed certain operating expenses (equal to 0.01% of average daily net assets for the six months ended June 30, 2017). Absent this reimbursement, total return would be lower. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses for the period while the Fund was investing in the Portfolio. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
(8) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(9) | For the period from May 1, 2012 through December 31, 2012 when the Fund was making investments directly in securities. |
References to Portfolio herein are to Special Equities Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to May 1, 2012 and which had the same investment objective and policies as the Fund during such period.
11 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2017
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 19.110 | $ | 17.960 | $ | 20.970 | $ | 20.760 | $ | 15.390 | $ | 14.550 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.113 | ) | $ | (0.191 | ) | $ | (0.262 | ) | $ | (0.260 | ) | $ | (0.216 | ) | $ | (0.146 | ) | ||||||
Net realized and unrealized gain (loss) | 1.263 | 2.758 | (0.488 | ) | 0.470 | 5.683 | 0.986 | |||||||||||||||||
Total income (loss) from operations | $ | 1.150 | $ | 2.567 | $ | (0.750 | ) | $ | 0.210 | $ | 5.467 | $ | 0.840 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | (0.097 | ) | $ | — | |||||||||||
From net realized gain | — | (1.417 | ) | (2.260 | ) | — | — | — | ||||||||||||||||
Total distributions | $ | — | $ | (1.417 | ) | $ | (2.260 | ) | $ | — | $ | (0.097 | ) | $ | — | |||||||||
Net asset value — End of period | $ | 20.260 | $ | 19.110 | $ | 17.960 | $ | 20.970 | $ | 20.760 | $ | 15.390 | ||||||||||||
Total Return(2) | 6.07 | %(3)(4) | 14.57 | % | (3.68 | )% | 1.01 | % | 35.59 | % | 5.77 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 2,270 | $ | 2,316 | $ | 2,925 | $ | 2,913 | $ | 3,280 | $ | 2,818 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(5)(6) | 2.12 | %(4)(7) | 2.16 | % | 2.06 | % | 2.06 | % | 2.06 | % | 2.19 | % | ||||||||||||
Net investment loss | (1.15 | )%(7) | (1.05 | )% | (1.22 | )% | (1.26 | )% | (1.20 | )% | (0.96 | )% | ||||||||||||
Portfolio Turnover of the Portfolio(8) | — | — | — | — | — | 26 | %(3) | |||||||||||||||||
Portfolio Turnover of the Fund | 34 | %(3) | 67 | % | 83 | % | 55 | % | 61 | % | 37 | %(3)(9) |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested and do not reflect the effect of sales charges. |
(3) | Not annualized. |
(4) | The administrator reimbursed certain operating expenses (equal to 0.01% of average daily net assets for the six months ended June 30, 2017). Absent this reimbursement, total return would be lower. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses for the period while the Fund was investing in the Portfolio. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
(8) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(9) | For the period from May 1, 2012 through December 31, 2012 when the Fund was making investments directly in securities. |
References to Portfolio herein are to Special Equities Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to May 1, 2012 and which had the same investment objective and policies as the Fund during such period.
12 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2017
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 21.460 | $ | 19.820 | $ | 22.670 | $ | 22.220 | $ | 16.320 | $ | 15.270 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | (0.013 | ) | $ | (0.009 | ) | $ | (0.047 | ) | $ | (0.056 | ) | $ | (0.029 | ) | $ | 0.010 | |||||||
Net realized and unrealized gain (loss) | 1.433 | 3.066 | (0.543 | ) | 0.506 | 6.044 | 1.040 | |||||||||||||||||
Total income (loss) from operations | $ | 1.420 | $ | 3.057 | $ | (0.590 | ) | $ | 0.450 | $ | 6.015 | $ | 1.050 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | (0.115 | ) | $ | — | |||||||||||
From net realized gain | — | (1.417 | ) | (2.260 | ) | — | — | — | ||||||||||||||||
Total distributions | $ | — | $ | (1.417 | ) | $ | (2.260 | ) | $ | — | $ | (0.115 | ) | $ | — | |||||||||
Net asset value — End of period | $ | 22.880 | $ | 21.460 | $ | 19.820 | $ | 22.670 | $ | 22.220 | $ | 16.320 | ||||||||||||
Total Return(2) | 6.62 | %(3)(4) | 15.69 | % | (2.70 | )% | 2.03 | % | 36.93 | % | 6.88 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 11,542 | $ | 5,954 | $ | 9,087 | $ | 19,636 | $ | 18,404 | $ | 11,550 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(5)(6) | 1.12 | %(4)(7) | 1.16 | % | 1.07 | % | 1.06 | % | 1.06 | % | 1.18 | % | ||||||||||||
Net investment income (loss) | (0.12 | )%(7) | (0.05 | )% | (0.20 | )% | (0.25 | )% | (0.15 | )% | 0.06 | % | ||||||||||||
Portfolio Turnover of the Portfolio(8) | — | — | — | — | — | 26 | %(3) | |||||||||||||||||
Portfolio Turnover of the Fund | 34 | %(3) | 67 | % | 83 | % | 55 | % | 61 | % | 37 | %(3)(9) |
(1) | Computed using average shares outstanding. |
(2) | Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. |
(3) | Not annualized. |
(4) | The administrator reimbursed certain operating expenses (equal to 0.01% of average daily net assets for the six months ended June 30, 2017). Absent this reimbursement, total return would be lower. |
(5) | Includes the Fund’s share of the Portfolio’s allocated expenses for the period while the Fund was investing in the Portfolio. |
(6) | Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit balances, were discontinued by the custodian. |
(7) | Annualized. |
(8) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(9) | For the period from May 1, 2012 through December 31, 2012 when the Fund was making investments directly in securities. |
References to Portfolio herein are to Special Equities Portfolio, a Massachusetts business trust in which the Fund invested all of its investable assets prior to May 1, 2012 and which had the same investment objective and policies as the Fund during such period.
13 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2017
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Special Equities Fund (the Fund) is a diversified series of Eaton Vance Special Investment Trust (the Trust). The Trust is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund’s investment objective is to provide growth of capital. The Fund offers three classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class C shares are sold at net asset value and are generally subject to a contingent deferred sales charge (see Note 5). Class I shares are sold at net asset value and are not subject to a sales charge. Each class represents a pro-rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income and losses, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class-specific expenses.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.
Affiliated Fund. The Fund may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Fund in a manner that fairly reflects the security’s value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s or entity’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Distributions from investment companies are recorded as dividend income, capital gains or return of capital based on the nature of the distribution.
D Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of June 30, 2017, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E Expenses — The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds.
F Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications — Under the Trust’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Trust) could be deemed to have personal liability for the obligations of the Trust. However, the Trust’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Trust shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of
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Special Equities Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
H Interim Financial Statements — The interim financial statements relating to June 30, 2017 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders and Income Tax Information
It is the present policy of the Fund to make at least one distribution annually (normally in December) of all or substantially all of its net investment income and to distribute annually all or substantially all of its net realized capital gains (reduced by available capital loss carryforwards from prior years). Distributions to shareholders are recorded on the ex-dividend date. Distributions are declared separately for each class of shares. Shareholders may reinvest income and capital gain distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date or, at the election of the shareholder, receive distributions in cash. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income.
The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2017, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 40,966,732 | ||
Gross unrealized appreciation | $ | 8,492,347 | ||
Gross unrealized depreciation | (948,270 | ) | ||
Net unrealized appreciation | $ | 7,544,077 |
3 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research (BMR), a subsidiary of EVM, as compensation for investment advisory services rendered to the Fund. The fee is computed at an annual rate of 0.625% of the Fund’s average daily net assets and is payable monthly. For the six months ended June 30, 2017, the Fund’s investment adviser fee amounted to $140,994. The Fund invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund. EVM also serves as administrator of the Fund, but receives no compensation.
Effective May 1, 2017, EVM has agreed to reimburse the Fund’s expenses to the extent that total annual operating expenses (relating to ordinary operating expenses only) exceed 1.35%, 2.10% and 1.10% of the Fund’s average daily net assets for Class A, Class C and Class I, respectively, through April 30, 2018. Thereafter, the reimbursement may be changed or terminated at any time. Pursuant to this agreement, EVM was allocated $3,247 of the Fund’s operating expenses for the six months ended June 30, 2017.
EVM provides sub-transfer agency and related services to the Fund pursuant to a Sub-Transfer Agency Support Services Agreement. For the six months ended June 30, 2017, EVM earned $9,092 from the Fund pursuant to such agreement, which is included in transfer and dividend disbursing agent fees on the Statement of Operations. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM and the Fund’s principal underwriter, received $1,178 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2017. EVD also received distribution and service fees from Class A and Class C shares (see Note 4) and contingent deferred sales charges (see Note 5).
Trustees and officers of the Fund who are members of EVM’s or BMR’s organizations receive remuneration for their services to the Fund out of the investment adviser fee. Trustees of the Fund who are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended June 30, 2017, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of the above organizations.
4 Distribution Plans
The Fund has in effect a distribution plan for Class A shares (Class A Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class A Plan, the Fund pays EVD a distribution and service fee of 0.25% per annum of its average daily net assets attributable to Class A shares for distribution services and facilities provided to the Fund by EVD, as well as for personal services and/or the maintenance of shareholder accounts. Distribution and service fees paid or accrued to EVD for the six months ended June 30, 2017 amounted to $41,853 for Class A shares.
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Eaton Vance
Special Equities Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
The Fund also has in effect a distribution plan for Class C shares (Class C Plan) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Class C Plan, the Fund pays EVD amounts equal to 0.75% per annum of its average daily net assets attributable to Class C shares for providing ongoing distribution services and facilities to the Fund. For the six months ended June 30, 2017, the Fund paid or accrued to EVD $9,019 for Class C shares.
Pursuant to the Class C Plan, the Fund also makes payments of service fees to EVD, financial intermediaries and other persons in amounts equal to 0.25% per annum of its average daily net assets attributable to that class. Service fees paid or accrued are for personal services and/or the maintenance of shareholder accounts. They are separate and distinct from the sales commissions and distribution fees payable to EVD. Service fees paid or accrued for the six months ended June 30, 2017 amounted to $3,006 for Class C shares.
Distribution and service fees are subject to the limitations contained in the Financial Industry Regulatory Authority Rule 2341(d).
5 Contingent Deferred Sales Charges
A contingent deferred sales charge (CDSC) of 1% generally is imposed on redemptions of Class C shares made within one year of purchase. Class A shares may be subject to a 1% CDSC if redeemed within 18 months of purchase (depending on the circumstances of purchase). Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. For the six months ended June 30, 2017, the Fund was informed that EVD received less than $100 of CDSCs paid by Class C shareholders and no CDSCs paid by Class A shareholders.
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $20,642,141 and $15,143,206, respectively, for the six months ended June 30, 2017.
7 Shares of Beneficial Interest
The Fund’s Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
Class A | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 156,507 | 54,328 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 86,394 | ||||||
Redemptions | (132,867 | ) | (205,849 | ) | ||||
Net increase (decrease) | 23,640 | (65,127 | ) | |||||
Class C | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 12,695 | 8,514 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 8,217 | ||||||
Redemptions | (21,892 | ) | (58,420 | ) | ||||
Net decrease | (9,197 | ) | (41,689 | ) |
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Special Equities Fund
June 30, 2017
Notes to Financial Statements (Unaudited) — continued
Class I | Six Months Ended June 30, 2017 (Unaudited) | Year Ended December 31, 2016 | ||||||
Sales | 278,638 | 98,085 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 6,398 | ||||||
Redemptions | (51,534 | ) | (285,601 | ) | ||||
Net increase (decrease) | 227,104 | (181,118 | ) |
8 Line of Credit
The Fund participates with other portfolios and funds managed by EVM and its affiliates in a $625 million unsecured line of credit agreement with a group of banks, which is in effect through September 1, 2017. Borrowings are made by the Fund solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Fund based on its borrowings at an amount above either the 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. Because the line of credit is not available exclusively to the Fund, it may be unable to borrow some or all of its requested amounts at any particular time. The Fund did not have any significant borrowings or allocated fees during the six months ended June 30, 2017.
9 Fair Value Measurements
Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 – quoted prices in active markets for identical investments |
• | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At June 30, 2017, the hierarchy of inputs used in valuing the Fund’s investments, which are carried at value, were as follows:
Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 48,216,602 | * | $ | — | $ | — | $ | 48,216,602 | |||||||
Exchange-Traded Funds | 144,725 | — | — | 144,725 | ||||||||||||
Short-Term Investments | — | 149,482 | — | 149,482 | ||||||||||||
Total Investments | $ | 48,361,327 | $ | 149,482 | $ | — | $ | 48,510,809 |
* | The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments. |
The Fund held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At June 30, 2017, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
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Eaton Vance
Special Equities Fund
June 30, 2017
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the registered investment companies advised by either Eaton Vance Management or its affiliate, Boston Management and Research, (the “Eaton Vance Funds”) held on April 25, 2017, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing investment advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2017. The Contract Review Committee also considered information received at prior meetings of the Board and its committees, as relevant to its annual evaluation of the investment advisory and sub-advisory agreements.
The information that the Board considered included, among other things, the following (for funds that invest through one or more underlying portfolio(s), references to “each fund” in this section may include information that was considered at the portfolio-level):
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees paid by each fund with fees paid by comparable funds as identified by the independent data provider (“comparable funds”); |
• | A report from an independent data provider comparing each fund’s total expense ratio and its components to comparable funds; |
• | A report from an independent data provider comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods; |
• | Data regarding investment performance in comparison to benchmark indices, as well as customized groups of peer funds and blended indices identified by the adviser in consultation with the Board; |
• | For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund; |
• | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services provided to each fund, including the investment strategies and processes it employs; |
• | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
• | Information about each adviser’s policies and practices with respect to trading, including each adviser’s processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
• | Data relating to portfolio turnover rates of each fund; |
Information about each Adviser
• | Reports detailing the financial results and condition of each adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; |
• | The Code of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates (including descriptions of various compliance programs) and their record of compliance; |
• | Information concerning the business continuity and disaster recovery plans of each adviser and its affiliates; |
• | A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters; |
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Special Equities Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
Other Relevant Information
• | Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates; |
• | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and |
• | The terms of each investment advisory agreement. |
Over the course of the twelve-month period ended April 30, 2017, with respect to one or more funds, the Board met ten times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, thirteen, six, eight and ten times, respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each investment adviser relating to each fund, and considered various investment and trading strategies used in pursuing each fund’s investment objective, such as the use of derivative instruments, as well as risk management techniques. The Board and its Committees also evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management and other fund advisers with respect to such matters. In addition to the formal meetings of the Board and its Committees, the Independent Trustees hold regular teleconferences in between meetings to discuss, among other topics, matters relating to the continuation of investment advisory and sub-advisory agreements.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of investment advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each investment advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory and sub-advisory agreement. In evaluating each investment advisory and sub-advisory agreement, including the specific fee structures and other terms of the agreements, the Contract Review Committee was informed by multiple years of analysis and discussion among the Independent Trustees and the Eaton Vance Funds’ advisers and sub-advisers.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Eaton Vance Special Equities Fund (the “Fund”) with Boston Management and Research (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the agreement. The Board accepted the recommendation of the Contract Review Committee based on the material factors considered and conclusions reached by the Contract Review Committee with respect to the agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Fund.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement of the Fund, the Board evaluated the nature, extent and quality of services provided to the Fund by the Adviser.
The Board considered the Adviser’s management capabilities and investment process with respect to the types of investments held by the Fund, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Fund, including recent changes to such personnel. The Board specifically noted that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. The Board also took into account the resources dedicated to portfolio management and other services, as well as the compensation methods of the Adviser and other factors, such as the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Fund, by senior management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Fund, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in managing the Fund.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment professionals, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
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Eaton Vance
Special Equities Fund
June 30, 2017
Board of Trustees’ Contract Approval — continued
The Board was aware that on April 24, 2017 a former employee of the Adviser agreed to plead guilty to fraud charges arising from the individual’s prior activities as an equity options trader for certain Eaton Vance Funds. The Board was informed that the Adviser became aware of the matter on April 18, 2017, at which time management contacted federal authorities, alerted the Board and began an internal investigation. The Adviser represented to the Board that, based on information available as of April 25, 2017, management had no reason to believe that any other employee of the Adviser or its affiliates was involved in any wrongful activities or that any fund had been materially harmed. The Adviser agreed to keep the Board fully apprised as additional information is learned, and assured the Board that any fund harmed by the former employee’s wrongful activities will be made whole, as determined in consultation with the Board. The Board concluded that the Adviser’s actions in response to these events are appropriate and consistent with the Adviser’s commitment to protect and provide quality services to the Eaton Vance Funds.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines, as well as the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds and appropriate benchmark indices, as well as a customized peer group of similarly managed funds. The Board’s review included comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2016 for the Fund. The Board noted that actions are being taken by the Adviser to address Fund performance and concluded that additional time is required to evaluate the effectiveness of such actions.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Fund for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one year period ended September 30, 2016, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also received and considered information about the services offered and the fee rates charged by the Adviser to other types of clients with investment objectives and strategies that are substantially similar to and/or managed in a similar investment style as the Fund. In this regard, the Board received information about the differences in the nature and scope of services the Adviser provides to the Fund as compared to other types of clients and the material differences in compliance, reporting and other legal burdens and risks to the Adviser as between the Fund and other types of clients. The Board considered factors that had an impact on Fund expense ratios relative to comparable funds. The Board also considered the fact that the Adviser had undertaken to reimburse expenses of the Fund in an agreed upon amount, such expense reimbursement arrangement to be effective May 1, 2017.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.
Profitability and Other “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their relationships with the Fund, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Fund and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in any benefits from economies of scale. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Fund, and in light of the level of the Adviser’s 2016 profits with respect to the Fund, the implementation of breakpoints in the advisory fee schedule is not warranted at this time.
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Eaton Vance
Special Equities Fund
June 30, 2017
Officers and Trustees
Officers of Eaton Vance Special Equities Fund
Payson F. Swaffield
President
Maureen A. Gemma
Vice President, Secretary and
Chief Legal Officer
James F. Kirchner
Treasurer
Paul M. O’Neil
Chief Compliance Officer
Trustees of Eaton Vance Special Equities Fund
William H. Park
Chairperson
Scott E. Eston
Thomas E. Faust Jr.*
Mark R. Fetting**
Cynthia E. Frost
George J. Gorman
Valerie A. Mosley
Helen Frame Peters
Susan J. Sutherland
Harriett Tee Taggart
Scott E. Wennerholm**
* | Interested Trustee |
** | Messrs. Fetting and Wennerholm began serving as Trustees effective September 1, 2016. |
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Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:
• | Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions. |
• | None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers. |
• | Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. |
• | We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by Eaton Vance or your financial advisor. Separate statements will be generated for each separate account and will be householded as described above.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.
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Investment Adviser
Boston Management and Research
Two International Place
Boston, MA 02110
Administrator
Eaton Vance Management
Two International Place
Boston, MA 02110
Principal Underwriter*
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
Custodian
State Street Bank and Trust Company
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Fund Offices
Two International Place
Boston, MA 02110
* | FINRA BrokerCheck. Investors may check the background of their Investment Professional by contacting the Financial Industry Regulatory Authority (FINRA). FINRA BrokerCheck is a free tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA BrokerCheck is available by calling 1-800-289-9999 and at www.FINRA.org. The FINRA BrokerCheck brochure describing this program is available to investors at www.FINRA.org. |
7701 6.30.17
Item 2. Code of Ethics
Not required in this filing.
Item 3. Audit Committee Financial Expert
Not required in this filing.
Item 4. Principal Accountant Fees and Services
Rule 2-01(c)(1)(ii)(A) of Regulation S-X (the “Loan Rule”) prohibits an accounting firm, such as the Trust’s principal accountant, Deloitte & Touche LLP (“D&T”), from having certain financial relationships with their audit clients and affiliated entities. Specifically, the Loan Rule provides, in relevant part, that an accounting firm generally would not be independent if it or a “covered person” of the accounting firm (within the meaning of applicable SEC rules relating to auditor independence) receives a loan from a lender that is a “record or beneficial owner of more than ten percent of the audit client’s equity securities.” Based on information provided to the Audit Committee of the Board of Trustees (the “Audit Committee”) of the Eaton Vance family of funds by D&T, certain relationships between D&T and its affiliates (“Deloitte Entities”) and one or more lenders who are record owners of shares of one or more funds within the Eaton Vance family of funds (the “Funds”) implicate the Loan Rule, calling into question D&T’s independence with respect to the Funds. The Funds are providing this disclosure to explain the facts and circumstances as well as D&T’s conclusions concerning D&T’s objectivity and impartiality with respect to the audits of the Funds notwithstanding the existence of one or more breaches of the Loan Rule.
On June 20, 2016, the U.S. Securities and Exchange Commission (the “SEC”) issued no-action relief to another mutual fund complex (see Fidelity Management & Research Company et al., No-Action Letter (June 20, 2016) (the “No-Action Letter”)) related to an auditor independence issue arising under the Loan Rule. In the No-Action Letter, the SEC indicated that it would not recommend enforcement action against the fund group if the auditor is not in compliance with the Loan Rule provided that: (1) the auditor has complied with PCAOB Rule 3526(b)(1) and 3526(b)(2); (2) the auditor’s non-compliance under the Loan Rule is with respect to certain lending relationships; and (3) notwithstanding such non-compliance, the auditor has concluded that it is objective and impartial with respect to the issues encompassed within its engagement as auditor of the funds. The SEC has indicated that the no-action relief will expire 18 months from its issuance.
Based on information provided by D&T to the Audit Committee, the requirements of the No-Action Letter appear to be met with respect to D&T’s lending relationships described above. Among other things, D&T has advised the Audit Committee of its conclusion that the consequences of the breach of the Loan Rule have been satisfactorily addressed, that D&T’s objectivity and impartiality in the planning and conduct of the audits of the Fund’s financial statements has not been compromised and that, notwithstanding the breach, D&T is in a position to continue as the auditor for the Funds and D&T does not believe any actions need to be taken with respect to previously issued reports by D&T. D&T has advised the Audit Committee that these conclusions were based in part on its consideration of the No-Action Letter and other relevant information communicated to the Audit Committee.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
No material changes.
Item 11. Controls and Procedures
(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.
(b) There have been no changes in the registrant’s internal controls over financial reporting during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
(a)(1) | Registrant’s Code of Ethics – Not applicable (please see Item 2). | |
(a)(2)(i) | Treasurer’s Section 302 certification. | |
(a)(2)(ii) | President’s Section 302 certification. | |
(b) | Combined Section 906 certification. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Eaton Vance Special Investment Trust
By: | /s/ Payson F. Swaffield | |
Payson F. Swaffield | ||
President | ||
Date: | August 24, 2017 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ James F. Kirchner | |
James F. Kirchner | ||
Treasurer | ||
Date: | August 24, 2017 | |
By: | /s/ Payson F. Swaffield | |
Payson F. Swaffield | ||
President | ||
Date: | August 24, 2017 |