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, 2018
Date of Reporting Period
Item 1. Reports to Stockholders
Eaton Vance
Balanced Fund
Semiannual Report
June 30, 2018
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, 2018
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 | 32 | |||
Officers and Trustees | 35 | |||
Important Notices | 36 |
Eaton Vance
Balanced Fund
June 30, 2018
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 | 0.94 | % | 7.64 | % | 8.70 | % | 5.73 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | –4.91 | 1.47 | 7.43 | 5.11 | ||||||||||||||||||
Class B at NAV | 11/02/1993 | 04/01/1932 | 0.62 | 6.85 | 7.89 | 4.94 | ||||||||||||||||||
Class B with 5% Maximum Sales Charge | — | — | –4.38 | 1.85 | 7.59 | 4.94 | ||||||||||||||||||
Class C at NAV | 11/02/1993 | 04/01/1932 | 0.67 | 6.79 | 7.90 | 4.96 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | –0.33 | 5.79 | 7.90 | 4.96 | ||||||||||||||||||
Class I at NAV | 09/28/2012 | 04/01/1932 | 1.17 | 8.02 | 8.99 | 5.89 | ||||||||||||||||||
Class R at NAV | 05/02/2016 | 04/01/1932 | 0.85 | 7.36 | 8.59 | 5.68 | ||||||||||||||||||
Class R6 at NAV | 05/02/2016 | 04/01/1932 | 1.20 | 7.97 | 9.02 | 5.91 | ||||||||||||||||||
S&P 500 Index | — | — | 2.65 | % | 14.37 | % | 13.41 | % | 10.16 | % | ||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond Index | — | — | –1.62 | –0.40 | 2.27 | 3.72 | ||||||||||||||||||
Blended Index | — | — | 1.00 | 8.34 | 8.97 | 7.84 | ||||||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class B | Class C | Class I | Class R | Class R6 | ||||||||||||||||||
Gross | 0.99 | % | 1.74 | % | 1.74 | % | 0.74 | % | 1.24 | % | 0.70 | % | ||||||||||||
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, 2018
Fund Profile4
Asset Allocation (% of total investments)
Equity Investments Sector Allocation (% of total investments)
Fixed Income Allocation (% of total investments)
See Endnotes and Additional Disclosures in this report.
3 |
Eaton Vance
Balanced Fund
June 30, 2018
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 4/30/19. 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 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. |
4 |
Eaton Vance
Balanced Fund
June 30, 2018
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, 2018 – June 30, 2018).
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 (1/1/18) | Ending Account Value (6/30/18) | Expenses Paid During Period* (1/1/18 – 6/30/18) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,009.40 | $ | 4.88 | ** | 0.98 | % | |||||||
Class B | $ | 1,000.00 | $ | 1,006.20 | $ | 8.61 | ** | 1.73 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,006.70 | $ | 8.61 | ** | 1.73 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,011.70 | $ | 3.64 | ** | 0.73 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,008.50 | $ | 6.13 | ** | 1.23 | % | |||||||
Class R6 | $ | 1,000.00 | $ | 1,012.00 | $ | 3.44 | ** | 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, 2017. 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, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Investment in Core Bond Portfolio, at value (identified cost, $316,313,548) | $ | 308,082,410 | ||
Investment in Stock Portfolio, at value (identified cost, $431,430,210) | 508,568,172 | |||
Receivable for Fund shares sold | 992,089 | |||
Total assets | $ | 817,642,671 | ||
Liabilities |
| |||
Payable for Fund shares redeemed | $ | 937,267 | ||
Payable to affiliates: | ||||
Administration fee | 27,103 | |||
Distribution and service fees | 274,562 | |||
Trustees’ fees | 125 | |||
Other | 2,127 | |||
Accrued expenses | 161,849 | |||
Total liabilities | $ | 1,403,033 | ||
Net Assets | $ | 816,239,638 | ||
Sources of Net Assets |
| |||
Paid-in capital | $ | 712,096,850 | ||
Accumulated distributions in excess of net investment income | (277,354 | ) | ||
Accumulated net realized gain from Portfolios | 35,513,318 | |||
Net unrealized appreciation from Portfolios | 68,906,824 | |||
Net Assets | $ | 816,239,638 | ||
Class A Shares |
| |||
Net Assets | $ | 324,852,304 | ||
Shares Outstanding | 35,567,573 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.13 | ||
Maximum Offering Price Per Share |
| |||
(100 ÷ 94.25 of net asset value per share) | $ | 9.69 | ||
Class B Shares |
| |||
Net Assets | $ | 2,471,416 | ||
Shares Outstanding | 269,797 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.16 | ||
Class C Shares |
| |||
Net Assets | $ | 245,385,565 | ||
Shares Outstanding | 26,757,806 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.17 | ||
Class I Shares |
| |||
Net Assets | $ | 215,563,879 | ||
Shares Outstanding | 23,592,696 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.14 |
6 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
Statement of Assets and Liabilities (Unaudited) — continued
Class R Shares | June 30, 2018 | |||
Net Assets | $ | 1,684,019 | ||
Shares Outstanding | 184,795 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.11 | ||
Class R6 Shares |
| |||
Net Assets | $ | 26,282,455 | ||
Shares Outstanding | 2,876,032 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.14 |
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. |
7 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends allocated from Portfolios (net of foreign taxes, $37,598) | $ | 4,710,052 | ||
Interest allocated from Portfolios (net of foreign taxes, $5,205) | 5,020,590 | |||
Expenses allocated from Portfolios | (2,411,139 | ) | ||
Total investment income from Portfolios | $ | 7,319,503 | ||
Expenses |
| |||
Administration fee | $ | 165,243 | ||
Distribution and service fees | ||||
Class A | 408,514 | |||
Class B | 15,436 | |||
Class C | 1,248,824 | |||
Class R | 2,120 | |||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 28,689 | |||
Transfer and dividend disbursing agent fees | 298,032 | |||
Legal and accounting services | 26,443 | |||
Printing and postage | 33,827 | |||
Registration fees | 59,797 | |||
Miscellaneous | 10,940 | |||
Total expenses | $ | 2,298,115 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 30,307 | ||
Total expense reductions | $ | 30,307 | ||
Net expenses | $ | 2,267,808 | ||
Net investment income | $ | 5,051,695 | ||
Realized and Unrealized Gain (Loss) from Portfolios | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 24,479,956 | ||
Financial futures contracts | (269,246 | ) | ||
Foreign currency transactions | 81 | |||
Net realized gain | $ | 24,210,791 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (21,837,994 | ) | |
Financial futures contracts | 167,483 | |||
Foreign currency | (505 | ) | ||
Net change in unrealized appreciation (depreciation) | $ | (21,671,016 | ) | |
Net realized and unrealized gain | $ | 2,539,775 | ||
Net increase in net assets from operations | $ | 7,591,470 |
8 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment income | $ | 5,051,695 | $ | 10,497,056 | ||||
Net realized gain | 24,210,791 | 38,866,291 | (1) | |||||
Net change in unrealized appreciation (depreciation) | (21,671,016 | ) | 56,128,936 | |||||
Net increase in net assets from operations | $ | 7,591,470 | $ | 105,492,283 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (2,381,687 | ) | $ | (5,388,871 | ) | ||
Class B | (8,466 | ) | (33,748 | ) | ||||
Class C | (862,693 | ) | (2,075,186 | ) | ||||
Class I | (1,836,050 | ) | (3,884,926 | ) | ||||
Class R | (5,347 | ) | (4,260 | ) | ||||
Class R6 | (234,806 | ) | (354,961 | ) | ||||
From net realized gain | ||||||||
Class A | — | (10,388,604 | ) | |||||
Class B | — | (119,063 | ) | |||||
Class C | — | (8,004,779 | ) | |||||
Class I | — | (6,814,673 | ) | |||||
Class R | — | (15,013 | ) | |||||
Class R6 | — | (844,619 | ) | |||||
Total distributions to shareholders | $ | (5,329,049 | ) | $ | (37,928,703 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 15,706,925 | $ | 53,200,585 | ||||
Class B | 52,328 | 383,520 | ||||||
Class C | 15,588,097 | 46,001,367 | ||||||
Class I | 40,680,435 | 125,211,421 | ||||||
Class R | 1,466,120 | 345,985 | ||||||
Class R6 | 2,473,796 | 29,845,058 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 2,116,663 | 14,377,214 | ||||||
Class B | 7,126 | 131,920 | ||||||
Class C | 825,388 | 9,594,045 | ||||||
Class I | 1,620,222 | 9,476,794 | ||||||
Class R | 5,347 | 19,272 | ||||||
Class R6 | 234,806 | 1,199,579 | ||||||
Cost of shares redeemed | ||||||||
Class A | (28,764,844 | ) | (137,560,952 | ) | ||||
Class B | (203,191 | ) | (1,053,892 | ) | ||||
Class C | (30,636,294 | ) | (72,158,153 | ) | ||||
Class I | (47,775,831 | ) | (143,521,607 | ) | ||||
Class R | (344,329 | ) | (1,100 | ) | ||||
Class R6 | (3,993,597 | ) | (4,088,771 | ) | ||||
Net asset value of shares exchanged | ||||||||
Class A | 1,032,035 | 1,518,158 | ||||||
Class B | (1,032,035 | ) | (1,518,158 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (30,940,833 | ) | $ | (68,597,715 | ) | ||
Other capital — | ||||||||
Portfolio transaction fee contributed to Stock Portfolio | $ | (70,041 | ) | $ | (165,472 | ) | ||
Portfolio transaction fee allocated from Stock Portfolio | 70,559 | 171,802 | ||||||
Net increase in net assets from other capital | $ | 518 | $ | 6,330 | ||||
Net decrease in net assets | $ | (28,677,894 | ) | $ | (1,027,805 | ) |
9 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
Statements of Changes in Net Assets — continued
Net Assets | Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | ||||||
At beginning of period | $ | 844,917,532 | $ | 845,945,337 | ||||
At end of period | $ | 816,239,638 | $ | 844,917,532 | ||||
Accumulated distributions in excess of net investment income included in net assets |
| |||||||
At end of period | $ | (277,354 | ) | $ | — |
(1) | Includes $5,153,441 of net realized gains from redemptions in-kind. |
10 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 9.110 | $ | 8.410 | $ | 8.190 | $ | 8.460 | $ | 8.460 | $ | 7.570 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.062 | $ | 0.124 | $ | 0.114 | $ | 0.088 | $ | 0.090 | $ | 0.077 | ||||||||||||
Net realized and unrealized gain | 0.024 | 1.003 | 0.261 | 0.139 | 0.703 | 1.491 | ||||||||||||||||||
Total income from operations | $ | 0.086 | $ | 1.127 | $ | 0.375 | $ | 0.227 | $ | 0.793 | $ | 1.568 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.066 | ) | $ | (0.139 | ) | $ | (0.123 | ) | $ | (0.116 | ) | $ | (0.110 | ) | $ | (0.101 | ) | ||||||
From net realized gain | — | (0.288 | ) | (0.032 | ) | (0.381 | ) | (0.683 | ) | (0.577 | ) | |||||||||||||
Total distributions | $ | (0.066 | ) | $ | (0.427 | ) | $ | (0.155 | ) | $ | (0.497 | ) | $ | (0.793 | ) | $ | (0.678 | ) | ||||||
Portfolio transaction fee, net(1) | $ | 0.000 | (2) | $ | 0.000 | (2) | $ | (0.000 | )(2) | $ | — | $ | — | $ | — | |||||||||
Net asset value — End of period | $ | 9.130 | $ | 9.110 | $ | 8.410 | $ | 8.190 | $ | 8.460 | $ | 8.460 | ||||||||||||
Total Return(3) | 0.94 | %(4)(5) | 13.53 | %(4) | 4.60 | %(4) | 2.65 | %(4) | 9.62 | % | 20.96 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 324,852 | $ | 333,860 | $ | 374,579 | $ | 293,994 | $ | 197,190 | $ | 171,322 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 0.98 | %(4)(8) | 0.98 | %(4) | 0.98 | %(4) | 1.05 | %(4) | 1.14 | % | 1.14 | % | ||||||||||||
Net investment income | 1.38 | %(8) | 1.41 | % | 1.38 | % | 1.05 | % | 1.02 | % | 0.93 | % | ||||||||||||
Portfolio Turnover of the Fund(9) | 1 | %(5) | 4 | % | 11 | % | 2 | % | 17 | % | 9 | % |
(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%, 0.01%, 0.03% and less than 0.005% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 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, 2018
Financial Highlights — continued
Class B | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 9.130 | $ | 8.430 | $ | 8.200 | $ | 8.470 | $ | 8.470 | $ | 7.570 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.027 | $ | 0.058 | $ | 0.051 | $ | 0.025 | $ | 0.024 | $ | 0.015 | ||||||||||||
Net realized and unrealized gain | 0.030 | 0.997 | 0.266 | 0.139 | 0.702 | 1.501 | ||||||||||||||||||
Total income from operations | $ | 0.057 | $ | 1.055 | $ | 0.317 | $ | 0.164 | $ | 0.726 | $ | 1.516 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.027 | ) | $ | (0.067 | ) | $ | (0.055 | ) | $ | (0.053 | ) | $ | (0.043 | ) | $ | (0.039 | ) | ||||||
From net realized gain | — | (0.288 | ) | (0.032 | ) | (0.381 | ) | (0.683 | ) | (0.577 | ) | |||||||||||||
Total distributions | $ | (0.027 | ) | $ | (0.355 | ) | $ | (0.087 | ) | $ | (0.434 | ) | $ | (0.726 | ) | $ | (0.616 | ) | ||||||
Portfolio transaction fee, net(1) | $ | 0.000 | (2) | $ | 0.000 | (2) | $ | (0.000 | )(2) | $ | — | $ | — | $ | — | |||||||||
Net asset value — End of period | $ | 9.160 | $ | 9.130 | $ | 8.430 | $ | 8.200 | $ | 8.470 | $ | 8.470 | ||||||||||||
Total Return(3) | 0.62 | %(4)(5) | 12.60 | %(4) | 3.87 | %(4) | 1.88 | %(4) | 8.78 | % | 20.19 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 2,471 | $ | 3,638 | $ | 5,313 | $ | 7,992 | $ | 10,022 | $ | 11,770 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 1.73 | %(4)(8) | 1.73 | %(4) | 1.73 | %(4) | 1.80 | %(4) | 1.89 | % | 1.89 | % | ||||||||||||
Net investment income | 0.60 | %(8) | 0.66 | % | 0.62 | % | 0.29 | % | 0.27 | % | 0.18 | % | ||||||||||||
Portfolio Turnover of the Fund(9) | 1 | %(5) | 4 | % | 11 | % | 2 | % | 17 | % | 9 | % |
(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%, 0.01%, 0.03% and less than 0.005% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 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. |
12 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 9.140 | $ | 8.440 | $ | 8.220 | $ | 8.500 | $ | 8.500 | $ | 7.600 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.028 | $ | 0.058 | $ | 0.052 | $ | 0.026 | $ | 0.024 | $ | 0.015 | ||||||||||||
Net realized and unrealized gain | 0.034 | 1.001 | 0.266 | 0.138 | 0.705 | 1.502 | ||||||||||||||||||
Total income from operations | $ | 0.062 | $ | 1.059 | $ | 0.318 | $ | 0.164 | $ | 0.729 | $ | 1.517 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.032 | ) | $ | (0.071 | ) | $ | (0.066 | ) | $ | (0.063 | ) | $ | (0.046 | ) | $ | (0.040 | ) | ||||||
From net realized gain | — | (0.288 | ) | (0.032 | ) | (0.381 | ) | (0.683 | ) | (0.577 | ) | |||||||||||||
Total distributions | $ | (0.032 | ) | $ | (0.359 | ) | $ | (0.098 | ) | $ | (0.444 | ) | $ | (0.729 | ) | $ | (0.617 | ) | ||||||
Portfolio transaction fee, net(1) | $ | 0.000 | (2) | $ | 0.000 | (2) | $ | (0.000 | )(2) | $ | — | $ | — | $ | — | |||||||||
Net asset value — End of period | $ | 9.170 | $ | 9.140 | $ | 8.440 | $ | 8.220 | $ | 8.500 | $ | 8.500 | ||||||||||||
Total Return(3) | 0.67 | %(4)(5) | 12.63 | %(4) | 3.88 | %(4) | 1.86 | %(4) | 8.78 | % | 20.14 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 245,386 | $ | 258,844 | $ | 254,656 | $ | 137,051 | $ | 60,351 | $ | 39,432 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 1.73 | %(4)(8) | 1.73 | %(4) | 1.73 | %(4) | 1.80 | %(4) | 1.88 | % | 1.89 | % | ||||||||||||
Net investment income | 0.63 | %(8) | 0.65 | % | 0.63 | % | 0.30 | % | 0.28 | % | 0.18 | % | ||||||||||||
Portfolio Turnover of the Fund(9) | 1 | %(5) | 4 | % | 11 | % | 2 | % | 17 | % | 9 | % |
(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%, 0.01%, 0.03% and less than 0.005% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 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. |
13 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 9.110 | $ | 8.410 | $ | 8.190 | $ | 8.460 | $ | 8.460 | $ | 7.560 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.074 | $ | 0.147 | $ | 0.137 | $ | 0.109 | $ | 0.115 | $ | 0.099 | ||||||||||||
Net realized and unrealized gain | 0.034 | 1.002 | 0.258 | 0.138 | 0.700 | 1.500 | ||||||||||||||||||
Total income from operations | $ | 0.108 | $ | 1.149 | $ | 0.395 | $ | 0.247 | $ | 0.815 | $ | 1.599 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.078 | ) | $ | (0.161 | ) | $ | (0.143 | ) | $ | (0.136 | ) | $ | (0.132 | ) | $ | (0.122 | ) | ||||||
From net realized gain | — | (0.288 | ) | (0.032 | ) | (0.381 | ) | (0.683 | ) | (0.577 | ) | |||||||||||||
Total distributions | $ | (0.078 | ) | $ | (0.449 | ) | $ | (0.175 | ) | $ | (0.517 | ) | $ | (0.815 | ) | $ | (0.699 | ) | ||||||
Portfolio transaction fee, net(1) | $ | 0.000 | (2) | $ | 0.000 | (2) | $ | (0.000 | )(2) | $ | — | $ | — | $ | — | |||||||||
Net asset value — End of period | $ | 9.140 | $ | 9.110 | $ | 8.410 | $ | 8.190 | $ | 8.460 | $ | 8.460 | ||||||||||||
Total Return(3) | 1.17 | %(4)(5) | 13.81 | %(4) | 4.86 | %(4) | 2.88 | %(4) | 9.89 | % | 21.42 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 215,564 | $ | 220,522 | $ | 211,211 | $ | 78,055 | $ | 24,397 | $ | 6,198 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(7) | 0.73 | %(4)(8) | 0.73 | %(4) | 0.73 | %(4) | 0.80 | %(4) | 0.89 | % | 0.89 | % | ||||||||||||
Net investment income | 1.63 | %(8) | 1.66 | % | 1.63 | % | 1.29 | % | 1.31 | % | 1.19 | % | ||||||||||||
Portfolio Turnover of the Fund(9) | 1 | %(5) | 4 | % | 11 | % | 2 | % | 17 | % | 9 | % |
(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. |
(4) | The administrator of the Fund reimbursed certain operating expenses (equal to 0.01%, 0.01%, 0.03% and less than 0.005% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 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. |
14 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
Financial Highlights — continued
Class R | ||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | Period Ended December 31, 2016(1) | ||||||||||
Net asset value — Beginning of period | $ | 9.090 | $ | 8.400 | $ | 8.290 | ||||||
Income (Loss) From Operations | ||||||||||||
Net investment income(2) | $ | 0.054 | $ | 0.104 | $ | 0.075 | ||||||
Net realized and unrealized gain | 0.024 | 0.996 | 0.152 | |||||||||
Total income from operations | $ | 0.078 | $ | 1.100 | $ | 0.227 | ||||||
Less Distributions | ||||||||||||
From net investment income | $ | (0.058 | ) | $ | (0.122 | ) | $ | (0.085 | ) | |||
From net realized gain | — | (0.288 | ) | (0.032 | ) | |||||||
Total distributions | $ | (0.058 | ) | $ | (0.410 | ) | $ | (0.117 | ) | |||
Portfolio transaction fee, net(2) | $ | 0.000 | (3) | $ | 0.000 | (3) | $ | (0.000 | )(3) | |||
Net asset value — End of period | $ | 9.110 | $ | 9.090 | $ | 8.400 | ||||||
Total Return(4) | 0.85 | %(5)(6) | 13.22 | %(5) | 2.73 | %(5)(6) | ||||||
Ratios/Supplemental Data |
| |||||||||||
Net assets, end of period (000’s omitted) | $ | 1,684 | $ | 561 | $ | 178 | ||||||
Ratios (as a percentage of average daily net assets):(7) | ||||||||||||
Expenses(8) | 1.23 | %(5)(9) | 1.23 | %(5) | 1.23 | %(5)(9) | ||||||
Net investment income | 1.21 | %(9) | 1.17 | % | 1.33 | %(9) | ||||||
Portfolio Turnover of the Fund(10) | 1 | %(6) | 4 | % | 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%, 0.01% and 0.03% of average daily net assets for the six months ended June 30, 2018, the year ended December 31, 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. |
15 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
Financial Highlights — continued
Class R6 | ||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | Period Ended December 31, 2016(1) | ||||||||||
Net asset value — Beginning of period | $ | 9.110 | $ | 8.420 | $ | 8.300 | ||||||
Income (Loss) From Operations | ||||||||||||
Net investment income(2) | $ | 0.076 | $ | 0.146 | $ | 0.088 | ||||||
Net realized and unrealized gain | 0.035 | 0.999 | 0.170 | |||||||||
Total income from operations | $ | 0.111 | $ | 1.145 | $ | 0.258 | ||||||
Less Distributions | ||||||||||||
From net investment income | $ | (0.081 | ) | $ | (0.167 | ) | $ | (0.106 | ) | |||
From net realized gain | — | (0.288 | ) | (0.032 | ) | |||||||
Total distributions | $ | (0.081 | ) | $ | (0.455 | ) | $ | (0.138 | ) | |||
Portfolio transaction fees, net(2) | $ | 0.000 | (3) | $ | 0.000 | (3) | $ | (0.000 | )(3) | |||
Net asset value — End of period | $ | 9.140 | $ | 9.110 | $ | 8.420 | ||||||
Total Return(4) | 1.20 | %(5)(6) | 13.75 | %(5) | 3.11 | %(5)(6) | ||||||
Ratios/Supplemental Data |
| |||||||||||
Net assets, end of period (000’s omitted) | $ | 26,282 | $ | 27,492 | $ | 7 | ||||||
Ratios (as a percentage of average daily net assets):(7) | ||||||||||||
Expenses(8) | 0.69 | %(5)(9) | 0.69 | %(5) | 0.69 | %(5)(9) | ||||||
Net investment income | 1.67 | %(9) | 1.62 | % | 1.58 | %(9) | ||||||
Portfolio Turnover of the Fund(10) | 1 | %(6) | 4 | % | 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%, 0.01% and 0.03% of average daily net assets for the six months ended June 30, 2018, the year ended December 31, 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. |
16 | See Notes to Financial Statements. |
Eaton Vance
Balanced Fund
June 30, 2018
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 Fund’s proportionate interest in each of the Portfolio’s net assets at June 30, 2018 were as follows: Core Bond Portfolio (63.4%) and Stock Portfolio (82.2%). 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.
Senior Floating-Rate Loans. Interests in senior floating-rate loans (Senior Loans) for which reliable market quotations are readily available are valued generally at the average mean of bid and ask quotations obtained from a third party pricing service.
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.
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 (including options on securities, indices and foreign currencies) 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. Financial futures contracts are valued at the closing settlement price established by the board of trade or exchange on which they are traded.
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, 2018, 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.
17 |
Eaton Vance
Balanced Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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, 2018 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, 2018, the administration fee amounted to $165,243. 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, 2019. Pursuant to this agreement, EVM was allocated $30,307 of the Fund’s operating expenses for the six months ended June 30, 2018. 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, 2018, the Fund’s allocated portion of the adviser fees paid by the Portfolios amounted to $2,238,471 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, 2018, EVM earned $42,799 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 $31,212 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2018. 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, 2018 amounted to $408,514 for Class A shares.
18 |
Eaton Vance
Balanced Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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, 2018, the Fund paid or accrued to EVD $11,577 and $936,618 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, 2018, the Fund paid or accrued to EVD $1,060 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, 2018 amounted to $3,859, $312,206 and $1,060 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, 2018, the Fund was informed that EVD received less than $100 of CDSCs paid by Class A shareholders, approximately $10,000 of CDSCs paid by Class C shareholders and no CDSCs paid by Class B shareholders.
6 Investment Transactions
For the six months ended June 30, 2018, increases and decreases in the Fund’s investments in the Portfolios were as follows:
Portfolio | Contributions | Withdrawals | ||||||
Core Bond Portfolio | $ | 6,181,973 | $ | 8,641,231 | ||||
Stock Portfolio | 5,604,222 | 42,306,912 |
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, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 1,716,083 | 6,046,264 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 228,582 | 1,601,057 | ||||||
Redemptions | (3,147,105 | ) | (15,698,095 | ) | ||||
Exchange from Class B shares | 112,987 | 171,228 | ||||||
Net decrease | (1,089,453 | ) | (7,879,546 | ) |
19 |
Eaton Vance
Balanced Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
Class B | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 5,715 | 43,589 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 767 | 14,629 | ||||||
Redemptions | (22,333 | ) | (119,317 | ) | ||||
Exchange to Class A shares | (112,825 | ) | (170,938 | ) | ||||
Net decrease | (128,676 | ) | (232,037 | ) | ||||
Class C | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 1,697,869 | 5,210,829 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 88,751 | 1,060,832 | ||||||
Redemptions | (3,335,072 | ) | (8,125,257 | ) | ||||
Net decrease | (1,548,452 | ) | (1,853,596 | ) | ||||
Class I | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 4,443,340 | 14,281,311 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 174,970 | 1,055,190 | ||||||
Redemptions | (5,230,133 | ) | (16,235,147 | ) | ||||
Net decrease | (611,823 | ) | (898,646 | ) | ||||
Class R | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 160,392 | 38,453 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 579 | 2,141 | ||||||
Redemptions | (37,891 | ) | (119 | ) | ||||
Net increase | 123,080 | 40,475 | ||||||
Class R6 | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 270,400 | 3,334,907 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 25,357 | 132,953 | ||||||
Redemptions | (436,459 | ) | (451,958 | ) | ||||
Net increase (decrease) | (140,702 | ) | 3,015,902 |
20 |
Eaton Vance
Balanced Fund
June 30, 2018
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, 2018 and December 31, 2017, 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.
21 |
Stock Portfolio
June 30, 2018
Portfolio of Investments (Unaudited)
Common Stocks — 99.6% |
| |||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 4.1% | ||||||||
CAE, Inc. | 314,000 | $ | 6,522,907 | |||||
Raytheon Co. | 47,537 | 9,183,198 | ||||||
Textron, Inc. | 146,500 | 9,655,815 | ||||||
$ | 25,361,920 | |||||||
Air Freight & Logistics — 2.0% | ||||||||
FedEx Corp. | 55,901 | $ | 12,692,881 | |||||
$ | 12,692,881 | |||||||
Auto Components — 1.8% | ||||||||
Aptiv PLC | 43,209 | $ | 3,959,241 | |||||
Delphi Technologies PLC | 156,803 | 7,128,264 | ||||||
$ | 11,087,505 | |||||||
Banks — 5.9% | ||||||||
Bank of America Corp. | 472,780 | $ | 13,327,668 | |||||
JPMorgan Chase & Co. | 117,540 | 12,247,668 | ||||||
KeyCorp | 320,660 | 6,265,697 | ||||||
PNC Financial Services Group, Inc. (The) | 34,400 | 4,647,440 | ||||||
$ | 36,488,473 | |||||||
Beverages — 1.4% | ||||||||
Constellation Brands, Inc., Class A | 39,881 | $ | 8,728,754 | |||||
$ | 8,728,754 | |||||||
Biotechnology — 2.7% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 20,851 | $ | 2,588,652 | |||||
Biogen, Inc.(1) | 10,948 | 3,177,547 | ||||||
Celgene Corp.(1) | 40,215 | 3,193,875 | ||||||
Gilead Sciences, Inc. | 69,793 | 4,944,136 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 17,552 | 2,983,138 | ||||||
$ | 16,887,348 | |||||||
Capital Markets — 1.1% | ||||||||
Charles Schwab Corp. (The) | 137,000 | $ | 7,000,700 | |||||
$ | 7,000,700 | |||||||
Commercial Services & Supplies — 1.0% | ||||||||
Deluxe Corp. | 93,581 | $ | 6,195,998 | |||||
$ | 6,195,998 |
Security | Shares | Value | ||||||
Consumer Finance — 1.5% | ||||||||
Ally Financial, Inc. | 181,767 | $ | 4,775,019 | |||||
Navient Corp. | 367,600 | 4,789,828 | ||||||
$ | 9,564,847 | |||||||
Containers & Packaging — 1.7% | ||||||||
Ball Corp. | 292,210 | $ | 10,388,065 | |||||
$ | 10,388,065 | |||||||
Diversified Telecommunication Services — 2.3% | ||||||||
Verizon Communications, Inc. | 282,803 | $ | 14,227,819 | |||||
$ | 14,227,819 | |||||||
Electric Utilities — 2.1% | ||||||||
Edison International | 117,500 | $ | 7,434,225 | |||||
NextEra Energy, Inc. | 32,536 | 5,434,488 | ||||||
$ | 12,868,713 | |||||||
Energy Equipment & Services — 0.8% | ||||||||
Halliburton Co. | 105,592 | $ | 4,757,976 | |||||
$ | 4,757,976 | |||||||
Equity Real Estate Investment Trusts (REITs) — 2.7% | ||||||||
AvalonBay Communities, Inc. | 54,000 | $ | 9,282,060 | |||||
Public Storage | 33,299 | 7,554,211 | ||||||
$ | 16,836,271 | |||||||
Food & Staples Retailing — 1.6% | ||||||||
Performance Food Group Co.(1) | 263,558 | $ | 9,672,579 | |||||
$ | 9,672,579 | |||||||
Food Products — 3.6% | ||||||||
Conagra Brands, Inc. | 204,000 | $ | 7,288,920 | |||||
Mondelez International, Inc., Class A | 358,300 | 14,690,300 | ||||||
$ | 21,979,220 | |||||||
Health Care Equipment & Supplies — 2.6% | ||||||||
Boston Scientific Corp.(1) | 254,300 | $ | 8,315,610 | |||||
Danaher Corp. | 78,426 | 7,739,078 | ||||||
$ | 16,054,688 |
22 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Health Care Providers & Services — 2.7% | ||||||||
Aetna, Inc. | 57,193 | $ | 10,494,915 | |||||
Anthem, Inc. | 25,800 | 6,141,174 | ||||||
$ | 16,636,089 | |||||||
Insurance — 4.6% | ||||||||
American Financial Group, Inc. | 73,308 | $ | 7,868,148 | |||||
American International Group, Inc. | 247,600 | 13,127,752 | ||||||
First American Financial Corp. | 146,692 | 7,586,910 | ||||||
$ | 28,582,810 | |||||||
Internet & Direct Marketing Retail — 4.7% | ||||||||
Amazon.com, Inc.(1) | 13,342 | $ | 22,678,732 | |||||
Netflix, Inc.(1) | 15,800 | 6,184,594 | ||||||
$ | 28,863,326 | |||||||
Internet Software & Services — 7.6% | ||||||||
Alphabet, Inc., Class C(1) | 20,469 | $ | 22,836,240 | |||||
Facebook, Inc., Class A(1) | 99,932 | 19,418,786 | ||||||
GoDaddy, Inc., Class A(1) | 67,179 | 4,742,837 | ||||||
$ | 46,997,863 | |||||||
IT Services — 2.8% | ||||||||
Amdocs, Ltd. | 92,082 | $ | 6,094,907 | |||||
Cognizant Technology Solutions Corp., Class A | 139,018 | 10,981,032 | ||||||
$ | 17,075,939 | |||||||
Machinery — 0.7% | ||||||||
Parker-Hannifin Corp. | 28,200 | $ | 4,394,970 | |||||
$ | 4,394,970 | |||||||
Media — 2.7% | ||||||||
Walt Disney Co. (The) | 156,609 | $ | 16,414,189 | |||||
$ | 16,414,189 | |||||||
Metals & Mining — 0.5% | ||||||||
Rio Tinto PLC ADR | 59,480 | $ | 3,299,950 | |||||
$ | 3,299,950 | |||||||
Multi-Utilities — 0.9% | ||||||||
Sempra Energy | 48,442 | $ | 5,624,601 | |||||
$ | 5,624,601 |
Security | Shares | Value | ||||||
Oil, Gas & Consumable Fuels — 5.5% | ||||||||
ConocoPhillips | 110,766 | $ | 7,711,529 | |||||
Diamondback Energy, Inc. | 48,600 | 6,394,302 | ||||||
Exxon Mobil Corp. | 149,800 | 12,392,954 | ||||||
Phillips 66 | 68,425 | 7,684,812 | ||||||
$ | 34,183,597 | |||||||
Pharmaceuticals — 5.4% | ||||||||
Jazz Pharmaceuticals PLC(1) | 43,013 | $ | 7,411,140 | |||||
Johnson & Johnson | 123,024 | 14,927,732 | ||||||
Pfizer, Inc. | 299,168 | 10,853,815 | ||||||
$ | 33,192,687 | |||||||
Road & Rail — 1.3% | ||||||||
CSX Corp. | 122,854 | $ | 7,835,628 | |||||
$ | 7,835,628 | |||||||
Semiconductors & Semiconductor Equipment — 3.8% | ||||||||
Broadcom, Inc. | 23,043 | $ | 5,591,154 | |||||
QUALCOMM, Inc. | 118,662 | 6,659,311 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 130,843 | 4,783,620 | ||||||
Texas Instruments, Inc. | 60,419 | 6,661,195 | ||||||
$ | 23,695,280 | |||||||
Software — 6.5% | ||||||||
Adobe Systems, Inc.(1) | 33,218 | $ | 8,098,881 | |||||
Intuit, Inc. | 37,116 | 7,582,984 | ||||||
Microsoft Corp. | 158,320 | 15,611,935 | ||||||
Oracle Corp. | 205,600 | 9,058,736 | ||||||
$ | 40,352,536 | |||||||
Specialty Retail — 4.1% | ||||||||
Home Depot, Inc. (The) | 66,168 | $ | 12,909,377 | |||||
TJX Cos., Inc. (The) | 85,400 | 8,128,372 | ||||||
Tractor Supply Co. | 56,600 | 4,329,334 | ||||||
$ | 25,367,083 | |||||||
Technology Hardware, Storage & Peripherals — 6.2% | ||||||||
Apple, Inc. | 153,717 | $ | 28,454,554 | |||||
HP, Inc. | 435,991 | 9,892,636 | ||||||
$ | 38,347,190 |
23 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Thrifts & Mortgage Finance — 0.7% | ||||||||
MGIC Investment Corp.(1) | 424,600 | $ | 4,551,712 | |||||
$ | 4,551,712 | |||||||
Total Common Stocks |
| $ | 616,209,207 | |||||
Short-Term Investments — 0.9% |
| |||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 2.09%(2) | 5,383,101 | $ | 5,383,101 | |||||
Total Short-Term Investments |
| $ | 5,383,101 | |||||
Total Investments — 100.5% |
| $ | 621,592,308 | |||||
Other Assets, Less Liabilities — (0.5)% |
| $ | (3,070,246 | ) | ||||
Net Assets — 100.0% |
| $ | 618,522,062 |
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, 2018. |
Abbreviations:
ADR | – | American Depositary Receipt |
24 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Unaffiliated investments, at value (identified cost, $513,469,351) | $ | 616,209,207 | ||
Affiliated investment, at value (identified cost, $5,383,101) | 5,383,101 | |||
Foreign currency, at value (identified cost, $15,978) | 16,122 | |||
Dividends receivable | 654,115 | |||
Dividends receivable from affiliated investment | 2,245 | |||
Receivable for investments sold | 1,353,348 | |||
Tax reclaims receivable | 174,426 | |||
Total assets | $ | 623,792,564 | ||
Liabilities |
| |||
Payable for investments purchased | $ | 4,852,572 | ||
Payable to affiliates: | ||||
Investment adviser fee | 308,338 | |||
Trustees’ fees | 6,910 | |||
Accrued expenses | 102,682 | |||
Total liabilities | $ | 5,270,502 | ||
Net Assets applicable to investors’ interest in Portfolio | $ | 618,522,062 | ||
Sources of Net Assets |
| |||
Investors’ capital | $ | 515,783,835 | ||
Net unrealized appreciation | 102,738,227 | |||
Total | $ | 618,522,062 |
25 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends (net of foreign taxes, $45,716) | $ | 5,662,049 | ||
Dividends from affiliated investment | 12,947 | |||
Total investment income | $ | 5,674,996 | ||
Expenses | ||||
Investment adviser fee | $ | 1,889,103 | ||
Trustees’ fees and expenses | 12,090 | |||
Custodian fee | 84,718 | |||
Legal and accounting services | 25,286 | |||
Miscellaneous | 13,715 | |||
Total expenses | $ | 2,024,912 | ||
Net investment income | $ | 3,650,084 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 32,042,053 | ||
Investment transactions — affiliated investment | (14 | ) | ||
Foreign currency transactions | 95 | |||
Net realized gain | $ | 32,042,134 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (18,528,834 | ) | |
Investments — affiliated investment | 405 | |||
Foreign currency | (614 | ) | ||
Net change in unrealized appreciation (depreciation) | $ | (18,529,043 | ) | |
Net realized and unrealized gain | $ | 13,513,091 | ||
Net increase in net assets from operations | $ | 17,163,175 |
26 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment income | $ | 3,650,084 | $ | 8,760,643 | ||||
Net realized gain | 32,042,134 | 44,411,069 | (1) | |||||
Net change in unrealized appreciation (depreciation) | (18,529,043 | ) | 63,700,885 | |||||
Net increase in net assets from operations | $ | 17,163,175 | $ | 116,872,597 | ||||
Capital transactions — | ||||||||
Contributions | $ | 6,691,583 | $ | 30,972,679 | ||||
Withdrawals | (52,823,394 | ) | (141,623,853 | ) | ||||
Portfolio transaction fee | 85,711 | 210,734 | ||||||
Net decrease in net assets from capital transactions | $ | (46,046,100 | ) | $ | (110,440,440 | ) | ||
Net increase (decrease) in net assets | $ | (28,882,925 | ) | $ | 6,432,157 | |||
Net Assets |
| |||||||
At beginning of period | $ | 647,404,987 | $ | 640,972,830 | ||||
At end of period | $ | 618,522,062 | $ | 647,404,987 |
(1) | Includes $6,288,884 of net realized gains from redemptions in-kind. |
27 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2018
Financial Highlights
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
Ratios/Supplemental Data | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(1) | 0.64 | %(2) | 0.64 | % | 0.65 | % | 0.70 | % | 0.71 | % | 0.73 | % | ||||||||||||
Net investment income | 1.15 | %(2) | 1.38 | % | 1.60 | % | 1.16 | % | 1.07 | % | 0.93 | % | ||||||||||||
Portfolio Turnover | 42 | %(3) | 101 | % | 118 | % | 96 | % | 109 | % | 90 | % | ||||||||||||
Total Return | 2.69 | %(3) | 20.31 | % | 7.14 | % | 4.88 | % | 12.56 | % | 33.50 | % | ||||||||||||
Net assets, end of period (000’s omitted) | $ | 618,522 | $ | 647,405 | $ | 640,973 | $ | 395,492 | $ | 252,929 | $ | 237,133 |
(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. |
28 | See Notes to Financial Statements. |
Stock Portfolio
June 30, 2018
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, 2018, Eaton Vance Stock Fund, Eaton Vance Stock NextShares and Eaton Vance Balanced Fund held an interest of 15.7%, 2.1% and 82.2%, 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, 2018, 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
29 |
Stock Portfolio
June 30, 2018
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, 2018 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, 2018, the Portfolio’s investment adviser fee amounted to $1,889,103 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, 2018, 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 $268,384,275 and $308,455,705, respectively, for the six months ended June 30, 2018.
30 |
Stock Portfolio
June 30, 2018
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, 2018, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 519,478,085 | ||
Gross unrealized appreciation | $ | 109,951,781 | ||
Gross unrealized depreciation | (7,837,558 | ) | ||
Net unrealized appreciation | $ | 102,114,223 |
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 October 30, 2018. 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, 2018.
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, 2018, 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 | $ | 616,209,207 | * | $ | — | $ | — | $ | 616,209,207 | |||||||
Short-Term Investments | — | 5,383,101 | — | 5,383,101 | ||||||||||||
Total Investments | $ | 616,209,207 | $ | 5,383,101 | $ | — | $ | 621,592,308 |
* | The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments. |
At June 30, 2018, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
31 |
Eaton Vance
Balanced Fund
June 30, 2018
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 24, 2018, 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 2018. 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 fund’s investment strategies and policies; |
• | 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 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; |
32 |
Eaton Vance
Balanced Fund
June 30, 2018
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, 2018, with respect to one or more funds, the Board met seven 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 nine 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, including recent changes to such personnel. 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.
33 |
Eaton Vance
Balanced Fund
June 30, 2018
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 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, 2017 for the Fund. In this regard, the Board noted that the performance of the Fund was higher than the median performance of the Fund’s custom peer group and lower than the median performance of the Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was higher than its secondary benchmark index, lower than its primary benchmark index and lower than its blended index for the three-year period. 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, 2017, 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 Portfolios. In this regard, the Board received information about the differences in the nature and scope of services the Adviser provides to the Portfolios 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 Portfolios 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 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.
34 |
Eaton Vance
Balanced Fund
June 30, 2018
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
Richard F. Froio
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
Richard F. Froio
Chief Compliance Officer
Trustees of Eaton Vance Balanced Fund and Stock Portfolio
William H. Park
Chairperson
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 |
35 |
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 Advisers International Ltd., 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.
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.
36 |
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 6.30.18
Eaton Vance
Core Bond Fund
Semiannual Report
June 30, 2018
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, 2018
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 | 31 | |||
Officers and Trustees | 34 | |||
Important Notices | 35 |
Eaton Vance
Core Bond Fund
June 30, 2018
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 | –1.54 | % | –0.04 | % | 2.06 | % | 3.67 | % | ||||||||||||||
Class A with 4.75% Maximum Sales Charge | — | — | –6.21 | –4.80 | 1.07 | 3.17 | ||||||||||||||||||
Class I at NAV | 03/21/2007 | 03/07/2000 | –1.42 | 0.20 | 2.34 | 3.91 | ||||||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond Index | — | — | –1.62 | % | –0.40 | % | 2.27 | % | 3.72 | % | ||||||||||||||
% 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, 2018
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 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. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Core Bond Fund
June 30, 2018
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, 2018 – June 30, 2018).
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 (1/1/18) | Ending Account Value (6/30/18) | Expenses Paid During Period* (1/1/18 – 6/30/18) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 984.60 | $ | 3.64 | ** | 0.74 | % | |||||||
Class I | $ | 1,000.00 | $ | 985.80 | $ | 2.41 | ** | 0.49 | % | |||||||
Hypothetical |
| |||||||||||||||
(5% return per year before expenses) |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,021.10 | $ | 3.71 | ** | 0.74 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,022.40 | $ | 2.46 | ** | 0.49 | % |
* | 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, 2017. 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, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Investment in Core Bond Portfolio, at value (identified cost, $179,898,193) | $ | 177,937,662 | ||
Receivable for Fund shares sold | 184,827 | |||
Receivable from affiliate | 17,377 | |||
Total assets | $ | 178,139,866 | ||
Liabilities |
| |||
Payable for Fund shares redeemed | $ | 152,409 | ||
Distributions payable | 4,409 | |||
Payable to affiliates: | ||||
Distribution and service fees | 7,383 | |||
Trustees’ fees | 125 | |||
Accrued expenses | 34,665 | |||
Total liabilities | $ | 198,991 | ||
Net Assets | $ | 177,940,875 | ||
Sources of Net Assets |
| |||
Paid-in capital | $ | 183,191,088 | ||
Accumulated distributions in excess of net investment income | (274,138 | ) | ||
Accumulated net realized loss from Portfolio | (3,015,544 | ) | ||
Net unrealized depreciation from Portfolio | (1,960,531 | ) | ||
Total | $ | 177,940,875 | ||
Class A Shares |
| |||
Net Assets | $ | 36,097,105 | ||
Shares Outstanding | 3,778,532 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.55 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 95.25 of net asset value per share) | $ | 10.03 | ||
Class I Shares |
| |||
Net Assets | $ | 141,843,770 | ||
Shares Outstanding | 14,864,191 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 9.54 |
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, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Interest allocated from Portfolio (net of foreign taxes, $2,982) | $ | 2,855,718 | ||
Dividends allocated from Portfolio | 22,181 | |||
Expenses allocated from Portfolio | (422,492 | ) | ||
Total investment income from Portfolio | $ | 2,455,407 | ||
Expenses | ||||
Distribution and service fees | ||||
Class A | $ | 43,263 | ||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 9,097 | |||
Transfer and dividend disbursing agent fees | 28,430 | |||
Legal and accounting services | 15,371 | |||
Printing and postage | 11,896 | |||
Registration fees | 21,921 | |||
Miscellaneous | 4,985 | |||
Total expenses | $ | 135,213 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 91,599 | ||
Total expense reductions | $ | 91,599 | ||
Net expenses | $ | 43,614 | ||
Net investment income | $ | 2,411,793 | ||
Realized and Unrealized Gain (Loss) from Portfolio | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | (1,053,827 | ) | |
Financial futures contracts | (151,443 | ) | ||
Net realized loss | $ | (1,205,270 | ) | |
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (3,620,718 | ) | |
Financial futures contracts | 113,055 | |||
Net change in unrealized appreciation (depreciation) | $ | (3,507,663 | ) | |
Net realized and unrealized loss | $ | (4,712,933 | ) | |
Net decrease in net assets from operations | $ | (2,301,140 | ) |
6 | See Notes to Financial Statements. |
Eaton Vance
Core Bond Fund
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment income | $ | 2,411,793 | $ | 3,543,205 | ||||
Net realized gain (loss) | (1,205,270 | ) | 1,125,154 | |||||
Net change in unrealized appreciation (depreciation) | (3,507,663 | ) | 1,644,766 | |||||
Net increase (decrease) in net assets from operations | $ | (2,301,140 | ) | $ | 6,313,125 | |||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (503,494 | ) | $ | (883,483 | ) | ||
Class I | (2,176,069 | ) | (3,208,600 | ) | ||||
Total distributions to shareholders | $ | (2,679,563 | ) | $ | (4,092,083 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 5,708,290 | $ | 8,477,454 | ||||
Class I | 23,098,935 | 49,997,896 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 485,393 | 850,896 | ||||||
Class I | 1,983,256 | 1,279,199 | ||||||
Cost of shares redeemed | ||||||||
Class A | (3,157,229 | ) | (13,068,932 | ) | ||||
Class I | (9,974,765 | ) | (37,564,549 | ) | ||||
Net increase in net assets from Fund share transactions | $ | 18,143,880 | $ | 9,971,964 | ||||
Net increase in net assets | $ | 13,163,177 | $ | 12,193,006 | ||||
Net Assets |
| |||||||
At beginning of period | $ | 164,777,698 | $ | 152,584,692 | ||||
At end of period | $ | 177,940,875 | $ | 164,777,698 | ||||
Accumulated distributions in excess of net investment income included in net assets |
| |||||||
At end of period | $ | (274,138 | ) | $ | (6,368 | ) |
7 | See Notes to Financial Statements. |
Eaton Vance
Core Bond Fund
June 30, 2018
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 9.840 | $ | 9.690 | $ | 9.690 | $ | 9.980 | $ | 9.800 | $ | 10.360 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.124 | $ | 0.217 | $ | 0.168 | $ | 0.173 | $ | 0.226 | $ | 0.220 | ||||||||||||
Net realized and unrealized gain (loss) | (0.275 | ) | 0.187 | 0.075 | (0.201 | ) | 0.260 | (0.341 | ) | |||||||||||||||
Total income (loss) from operations | $ | (0.151 | ) | $ | 0.404 | $ | 0.243 | $ | (0.028 | ) | $ | 0.486 | $ | (0.121 | ) | |||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.139 | ) | $ | (0.254 | ) | $ | (0.243 | ) | $ | (0.258 | ) | $ | (0.306 | ) | $ | (0.326 | ) | ||||||
From net realized gain | — | — | — | (0.004 | ) | — | (0.113 | ) | ||||||||||||||||
Total distributions | $ | (0.139 | ) | $ | (0.254 | ) | $ | (0.243 | ) | $ | (0.262 | ) | $ | (0.306 | ) | $ | (0.439 | ) | ||||||
Net asset value — End of period | $ | 9.550 | $ | 9.840 | $ | 9.690 | $ | 9.690 | $ | 9.980 | $ | 9.800 | ||||||||||||
Total Return(2)(3) | (1.54 | )%(4) | 4.20 | % | 2.48 | % | (0.31 | )% | 5.00 | % | (1.18 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 36,097 | $ | 34,064 | $ | 37,290 | $ | 34,501 | $ | 25,821 | $ | 36,947 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 0.74 | %(7) | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||||
Net investment income | 2.60 | %(7) | 2.21 | % | 1.69 | % | 1.75 | % | 2.27 | % | 2.19 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 37 | %(4) | 123 | % | 132 | % | 159 | % | 134 | % | 107 | % |
(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%, 0.11%, 0.21%, 0.24% and 0.28% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, 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, 2018
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 9.830 | $ | 9.680 | $ | 9.680 | $ | 9.960 | $ | 9.780 | $ | 10.350 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.136 | $ | 0.241 | $ | 0.193 | $ | 0.199 | $ | 0.249 | $ | 0.248 | ||||||||||||
Net realized and unrealized gain (loss) | (0.275 | ) | 0.187 | 0.074 | (0.193 | ) | 0.261 | (0.354 | ) | |||||||||||||||
Total income (loss) from operations | $ | (0.139 | ) | $ | 0.428 | $ | 0.267 | $ | 0.006 | $ | 0.510 | $ | (0.106 | ) | ||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.151 | ) | $ | (0.278 | ) | $ | (0.267 | ) | $ | (0.282 | ) | $ | (0.330 | ) | $ | (0.351 | ) | ||||||
From net realized gain | — | — | — | (0.004 | ) | — | (0.113 | ) | ||||||||||||||||
Total distributions | $ | (0.151 | ) | $ | (0.278 | ) | $ | (0.267 | ) | $ | (0.286 | ) | $ | (0.330 | ) | $ | (0.464 | ) | ||||||
Net asset value — End of period | $ | 9.540 | $ | 9.830 | $ | 9.680 | $ | 9.680 | $ | 9.960 | $ | 9.780 | ||||||||||||
Total Return(2)(3) | (1.42 | )%(4) | 4.47 | % | 2.73 | % | 0.04 | % | 5.27 | % | (1.04 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 141,844 | $ | 130,714 | $ | 115,294 | $ | 55,607 | $ | 40,753 | $ | 46,336 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 0.49 | %(7) | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | ||||||||||||
Net investment income | 2.85 | %(7) | 2.46 | % | 1.95 | % | 2.01 | % | 2.50 | % | 2.47 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 37 | %(4) | 123 | % | 132 | % | 159 | % | 134 | % | 107 | % |
(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%, 0.11%, 0.21%, 0.24% and 0.28% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, 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, 2018
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 (36.6% at June 30, 2018). 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, 2018, 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, 2018 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, 2018
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, 2017, the Fund, for federal income tax purposes, had deferred capital losses of $555,256 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, 2017, $415,223 are short-term and $140,033 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% 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 $91,599 of the Fund’s operating expenses for the six months ended June 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, 2018, EVM earned $2,137 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 $1,999 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2018. EVD also received distribution and service fees from Class A shares (see Note 4).
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, 2018 amounted to $43,263 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, 2018, the Fund was informed that EVD received no CDSCs paid by Class A shareholders.
6 Investment Transactions
For the six months ended June 30, 2018, increases and decreases in the Fund’s investment in the Portfolio aggregated $19,651,046 and $4,045,104, respectively.
11 |
Eaton Vance
Core Bond Fund
June 30, 2018
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, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 593,068 | 865,250 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 50,500 | 86,763 | ||||||
Redemptions | (327,672 | ) | (1,339,027 | ) | ||||
Net increase (decrease) | 315,896 | (387,014 | ) | |||||
Class I | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 2,394,654 | 5,107,950 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 206,653 | 130,382 | ||||||
Redemptions | (1,038,899 | ) | (3,852,006 | ) | ||||
Net increase | 1,562,408 | 1,386,326 |
At June 30, 2018, 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 53.3% of the value of the outstanding shares of the Fund.
12 |
Core Bond Portfolio
June 30, 2018
Portfolio of Investments (Unaudited)
Corporate Bonds & Notes — 43.6% |
| |||||||
Security | Principal Amount | Value | ||||||
Aerospace & Defense — 0.2% | ||||||||
Azul Investments LLP, 5.875%, 10/26/24(1) | $ | 625 | $ | 532,031 | ||||
WestJet Airlines, Ltd., 3.50%, 6/16/21(1) | 620 | 614,013 | ||||||
$ | 1,146,044 | |||||||
Automotive — 1.7% | ||||||||
Ford Motor Credit Co., LLC, 2.979%, 8/3/22 | $ | 2,503 | $ | 2,410,949 | ||||
Ford Motor Credit Co., LLC, 3.147%, (3 mo. USD | 705 | 707,737 | ||||||
General Motors Co., 4.20%, 10/1/27 | 2,383 | 2,287,747 | ||||||
General Motors Financial Co., Inc., 3.188%, (3 mo. USD LIBOR + 0.85%), 4/9/21(2) | 805 | 809,508 | ||||||
General Motors Financial Co., Inc., 3.327%, (3 mo. USD LIBOR + 0.99%), 1/5/23(2) | 1,110 | 1,114,324 | ||||||
General Motors Financial Co., Inc., 3.50%, 11/7/24 | 1,149 | 1,095,179 | ||||||
$ | 8,425,444 | |||||||
Banks — 16.2% | ||||||||
American Express Co., 3.625%, 12/5/24 | $ | 1,162 | $ | 1,145,589 | ||||
ANZ New Zealand International, Ltd., 2.20%, 7/17/20(1) | 1,084 | 1,062,680 | ||||||
Banco Safra SA/Cayman Islands, 4.125%, 2/8/23(1) | 2,425 | 2,316,214 | ||||||
Banco Santander SA, 3.125%, 2/23/23 | 1,645 | 1,562,107 | ||||||
Bank of America Corp., 2.742%, (3 mo. USD LIBOR + 0.38%), 1/23/22(2) | 2,707 | 2,691,334 | ||||||
Bank of America Corp., 2.881% to 4/24/22, 4/24/23(3) | 1,425 | 1,386,255 | ||||||
Bank of America Corp., 3.108%, (3 mo. USD LIBOR + 0.79%), 3/5/24(2) | 2,400 | 2,393,525 | ||||||
Bank of America Corp., 3.124% to 1/20/22, 1/20/23(3) | 2,420 | 2,379,727 | ||||||
Bank of America Corp., 3.30%, 1/11/23 | 1,237 | 1,219,224 | ||||||
Bank of America Corp., 3.499% to 5/17/21, 5/17/22(3) | 1,005 | 1,004,811 | ||||||
Bank of America Corp., 3.593% to 7/21/27, 7/21/28(3) | 4,880 | 4,662,656 | ||||||
Bank of Montreal, 3.803% to 12/15/27, | 721 | 668,771 | ||||||
Barclays PLC, 4.836%, 5/9/28 | 1,480 | 1,398,811 | ||||||
Capital One Bank (USA), N.A., 3.375%, 2/15/23 | 892 | 869,499 | ||||||
Capital One Financial Corp., 2.50%, 5/12/20 | 485 | 478,319 | ||||||
Capital One Financial Corp., 3.079%, (3 mo. USD | 2,300 | 2,288,114 | ||||||
Capital One Financial Corp., 3.30%, 10/30/24 | 3,227 | 3,068,062 | ||||||
Capital One Financial Corp., 3.75%, 4/24/24 | 700 | 687,201 | ||||||
Capital One, N.A., 2.65%, 8/8/22 | 1,780 | 1,709,108 | ||||||
Citigroup, Inc., 3.142% to 1/24/22, 1/24/23(3) | 1,552 | 1,521,351 | ||||||
Citigroup, Inc., 3.576%, (3 mo. USD LIBOR + 1.25%), 7/1/26(2) | 1,700 | 1,701,358 | ||||||
Citigroup, Inc., 3.668% to 7/24/27, 7/24/28(3) | 3,400 | 3,236,036 |
Security | Principal Amount | Value | ||||||
Banks (continued) | ||||||||
Citigroup, Inc., 3.70%, 1/12/26 | $ | 1,000 | $ | 970,507 | ||||
Citigroup, Inc., 3.887% to 1/10/27, 1/10/28(3) | 909 | 881,407 | ||||||
Citigroup, Inc., 4.075% to 4/23/28, 4/23/29(3) | 3,709 | 3,643,284 | ||||||
Citigroup, Inc., 4.50%, 1/14/22 | 725 | 745,128 | ||||||
Citizens Financial Group, Inc., 4.30%, 12/3/25 | 1,399 | 1,391,755 | ||||||
Commonwealth Bank of Australia, 2.50%, 9/18/22(1) | 1,050 | 1,006,532 | ||||||
Discover Bank, 3.20%, 8/9/21 | 950 | 939,794 | ||||||
Discover Bank, 3.35%, 2/6/23 | 1,193 | 1,163,422 | ||||||
Discover Financial Services, 3.95%, 11/6/24 | 490 | 478,624 | ||||||
Fifth Third Bancorp, 4.30%, 1/16/24 | 1,131 | 1,146,925 | ||||||
First Horizon National Corp., 3.50%, 12/15/20 | 702 | 704,709 | ||||||
Goldman Sachs Group, Inc. (The), 2.905% to 7/24/22, 7/24/23(3) | 1,909 | 1,839,894 | ||||||
Goldman Sachs Group, Inc. (The), 3.491%, (3 mo. USD LIBOR + 1.17%), 5/15/26(2) | 1,226 | 1,212,302 | ||||||
Goldman Sachs Group, Inc. (The), 3.691% to 6/5/27, 6/5/28(3) | 916 | 869,001 | ||||||
Goldman Sachs Group, Inc. (The), 3.75%, 2/25/26 | 970 | 941,065 | ||||||
Goldman Sachs Group, Inc. (The), 3.85%, 1/26/27 | 1,510 | 1,452,306 | ||||||
Goldman Sachs Group, Inc. (The), 5.75%, 1/24/22 | 1,151 | 1,231,879 | ||||||
JPMorgan Chase & Co., 2.70%, 5/18/23 | 1,988 | 1,909,114 | ||||||
JPMorgan Chase & Co., 3.782% to 2/1/27, 2/1/28(3) | 1,000 | 974,986 | ||||||
JPMorgan Chase & Co., 5.625%, 8/16/43 | 628 | 694,394 | ||||||
Morgan Stanley, 3.591% to 7/22/27, 7/22/28(3) | 4,750 | 4,518,052 | ||||||
Morgan Stanley, 3.772% to 1/24/28, 1/24/29(3) | 2,042 | 1,970,096 | ||||||
Morgan Stanley, 4.00%, 7/23/25 | 2,220 | 2,214,594 | ||||||
Morgan Stanley, 4.875%, 11/1/22 | 1,132 | 1,174,915 | ||||||
PPTT, 2006-A GS, Class A, 5.866%(1)(4) | 259 | 265,410 | ||||||
Regions Financial Corp., 2.75%, 8/14/22 | 640 | 617,910 | ||||||
Regions Financial Corp., 3.20%, 2/8/21 | 1,526 | 1,519,898 | ||||||
Santander Holdings USA, Inc., 4.50%, 7/17/25 | 712 | 699,237 | ||||||
Synchrony Bank, 3.00%, 6/15/22 | 410 | 395,078 | ||||||
Synovus Financial Corp., 3.125%, 11/1/22 | 622 | 594,788 | ||||||
Wells Fargo & Co., 3.45%, 2/13/23 | 948 | 929,749 | ||||||
$ | 78,547,507 | |||||||
Beverages — 0.6% | ||||||||
Anheuser-Busch InBev Finance, Inc., 4.90%, 2/1/46 | $ | 730 | $ | 753,390 | ||||
Keurig Dr Pepper, Inc., 3.43%, 6/15/27 | 618 | 571,854 | ||||||
Keurig Dr Pepper, Inc., 3.551%, 5/25/21(1) | 722 | 723,076 | ||||||
Keurig Dr Pepper, Inc., 4.057%, 5/25/23(1) | 470 | 472,267 | ||||||
Keurig Dr Pepper, Inc., 4.417%, 5/25/25(1) | 385 | 387,409 | ||||||
$ | 2,907,996 |
13 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount | Value | ||||||
Building Materials — 0.1% | ||||||||
Vulcan Materials Co., 4.50%, 6/15/47 | $ | 479 | $ | 436,218 | ||||
$ | 436,218 | |||||||
Chemicals — 0.6% | ||||||||
Mexichem SAB de CV, 5.50%, 1/15/48(1) | $ | 2,000 | $ | 1,750,120 | ||||
Mosaic Co. (The), 3.25%, 11/15/22 | 1,311 | 1,274,391 | ||||||
$ | 3,024,511 | |||||||
Commercial Services — 0.6% | ||||||||
Block Financial, LLC, 5.25%, 10/1/25 | $ | 870 | $ | 873,438 | ||||
Ecolab, Inc., 3.95%, 12/1/47 | 883 | 847,076 | ||||||
Total System Services, Inc., 3.75%, 6/1/23 | 1,080 | 1,071,126 | ||||||
$ | 2,791,640 | |||||||
Computers — 1.5% | ||||||||
Dell International, LLC/EMC Corp., 4.42%, 6/15/21(1) | $ | 2,350 | $ | 2,384,946 | ||||
DXC Technology Co., 2.875%, 3/27/20 | 800 | 794,575 | ||||||
DXC Technology Co., 3.25%, (3 mo. USD LIBOR + 0.95%), 3/1/21(2) | 2,500 | 2,500,710 | ||||||
Microchip Technology, Inc., 4.333%, 6/1/23(1) | 1,664 | 1,668,095 | ||||||
$ | 7,348,326 | |||||||
Diversified Financial Services — 4.3% | ||||||||
Air Lease Corp., 3.375%, 6/1/21 | $ | 1,200 | $ | 1,194,281 | ||||
Ally Financial, Inc., 3.25%, 11/5/18 | 4,700 | 4,705,875 | ||||||
Ally Financial, Inc., 3.50%, 1/27/19 | 1,180 | 1,180,000 | ||||||
Ally Financial, Inc., 4.125%, 3/30/20 | 1,160 | 1,164,350 | ||||||
Banco BTG Pactual SA/Cayman Islands, 5.50%, 1/31/23(1) | 540 | 503,550 | ||||||
Brookfield Finance, Inc., 3.90%, 1/25/28 | 3,600 | 3,408,680 | ||||||
Jefferies Group, LLC/Jefferies Group Capital Finance, Inc., 4.15%, 1/23/30 | 2,336 | 2,064,988 | ||||||
Neuberger Berman Group, LLC/Neuberger Berman Finance Corp., 4.50%, 3/15/27(1) | 432 | 428,859 | ||||||
Neuberger Berman Group, LLC/Neuberger Berman Finance Corp., 4.875%, 4/15/45(1) | 510 | 492,369 | ||||||
Synchrony Financial, 3.584%, (3 mo. USD LIBOR + 1.23%), 2/3/20(2) | 3,465 | 3,498,299 | ||||||
Synchrony Financial, 3.95%, 12/1/27 | 1,200 | 1,108,711 | ||||||
UBS Group Funding Switzerland AG, 3.491%, 5/23/23(1) | 1,450 | 1,418,001 | ||||||
$ | 21,167,963 |
Security | Principal Amount | Value | ||||||
Electric Utilities — 0.5% | ||||||||
Entergy Corp., 4.00%, 7/15/22 | $ | 1,046 | $ | 1,059,659 | ||||
ITC Holdings Corp., 4.05%, 7/1/23 | 680 | 688,562 | ||||||
Pacific Gas & Electric Co., 4.00%, 12/1/46 | 965 | 834,956 | ||||||
$ | 2,583,177 | |||||||
Electrical and Electronic Equipment — 0.9% | ||||||||
Jabil, Inc., 3.95%, 1/12/28 | $ | 1,108 | $ | 1,048,024 | ||||
Jabil, Inc., 4.70%, 9/15/22 | 920 | 948,612 | ||||||
NXP B.V./NXP Funding, LLC, 4.625%, 6/1/23(1) | 2,165 | 2,195,743 | ||||||
$ | 4,192,379 | |||||||
Financial Services — 0.3% | ||||||||
CIT Group, Inc., 3.875%, 2/19/19 | $ | 1,380 | $ | 1,385,520 | ||||
$ | 1,385,520 | |||||||
Foods — 0.7% | ||||||||
ESAL GmbH, 6.25%, 2/5/23(1) | $ | 400 | $ | 374,500 | ||||
Kraft Heinz Foods Co., 3.375%, 6/15/21 | 297 | 297,678 | ||||||
Smithfield Foods, Inc., 2.65%, 10/3/21(1) | 1,304 | 1,242,827 | ||||||
Smithfield Foods, Inc., 3.35%, 2/1/22(1) | 1,482 | 1,431,891 | ||||||
$ | 3,346,896 | |||||||
Health Services — 0.3% | ||||||||
MEDNAX, Inc., 5.25%, 12/1/23(1) | $ | 1,420 | $ | 1,395,150 | ||||
$ | 1,395,150 | |||||||
Healthcare Products — 0.4% | ||||||||
Becton Dickinson and Co., 3.211%, (3 mo. USD LIBOR + 0.88%), 12/29/20(2) | $ | 700 | $ | 701,308 | ||||
Becton Dickinson and Co., 3.70%, 6/6/27 | 1,439 | 1,363,109 | ||||||
$ | 2,064,417 | |||||||
Home Construction — 0.5% | ||||||||
Lennar Corp., 4.125%, 1/15/22 | $ | 313 | $ | 311,044 | ||||
Lennar Corp., 4.50%, 11/15/19 | 1,150 | 1,161,500 | ||||||
Toll Brothers Finance Corp., 4.875%, 3/15/27 | 940 | 881,250 | ||||||
$ | 2,353,794 | |||||||
Home Furnishings — 0.2% | ||||||||
Whirlpool Corp., 4.50%, 6/1/46 | $ | 914 | $ | 856,966 | ||||
$ | 856,966 |
14 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount | Value | ||||||
Household Products — 0.3% | ||||||||
Newell Brands, Inc., 3.85%, 4/1/23 | $ | 1,426 | $ | 1,405,674 | ||||
$ | 1,405,674 | |||||||
Insurance — 0.3% | ||||||||
Marsh and McLennan Cos., Inc., 3.75%, 3/14/26 | $ | 841 | $ | 833,875 | ||||
Principal Financial Group, Inc., 4.30%, 11/15/46 | 534 | 509,308 | ||||||
$ | 1,343,183 | |||||||
Internet Software & Services — 0.2% | ||||||||
Symantec Corp., 5.00%, 4/15/25(1) | $ | 916 | $ | 889,435 | ||||
$ | 889,435 | |||||||
Lodging and Gaming — 0.2% | ||||||||
GLP Capital, L.P./GLP Financing II, Inc., 5.375%, 4/15/26 | $ | 160 | $ | 158,800 | ||||
MGM Resorts International, 4.625%, 9/1/26 | 900 | 837,000 | ||||||
$ | 995,800 | |||||||
Mining — 0.6% | ||||||||
Freeport-McMoRan, Inc., 5.40%, 11/14/34 | $ | 900 | $ | 821,250 | ||||
Glencore Funding, LLC, 4.00%, 3/27/27(1) | 1,006 | 950,963 | ||||||
Yamana Gold, Inc., 4.625%, 12/15/27 | 1,285 | 1,233,055 | ||||||
$ | 3,005,268 | |||||||
Miscellaneous Manufacturing — 0.1% | ||||||||
Carlisle Cos., Inc., 3.50%, 12/1/24 | $ | 442 | $ | 427,044 | ||||
$ | 427,044 | |||||||
Oil and Gas — 1.8% | ||||||||
AmeriGas Partners, L.P./AmeriGas Finance Corp., 5.75%, 5/20/27 | $ | 1,465 | $ | 1,399,075 | ||||
Ecopetrol SA, 5.875%, 9/18/23 | 1,400 | 1,487,500 | ||||||
Nabors Industries, Inc., 4.625%, 9/15/21 | 983 | 965,798 | ||||||
Noble Energy, Inc., 3.90%, 11/15/24 | 937 | 924,740 | ||||||
Oceaneering International, Inc., 4.65%, 11/15/24 | 1,035 | 989,626 | ||||||
Petroleos Mexicanos, 6.875%, 8/4/26 | 1,500 | 1,580,250 | ||||||
Pioneer Natural Resources Co., 4.45%, 1/15/26 | 1,400 | 1,443,609 | ||||||
$ | 8,790,598 | |||||||
Packaging & Containers — 0.2% | ||||||||
Owens-Brockway Glass Container, Inc., 5.875%, 8/15/23(1) | $ | 835 | $ | 847,525 | ||||
$ | 847,525 |
Security | Principal Amount | Value | ||||||
Pharmaceuticals — 1.9% | ||||||||
Celgene Corp., 3.55%, 8/15/22 | $ | 1,041 | $ | 1,033,759 | ||||
CVS Health Corp., 3.70%, 3/9/23 | 2,769 | 2,743,731 | ||||||
CVS Health Corp., 4.10%, 3/25/25 | 998 | 993,978 | ||||||
CVS Health Corp., 4.30%, 3/25/28 | 4,738 | 4,680,956 | ||||||
$ | 9,452,424 | |||||||
Pipelines — 0.8% | ||||||||
Gulfstream Natural Gas, 4.60%, 9/15/25(1) | $ | 431 | $ | 445,719 | ||||
Plains All America Pipeline, L.P./PAA Finance Corp., 4.50%, 12/15/26 | 485 | 475,411 | ||||||
Plains All America Pipeline, L.P./PAA Finance Corp., 4.65%, 10/15/25 | 663 | 661,507 | ||||||
Sabine Pass Liquefaction, LLC, 5.00%, 3/15/27 | 750 | 762,394 | ||||||
Sabine Pass Liquefaction, LLC, 5.625%, 3/1/25 | 880 | 937,034 | ||||||
Sunoco Logistics Partners Operations, L.P., 4.40%, 4/1/21 | 582 | 591,681 | ||||||
$ | 3,873,746 | |||||||
Real Estate Investment Trusts (REITs) — 1.3% | ||||||||
CBL & Associates, L.P., 5.95%, 12/15/26 | $ | 1,000 | $ | 843,245 | ||||
Crown Castle International Corp., 3.20%, 9/1/24 | 851 | 803,913 | ||||||
Crown Castle International Corp., 3.65%, 9/1/27 | 750 | 698,683 | ||||||
DDR Corp., 3.625%, 2/1/25 | 874 | 830,301 | ||||||
Digital Realty Trust, L.P., 3.70%, 8/15/27 | 1,272 | 1,210,656 | ||||||
EPR Properties, 4.50%, 6/1/27 | 1,350 | 1,291,217 | ||||||
EPR Properties, 4.95%, 4/15/28 | 725 | 710,398 | ||||||
$ | 6,388,413 | |||||||
Retail-Specialty and Apparel — 0.9% | ||||||||
Dollar Tree, Inc., 3.70%, 5/15/23 | $ | 1,476 | $ | 1,463,871 | ||||
Macy’s Retail Holdings, Inc., 4.375%, 9/1/23 | 965 | 968,766 | ||||||
Reliance Intermediate Holdings, L.P., 6.50%, 4/1/23(1) | 295 | 307,501 | ||||||
Tapestry, Inc., 4.125%, 7/15/27 | 1,877 | 1,792,551 | ||||||
$ | 4,532,689 | |||||||
Software — 0.4% | ||||||||
CA, Inc., 4.70%, 3/15/27 | $ | 909 | $ | 919,085 | ||||
IQVIA, Inc., 5.00%, 10/15/26(1) | 930 | 909,075 | ||||||
$ | 1,828,160 | |||||||
Technology — 0.5% | ||||||||
Western Digital Corp., 4.75%, 2/15/26 | $ | 2,412 | $ | 2,350,193 | ||||
$ | 2,350,193 |
15 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount | Value | ||||||
Telecommunications — 2.3% | ||||||||
AT&T, Inc., 3.00%, 6/30/22 | $ | 1,043 | $ | 1,012,002 | ||||
AT&T, Inc., 3.60%, 2/17/23 | 1,834 | 1,808,196 | ||||||
AT&T, Inc., 4.10%, 2/15/28(1) | 2,390 | 2,287,389 | ||||||
Nokia Oyj, 4.375%, 6/12/27 | 1,500 | 1,413,750 | ||||||
Verizon Communications, Inc., 3.443%, (3 mo. USD LIBOR + 1.10%), 5/15/25(2) | 1,108 | 1,107,755 | ||||||
Verizon Communications, Inc., 4.329%, 9/21/28(1) | 2,407 | 2,390,386 | ||||||
Verizon Communications, Inc., 4.862%, 8/21/46 | 1,400 | 1,341,771 | ||||||
$ | 11,361,249 | |||||||
Transportation — 0.7% | ||||||||
Kirby Corp., 4.20%, 3/1/28 | $ | 2,543 | $ | 2,509,972 | ||||
SMBC Aviation Capital Finance DAC, 3.00%, 7/15/22(1) | 914 | 881,956 | ||||||
$ | 3,391,928 | |||||||
Utilities — 1.5% | ||||||||
American Water Capital Corp., 2.95%, 9/1/27 | $ | 1,426 | $ | 1,344,394 | ||||
American Water Capital Corp., 3.40%, 3/1/25 | 365 | 360,245 | ||||||
American Water Capital Corp., 4.30%, 9/1/45 | 842 | 859,075 | ||||||
Baltimore Gas & Electric Co., 3.50%, 8/15/46 | 1,580 | 1,416,099 | ||||||
Duke Energy Florida Project Finance, LLC, 1.196%, 3/1/20 | 1,196 | 1,178,475 | ||||||
Southern Co. Gas Capital Corp., 2.45%, 10/1/23 | 1,060 | 997,571 | ||||||
Southern Co. Gas Capital Corp., 3.95%, 10/1/46 | 1,270 | 1,171,681 | ||||||
$ | 7,327,540 | |||||||
Total Corporate Bonds & Notes |
| $ | 212,184,817 | |||||
Agency Mortgage-Backed Securities — 16.6% |
| |||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Federal Home Loan Mortgage Corp.: | ||||||||
Pool #A93547, 4.50%, 8/1/40 | $ | 797 | $ | 837,394 | ||||
Pool #C03490, 4.50%, 8/1/40 | 657 | 691,006 | ||||||
Pool #C03815, 3.50%, 3/1/42 | 555 | 557,750 | ||||||
Pool #C03921, 3.50%, 5/1/42 | 590 | 591,778 | ||||||
Pool #C09031, 2.50%, 2/1/43 | 1,803 | 1,699,649 | ||||||
Pool #C09032, 3.50%, 2/1/43 | 969 | 971,615 | ||||||
Pool #C91875, 3.50%, 6/1/36 | 1,092 | 1,099,737 | ||||||
Pool #G04913, 5.00%, 3/1/38 | 740 | 791,050 | ||||||
Pool #G05958, 5.00%, 8/1/40 | 187 | 199,592 | ||||||
Pool #G07589, 5.50%, 6/1/41 | 2,965 | 3,230,793 |
Security | Principal Amount (000’s omitted) | Value | ||||||
Federal Home Loan Mortgage Corp.: (continued) | ||||||||
Pool #G08524, 3.00%, 3/1/43 | $ | 1,083 | $ | 1,057,715 | ||||
Pool #G08596, 4.50%, 7/1/44 | 904 | 947,629 | ||||||
Pool #G08670, 3.00%, 10/1/45 | 1,481 | 1,438,528 | ||||||
Pool #G08701, 3.00%, 4/1/46 | 2,283 | 2,215,244 | ||||||
Pool #G08717, 4.00%, 8/1/46 | 2,104 | 2,149,994 | ||||||
Pool #G08738, 3.50%, 12/1/46 | 2,011 | 2,004,058 | ||||||
Pool #G08758, 4.00%, 4/1/47 | 1,898 | 1,936,353 | ||||||
Pool #G60608, 4.00%, 5/1/46 | 3,200 | 3,271,960 | ||||||
Pool #G60761, 3.00%, 10/1/43 | 2,242 | 2,191,606 | ||||||
Pool #Q00285, 4.50%, 4/1/41 | 501 | 526,228 | ||||||
Pool #Q08641, 3.50%, 6/1/42 | 588 | 590,091 | ||||||
Pool #Q10378, 3.00%, 8/1/42 | 1,134 | 1,106,676 | ||||||
Pool #Q17453, 3.50%, 4/1/43 | 1,768 | 1,774,178 | ||||||
Pool #Q21661, 3.50%, 9/1/43 | 930 | 932,585 | ||||||
Pool #Q34310, 3.50%, 6/1/45 | 2,081 | 2,078,126 | ||||||
Pool #Q40264, 3.50%, 5/1/46 | 1,640 | 1,636,712 | ||||||
Pool #Q45051, 3.00%, 12/1/46 | 3,465 | 3,364,448 | ||||||
Pool #Q46889, 3.50%, 3/1/47 | 2,752 | 2,757,677 | ||||||
Pool #Q47999, 4.00%, 5/1/47 | 3,764 | 3,857,349 | ||||||
$ | 46,507,521 | |||||||
Federal National Mortgage Association: | ||||||||
Pool #735403, 5.00%, 4/1/35 | $ | 107 | $ | 114,470 | ||||
Pool #889982, 5.50%, 11/1/38 | 57 | 62,005 | ||||||
Pool #890427, 3.50%, 4/1/42 | 1,062 | 1,067,043 | ||||||
Pool #995203, 5.00%, 7/1/35 | 22 | 23,260 | ||||||
Pool #AB3678, 3.50%, 10/1/41 | 3,728 | 3,748,444 | ||||||
Pool #AB6633, 3.50%, 10/1/42 | 960 | 964,018 | ||||||
Pool #AB8923, 3.00%, 4/1/43 | 1,336 | 1,305,524 | ||||||
Pool #AE0949, 4.00%, 2/1/41 | 306 | 315,244 | ||||||
Pool #AH1559, 4.00%, 12/1/40 | 118 | 121,125 | ||||||
Pool #AH9055, 4.50%, 4/1/41 | 395 | 415,717 | ||||||
Pool #AL5162, 3.00%, 9/1/43 | 1,007 | 984,929 | ||||||
Pool #AL6838, 4.00%, 4/1/43 | 799 | 822,344 | ||||||
Pool #AL7524, 5.00%, 7/1/41 | 1,024 | 1,096,756 | ||||||
Pool #AS3892, 4.00%, 11/1/44 | 1,141 | 1,167,736 | ||||||
Pool #AS4421, 4.00%, 2/1/45 | 782 | 802,209 | ||||||
Pool #AS5332, 4.00%, 7/1/45 | 1,354 | 1,386,626 | ||||||
Pool #AS6014, 4.00%, 10/1/45 | 882 | 903,815 | ||||||
Pool #AS9721, 4.00%, 6/1/47 | 2,779 | 2,835,461 | ||||||
Pool #AZ0857, 3.00%, 7/1/45 | 940 | 915,105 | ||||||
Pool #BA0891, 3.50%, 1/1/46 | 2,599 | 2,595,336 | ||||||
Pool #BA3938, 3.50%, 1/1/46 | 1,989 | 1,987,131 | ||||||
Pool #BD1183, 3.50%, 12/1/46 | 1,351 | 1,347,627 | ||||||
Pool #BE2316, 3.50%, 1/1/47 | 3,139 | 3,129,968 | ||||||
Pool #MA0634, 4.50%, 1/1/31 | 687 | 718,804 |
16 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount (000’s omitted) | Value | ||||||
Federal National Mortgage Association: (continued) | ||||||||
Pool #MA1789, 4.50%, 2/1/44 | $ | 862 | $ | 904,280 | ||||
Pool #MA2389, 3.50%, 9/1/35 | 655 | 660,166 | ||||||
Pool #MA2653, 4.00%, 6/1/46 | 2,143 | 2,191,646 | ||||||
$ | 32,586,789 | |||||||
Government National Mortgage Association: | ||||||||
Pool #AQ1784, 3.50%, 12/20/45 | $ | 1,773 | $ | 1,781,495 | ||||
$ | 1,781,495 | |||||||
Total Agency Mortgage-Backed Securities |
| $ | 80,875,805 | |||||
Collateralized Mortgage Obligations — 4.8% |
| |||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Federal Home Loan Mortgage Corp.: | ||||||||
Series 3820, Class DJ, 3.00%, 11/15/35 | $ | 1,222 | $ | 1,224,523 | ||||
Series 4030, Class PA, 3.50%, 6/15/40 | 1,583 | 1,594,924 | ||||||
Series 4423, Class A, 3.50%, 10/15/39 | 1,609 | 1,621,564 | ||||||
$ | 4,441,011 | |||||||
Federal Home Loan Mortgage Corp. Structured Agency Credit Risk Debt Notes: | ||||||||
Series 2017-DNA3, Class M2, 4.591%, (1 mo. USD LIBOR + 2.50%), 3/25/30(2) | $ | 715 | $ | 739,881 | ||||
Series 2018-DNA1, Class M1, 2.541%, (1 mo. USD LIBOR + 0.45%), 7/25/30(2) | 1,230 | 1,227,745 | ||||||
$ | 1,967,626 | |||||||
Federal National Mortgage Association: | ||||||||
Series 2005-58, Class MA, 5.50%, 7/25/35 | $ | 306 | $ | 324,453 | ||||
Series 2011-117, Class QA, 3.50%, 10/25/31 | 369 | 369,165 | ||||||
Series 2011-135, Class PK, 4.50%, 5/25/40 | 1,076 | 1,109,840 | ||||||
Series 2013-6, Class HD, 1.50%, 12/25/42 | 293 | 270,037 | ||||||
Series 2013-130, Class EA, 3.00%, 6/25/38 | 1,283 | 1,273,933 | ||||||
Series 2014-70, Class KP, 3.50%, 3/25/44 | 1,335 | 1,345,788 | ||||||
$ | 4,693,216 | |||||||
Federal National Mortgage Association Connecticut Avenue Securities: | ||||||||
Series 2013-C01, Class M2, 7.341%, (1 mo. USD LIBOR + 5.25%), 10/25/23(2) | $ | 2,300 | $ | 2,655,867 | ||||
Series 2014-C02, Class 2M2, 4.691%, (1 mo. USD LIBOR + 2.60%), 5/25/24(2) | 1,063 | 1,129,012 | ||||||
Series 2014-C03, Class 1M2, 5.091%, (1 mo. USD LIBOR + 3.00%), 7/25/24(2) | 1,241 | 1,334,281 | ||||||
Series 2014-C03, Class 2M2, 4.991%, (1 mo. USD LIBOR + 2.90%), 7/25/24(2) | 2,178 | 2,322,829 | ||||||
Series 2017-C05, Class 1M1, 2.641%, (1 mo. USD LIBOR + 0.55%), 1/25/30(2) | 1,535 | 1,539,078 |
Security | Principal Amount (000’s omitted) | Value | ||||||
Federal National Mortgage Association Connecticut Avenue Securities: (continued) | ||||||||
Series 2017-C05, Class 1M2, 4.291%, (1 mo. USD LIBOR + 2.20%), 1/25/30(2) | $ | 400 | $ | 407,012 | ||||
Series 2017-C06, Class 1M2, 4.741%, (1 mo. USD LIBOR + 2.65%), 2/25/30(2) | 1,275 | 1,318,265 | ||||||
Series 2017-C07, Class 1M1, 2.741%, (1 mo. USD LIBOR + 0.65%), 5/25/30(2) | 958 | 961,030 | ||||||
Series 2018-C03, Class 1M1, 2.771%, (1 mo. USD LIBOR + 0.68%), 10/25/30(2) | 519 | 520,071 | ||||||
$ | 12,187,445 | |||||||
Total Collateralized Mortgage Obligations |
| $ | 23,289,298 | |||||
Commercial Mortgage-Backed Securities — 5.6% |
| |||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
CFCRE Commercial Mortgage Trust | ||||||||
Series 2016-C7, Class C, | $ | 1,050 | $ | 1,039,666 | ||||
Citigroup Commercial Mortgage Trust | ||||||||
Series 2015-P1, Class D, 3.225%, 9/15/48(1) | 1,000 | 854,902 | ||||||
COMM Mortgage Trust | ||||||||
Series 2014-CR21, Class C, 4.562%, 12/10/47(5) | 500 | 486,498 | ||||||
Credit Suisse Mortgage Trust | ||||||||
Series 2016-NXSR, Class C, 4.508%, 12/15/49(5) | 1,500 | 1,482,586 | ||||||
JPMBB Commercial Mortgage Securities Trust | ||||||||
Series 2014-C22, Class D, | 500 | 414,491 | ||||||
Series 2014-C23, Class D, | 250 | 217,762 | ||||||
Series 2014-C25, Class D, | 1,960 | 1,613,503 | ||||||
JPMorgan Chase Commercial Mortgage Securities Trust | ||||||||
Series 2012-CBX, Class AS, | 3,325 | 3,399,850 | ||||||
Series 2013-C13, Class D, | 2,000 | 1,882,855 | ||||||
Morgan Stanley Capital I Trust | ||||||||
Series 2016-UB12, Class D, | 1,000 | 767,442 | ||||||
Series 2017-CLS, Class A, 2.773%, (1 mo. USD | 1,180 | 1,179,283 | ||||||
Motel 6 Trust | ||||||||
Series 2017-MTL6, Class C, 3.473%, (1 mo. USD LIBOR + 1.40%), 8/15/34(1)(2) | 1,486 | 1,489,056 | ||||||
Series 2017-MTL6, Class D, 4.223%, (1 mo. USD LIBOR + 2.15%), 8/15/34(1)(2) | 601 | 603,628 | ||||||
Natixis Commercial Mortgage Securities Trust | ||||||||
Series 2018-FL1, Class C, 4.119%, (1 mo. USD | 5,000 | 5,000,410 | ||||||
RETL Trust | ||||||||
Series 2018-RVP, Class A, 3.173%, (1 mo. USD | 3,192 | 3,209,602 |
17 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount (000’s omitted) | Value | ||||||
UBS Commercial Mortgage Trust | ||||||||
Series 2012-C1, Class D, 5.729%, | $ | 1,350 | $ | 1,328,664 | ||||
Wells Fargo Commercial Mortgage Trust | ||||||||
Series 2015-LC22, Class C, | 900 | 887,369 | ||||||
Series 2015-SG1, Class C, | 1,500 | 1,430,916 | ||||||
Total Commercial Mortgage-Backed Securities |
| $ | 27,288,483 | |||||
Asset-Backed Securities — 21.5% |
| |||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Automotive — 4.5% | ||||||||
American Credit Acceptance Receivables Trust | ||||||||
Series 2017-3, Class A, 1.82%, 3/10/20(1) | $ | 541 | $ | 540,893 | ||||
Series 2017-4, Class A, 2.00%, 7/10/20(1) | 754 | 752,045 | ||||||
AmeriCredit Automobile Receivables Trust | ||||||||
Series 2016-2, Class B, 2.21%, 5/10/21 | 610 | 607,373 | ||||||
Series 2016-4, Class A3, 1.53%, 7/8/21 | 825 | 819,127 | ||||||
Avis Budget Rental Car Funding, LLC | ||||||||
Series 2013-2A, Class A, 2.97%, 2/20/20(1) | 2,000 | 2,001,418 | ||||||
Series 2013-2A, Class B, 3.66%, 2/20/20(1) | 900 | 901,901 | ||||||
Series 2014-1A, Class A, 2.46%, 7/20/20(1) | 3,885 | 3,868,494 | ||||||
Canadian Pacer Auto Receivables Trust | ||||||||
Series 2017-1A, Class A2A, | 263 | 262,056 | ||||||
CarMax Auto Owner Trust | ||||||||
Series 2017-2, Class A3, 1.93%, 3/15/22 | 1,355 | 1,338,281 | ||||||
Drive Auto Receivables Trust | ||||||||
Series 2017-1, Class A3, 1.86%, 3/16/20 | 65 | 65,265 | ||||||
Enterprise Fleet Financing, LLC | ||||||||
Series 2017-1, Class A2, 2.13%, 7/20/22(1) | 1,196 | 1,189,005 | ||||||
First Investors Auto Owner Trust | ||||||||
Series 2016-2A, Class A1, | 69 | 68,598 | ||||||
Series 2017-1A, Class A1, | 232 | 230,746 | ||||||
Ford Credit Auto Owner Trust | ||||||||
Series 2014-1, Class B, 2.41%, 11/15/25(1) | 475 | 473,158 | ||||||
Hertz Fleet Lease Funding, L.P. | ||||||||
Series 2017-1, Class A2, 2.13%, 4/10/31(1) | 1,041 | 1,034,017 | ||||||
Mercedes-Benz Auto Receivables Trust | ||||||||
Series 2016-1, Class A3, 1.26%, 2/16/21 | 1,300 | 1,288,002 | ||||||
Santander Drive Auto Receivables Trust | ||||||||
Series 2017-2, Class A2, 1.60%, 3/16/20 | 139 | 139,004 | ||||||
Securitized Term Auto Receivables Trust | ||||||||
Series 2016-1A, Class A3, 1.524%, | 394 | 392,085 |
Security | Principal Amount (000’s omitted) | Value | ||||||
Automotive (continued) | ||||||||
Skopos Auto Receivables Trust | ||||||||
Series 2018-1A, Class A, 3.19%, 9/15/21(1) | $ | 2,014 | $ | 2,015,131 | ||||
TCF Auto Receivables Owner Trust | ||||||||
Series 2016-PT1A, Class A, 1.93%, | 900 | 891,518 | ||||||
Tesla Auto Lease Trust | ||||||||
Series 2018-A, Class A, 2.32%, 12/20/19(1) | 1,006 | 1,002,794 | ||||||
Wheels SPV, LLC | ||||||||
Series 2017-1A, Class A2, 1.88%, 4/20/26(1) | 917 | 910,006 | ||||||
World Omni Auto Receivables Trust | ||||||||
Series 2016-B, Class A2, 1.10%, 1/15/20 | 2 | 1,758 | ||||||
World Omni Automobile Lease Securitization Trust | ||||||||
Series 2017-A, Class A3, 2.13%, 4/15/20 | 1,000 | 992,367 | ||||||
$ | 21,785,042 | |||||||
Other — 15.2% | ||||||||
AASET U.S., Ltd. | ||||||||
Series 2018-1A, Class A, 3.844%, 1/16/38(1) | $ | 543 | $ | 539,354 | ||||
Series 2018-1A, Class B, 5.437%, 1/16/38(1) | 644 | 646,743 | ||||||
Ascentium Equipment Receivable Trust | ||||||||
Series 2016-1A, Class A3, 1.92%, 12/10/19(1) | 1,030 | 1,028,400 | ||||||
Avant Loans Funding Trust | ||||||||
Series 2017-A, Class A, 2.41%, 3/15/21(1) | 1 | 1,083 | ||||||
Series 2017-B, Class A, 2.29%, 6/15/20(1) | 1,141 | 1,139,992 | ||||||
Canyon Capital CLO, Ltd. | ||||||||
Series 2016-1A, Class BR, 4.048%, (3 mo. USD | 1,000 | 1,005,464 | ||||||
Series 2016-1A, Class DR, 5.148%, (3 mo. USD | 1,000 | 1,002,159 | ||||||
Carlyle Global Market Strategies CLO, Ltd. | ||||||||
Series 2014-3RA, Class A2, 3.638%, (3 mo. USD LIBOR + 1.55%), 7/27/31(1)(2) | 1,000 | 1,002,477 | ||||||
Series 2014-3RA, Class C, 5.038%, (3 mo. USD | 1,000 | 1,004,957 | ||||||
CNH Equipment Trust | ||||||||
Series 2017-A, Class A3, 2.07%, 5/16/22 | 1,200 | 1,186,156 | ||||||
Coinstar Funding, LLC | ||||||||
Series 2017-1A, Class A2, 5.216%, 4/25/47(1) | 1,089 | 1,106,187 | ||||||
Conn Funding II L.P. | ||||||||
Series 2017-A, Class B, 5.11%, 2/15/20(1) | 1,065 | 1,070,663 | ||||||
Series 2017-B, Class A, 2.73%, 7/15/20(1) | 754 | 753,724 | ||||||
Consumer Loan Underlying Bond Credit Trust | ||||||||
Series 2017-NP1, Class C, 5.13%, 4/17/23(1) | 2,000 | 2,018,593 | ||||||
DB Master Finance, LLC | ||||||||
Series 2015-1A, Class A2II, 3.98%, 2/20/45(1) | 2,281 | 2,290,058 | ||||||
Series 2017-1A, Class A2I, | 194 | 190,777 | ||||||
Series 2017-1A, Class A2II, | 338 | 336,047 |
18 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Principal Amount (000’s omitted) | Value | ||||||
Other (continued) | ||||||||
Driven Brands Funding, LLC | ||||||||
Series 2018-1A, Class A2, | $ | 775 | $ | 781,719 | ||||
Dryden Senior Loan Fund | ||||||||
Series 2018-55A, Class D, 4.891%, (3 mo. USD | 1,000 | 997,429 | ||||||
FOCUS Brands Funding, LLC | ||||||||
Series 2017-1A, Class A2II, | 990 | 1,018,502 | ||||||
Foundation Finance Trust | ||||||||
Series 2017-1A, Class A, 3.30%, 7/15/33(1) | 2,537 | 2,497,409 | ||||||
Hardee’s Funding, LLC | ||||||||
Series 2018-1A, Class AI, 4.25%, 6/20/48(1) | 980 | 983,812 | ||||||
MarketPlace Loan Trust | ||||||||
Series 2015-CB1, Class A, 4.00%, 7/15/21(1) | 1,437 | 1,436,756 | ||||||
NextGear Floorplan Master Owner Trust | ||||||||
Series 2015-2A, Class A, 2.38%, 10/15/20(1) | 3,276 | 3,273,466 | ||||||
OneMain Financial Issuance Trust | ||||||||
Series 2015-1A, Class A, 3.19%, 3/18/26(1) | 1,609 | 1,614,899 | ||||||
Series 2015-1A, Class B, 3.85%, 3/18/26(1) | 1,200 | 1,209,413 | ||||||
Series 2015-2A, Class A, 2.57%, 7/18/25(1) | 207 | 206,913 | ||||||
Series 2016-2A, Class A, 4.10%, 3/20/28(1) | 673 | 677,599 | ||||||
Series 2017-1A, Class A1, 2.37%, 9/14/32(1) | 1,925 | 1,888,327 | ||||||
Prosper Marketplace Issuance Trust | ||||||||
Series 2017-1A, Class A, 2.56%, 6/15/23(1) | 1,790 | 1,790,696 | ||||||
Series 2017-1A, Class B, 3.65%, 6/15/23(1) | 750 | 752,435 | ||||||
Series 2017-2A, Class A, 2.41%, 9/15/23(1) | 5,539 | 5,530,856 | ||||||
Series 2017-2A, Class B, 3.48%, 9/15/23(1) | 605 | 605,058 | ||||||
Series 2017-3A, Class A, 2.36%, 11/15/23(1) | 3,079 | 3,067,889 | ||||||
Series 2017-3A, Class B, 3.36%, 11/15/23(1) | 3,015 | 2,999,086 | ||||||
Series 2018-1A, Class A, 3.11%, 6/17/24(1) | 1,965 | 1,966,094 | ||||||
Purchasing Power Funding, LLC | ||||||||
Series 2018-A, Class A, 3.34%, 8/15/22(1) | 5,000 | 4,983,594 | ||||||
Sierra Receivables Funding Co., LLC | ||||||||
Series 2014-1A, Class B, 2.42%, 3/20/30(1) | 49 | 48,880 | ||||||
Series 2014-2A, Class B, 2.40%, 6/20/31(1) | 432 | 430,546 | ||||||
Series 2015-1A, Class B, 3.05%, 3/22/32(1) | 153 | 152,142 | ||||||
Social Professional Loan Program, LLC | ||||||||
Series 2014-B, Class A2, 2.55%, 8/27/29(1) | 482 | 478,431 | ||||||
SpringCastle America Funding LLC | ||||||||
Series 2016-AA, Class A, 3.05%, 4/25/29(1) | 843 | 840,559 | ||||||
Synchrony Credit Card Master Note Trust | ||||||||
Series 2015-3, Class A, 1.74%, 9/15/21 | 700 | 698,863 | ||||||
Taco Bell Funding, LLC | ||||||||
Series 2016-1A, Class A2I, | 2,364 | 2,371,245 |
Security | Principal Amount (000’s omitted) | Value | ||||||
Other (continued) | ||||||||
Thunderbolt Aircraft Lease, Ltd. | ||||||||
Series 2017-A, Class B, 5.75% to 4/15/24, 5/17/32(1)(7) | $ | 1,852 | $ | 1,874,020 | ||||
Towd Point Asset Trust | ||||||||
Series 2018-SL1, Class A, 2.691%, (1 mo. USD | 4,894 | 4,888,859 | ||||||
Upland CLO, Ltd. | ||||||||
Series 2016-1A, Class CR, 5.259%, (3 mo. USD | 1,000 | 997,557 | ||||||
Vantage Data Centers Issuer, LLC | ||||||||
Series 2018-1A, Class A2, | 1,378 | 1,380,071 | ||||||
Verizon Owner Trust | ||||||||
Series 2016-1A, Class A, 1.42%, 1/20/21(1) | 1,100 | 1,094,531 | ||||||
Voya CLO, Ltd. | ||||||||
Series 2018-2A, Class B1, 3.924%, (3 mo. USD | 1,000 | 1,000,000 | ||||||
Wendys Funding, LLC | ||||||||
Series 2015-1A, Class A2II, | 2,932 | 2,971,436 | ||||||
$ | 73,831,926 | |||||||
Single Family Home Rental — 1.8% | ||||||||
FirstKey Lending Trust | ||||||||
Series 2015-SFR1, Class A, | $ | 1,566 | $ | 1,557,508 | ||||
Invitation Homes Trust | ||||||||
Series 2017-SFR2, Class B, 3.235%, (1 mo. USD LIBOR + 1.15%), 12/17/36(1)(2) | 363 | 365,758 | ||||||
Series 2017-SFR2, Class C, 3.535%, (1 mo. USD LIBOR + 1.45%), 12/17/36(1)(2) | 461 | 463,692 | ||||||
Series 2018-SFR1, Class B, 3.035%, (1 mo. USD LIBOR + 0.95%), 3/17/37(1)(2) | 380 | 378,220 | ||||||
Series 2018-SFR1, Class C, 3.335%, (1 mo. USD LIBOR + 1.25%), 3/17/37(1)(2) | 445 | 446,391 | ||||||
Series 2018-SFR2, Class A, 2.973%, (1 mo. USD LIBOR + 0.90%), 6/17/37(1)(2) | 5,595 | 5,602,850 | ||||||
$ | 8,814,419 | |||||||
Total Asset-Backed Securities |
| $ | 104,431,387 |
19 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Foreign Government and Agency Securities — 0.2% |
| |||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
Mexico — 0.2% | ||||||||
Government of Mexico, 4.00%, 10/2/23 | $ | 790 | $ | 793,851 | ||||
$ | 793,851 | |||||||
Total Foreign Government and Agency Securities |
| $ | 793,851 | |||||
U.S. Treasury Obligations — 4.0% |
| |||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
U.S. Treasury Inflation-Protected Bond, | $ | 17,679 | $ | 19,323,334 | ||||
Total U.S. Treasury Obligations |
| $ | 19,323,334 | |||||
Senior Floating-Rate Loans — 2.4%(9) |
| |||||||
Building and Development — 0.3% | ||||||||
DTZ U.S. Borrower, LLC, Term Loan, | $ | 1,260 | $ | 1,260,000 | ||||
$ | 1,260,000 | |||||||
Business Equipment and Services — 0.2% | ||||||||
Change Healthcare Holdings, LLC, Term Loan, 3/1/24(10) | $ | 1,100 | $ | 1,097,731 | ||||
$ | 1,097,731 | |||||||
Cable and Satellite Television — 0.4% | ||||||||
UPC Financing Partnership, Term Loan, 4.57%, (1 mo. USD LIBOR + 2.50%), 1/15/26 | $ | 1,000 | $ | 990,375 | ||||
Ziggo Secured Finance Partnership, Term Loan, 4.57%, (1 mo. USD LIBOR + 2.50%), 4/15/25 | 1,000 | 990,938 | ||||||
$ | 1,981,313 | |||||||
Drugs — 0.4% | ||||||||
Jaguar Holding Company II, Term Loan, 4.59%, (1 mo. USD LIBOR + 2.50%), 8/18/22 | $ | 1,878 | $ | 1,868,586 | ||||
$ | 1,868,586 | |||||||
Electronics / Electrical — 0.5% | ||||||||
Infor (US), Inc., Term Loan, 2/1/22(10) | $ | 1,890 | $ | 1,883,621 | ||||
MA FinanceCo., LLC, Term Loan, 4.84%, (1 mo. USD LIBOR + 2.75%), 6/21/24 | 81 | 80,774 |
Security | Principal Amount (000’s omitted) | Value | ||||||
Electronics / Electrical (continued) | ||||||||
Seattle Spinco, Inc., Term Loan, 4.84%, (1 mo. USD LIBOR + 2.75%), 6/21/24 | $ | 549 | $ | 548,286 | ||||
$ | 2,512,681 | |||||||
Equipment Leasing — 0.4% | ||||||||
Avolon TLB Borrower 1 (US), LLC, Term Loan, 1/15/25(10) | $ | 1,800 | $ | 1,781,190 | ||||
$ | 1,781,190 | |||||||
Food / Drug Retailers — 0.2% | ||||||||
Albertsons, LLC, Term Loan, 4.84%, (1 mo. USD | $ | 997 | $ | 988,520 | ||||
$ | 988,520 | |||||||
Total Senior Floating-Rate Loans |
| $ | 11,490,021 | |||||
Short-Term Investments — 3.1% | ||||||||
Commercial Paper — 0.3% | ||||||||
Security | Principal Amount (000’s omitted) | Value | ||||||
AT&T, Inc., 3.14%, 5/28/19(1) | $ | 1,450 | $ | 1,409,481 | ||||
Total Commercial Paper |
| $ | 1,409,481 | |||||
Other — 2.8% | ||||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 2.09%(11) | 13,564,804 | $ | 13,564,804 | |||||
Total Other |
| $ | 13,564,804 | |||||
Total Short-Term Investments |
| $ | 14,974,285 | |||||
Total Investments — 101.8% |
| $ | 494,651,281 | |||||
Other Assets, Less Liabilities — (1.8)% |
| $ | (8,631,031 | ) | ||||
Net Assets — 100.0% | $ | 486,020,250 |
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
20 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
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, 2018, the aggregate value of these securities is $149,841,902 or 30.8% of the Portfolio’s net assets. |
(2) | Variable rate security. The stated interest rate represents the rate in effect at June 30, 2018. |
(3) | Security converts to floating rate after the indicated fixed-rate coupon period. |
(4) | Perpetual security with no stated maturity date but may be subject to calls by the issuer. |
(5) | Weighted average fixed-rate coupon that changes/updates monthly. Rate shown is the rate at June 30, 2018. |
(6) | When-issued security. |
(7) | Multi-step coupon security. Interest rate represents the rate in effect at June 30, 2018. |
(8) | Inflation-linked security whose principal is adjusted for inflation based on changes in the U.S. Consumer Price Index. Interest is calculated based on the inflation-adjusted principal. |
(9) | Senior floating-rate loans (Senior Loans) often require prepayments from excess cash flows or permit the borrowers to repay at their election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, Senior Loans will typically have an expected average life of approximately two to four years. Senior Loans typically have rates of interest which are redetermined periodically by reference to a base lending rate, plus a spread. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily, the prime rate offered by one or more major United States banks (the “Prime Rate”). Base lending rates may be subject to a floor, or minimum rate. |
(10) | This Senior Loan will settle after June 30, 2018, at which time the interest rate will be determined. |
(11) | 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, 2018. |
Futures Contracts | ||||||||||||||||||
Description | Number of Contracts | Position | Expiration Month/Year | Notional Amount | Value/Net Unrealized Appreciation (Depreciation) | |||||||||||||
Interest Rate Futures |
| |||||||||||||||||
U.S. Ultra 10-Year Treasury Note | 329 | Short | Sep-18 | $ | (42,189,109 | ) | $ | (85,550 | ) | |||||||||
U.S. Ultra-Long Treasury Bond | 273 | Long | Sep-18 | 43,560,562 | 388,223 | |||||||||||||
$ | 302,673 |
Abbreviations:
LIBOR | – | London Interbank Offered Rate |
Currency Abbreviations:
USD | – | United States Dollar |
21 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Unaffiliated investments, at value (identified cost, $490,495,709) | $ | 481,086,477 | ||
Affiliated investment, at value (identified cost, $13,565,292) | 13,564,804 | |||
Cash | 30,408 | |||
Deposits for derivatives collateral — financial futures contracts | 598,878 | |||
Interest receivable | 2,999,818 | |||
Dividends receivable from affiliated investment | 10,070 | |||
Receivable from affiliate | 8,471 | |||
Total assets | $ | 498,298,926 | ||
Liabilities | ||||
Payable for investments purchased | $ | 6,992,075 | ||
Payable for when-issued securities | 4,987,920 | |||
Payable for variation margin on open financial futures contracts | 17,063 | |||
Payable to affiliates: | ||||
Investment adviser fee | 179,036 | |||
Trustees’ fees | 5,145 | |||
Accrued expenses | 97,437 | |||
Total liabilities | $ | 12,278,676 | ||
Net Assets applicable to investors’ interest in Portfolio | $ | 486,020,250 | ||
Sources of Net Assets |
| |||
Investors’ capital | $ | 495,127,297 | ||
Net unrealized depreciation | (9,107,047 | ) | ||
Total | $ | 486,020,250 |
22 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Interest (net of foreign taxes, $8,188) | $ | 7,876,310 | ||
Dividends from affiliated investment | 61,198 | |||
Total investment income | $ | 7,937,508 | ||
Expenses | ||||
Investment adviser fee | $ | 1,071,530 | ||
Trustees’ fees and expenses | 8,871 | |||
Custodian fee | 66,027 | |||
Legal and accounting services | 47,401 | |||
Miscellaneous | 6,931 | |||
Total expenses | $ | 1,200,760 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 33,782 | ||
Total expense reductions | $ | 33,782 | ||
Net expenses | $ | 1,166,978 | ||
Net investment income | $ | 6,770,530 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | (2,949,326 | ) | |
Investment transactions — affiliated investment | 32 | |||
Financial futures contracts | (420,688 | ) | ||
Net realized loss | $ | (3,369,982 | ) | |
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (10,171,612 | ) | |
Investments — affiliated investment | (2 | ) | ||
Financial futures contracts | 280,538 | |||
Net change in unrealized appreciation (depreciation) | $ | (9,891,076 | ) | |
Net realized and unrealized loss | $ | (13,261,058 | ) | |
Net decrease in net assets from operations | $ | (6,490,528 | ) |
23 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment income | $ | 6,770,530 | $ | 11,721,140 | ||||
Net realized gain (loss) | (3,369,982 | ) | 3,676,612 | |||||
Net change in unrealized appreciation (depreciation) | (9,891,076 | ) | 5,607,998 | |||||
Net increase (decrease) in net assets from operations | $ | (6,490,528 | ) | $ | 21,005,750 | |||
Capital transactions — | ||||||||
Contributions | $ | 25,833,019 | $ | 55,689,460 | ||||
Withdrawals | (12,686,335 | ) | (81,587,010 | ) | ||||
Net increase (decrease) in net assets from capital transactions | $ | 13,146,684 | $ | (25,897,550 | ) | |||
Net increase (decrease) in net assets | $ | 6,656,156 | $ | (4,891,800 | ) | |||
Net Assets |
| |||||||
At beginning of period | $ | 479,364,094 | $ | 484,255,894 | ||||
At end of period | $ | 486,020,250 | $ | 479,364,094 |
24 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
Financial Highlights
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
Ratios/Supplemental Data | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(1)(2) | 0.49 | %(3) | 0.49 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | ||||||||||||
Net investment income | 2.84 | %(3) | 2.46 | % | 2.01 | % | 2.00 | % | 2.47 | % | 2.48 | % | ||||||||||||
Portfolio Turnover | 37 | %(4) | 123 | % | 132 | %(5) | 159 | %(5) | 134 | %(5) | 107 | % | ||||||||||||
Total Return(2) | (1.42 | )%(4) | 4.48 | % | 2.73 | % | 0.04 | % | 5.27 | % | (1.04 | )% | ||||||||||||
Net assets, end of period (000’s omitted) | $ | 486,020 | $ | 479,364 | $ | 484,256 | $ | 342,684 | $ | 214,538 | $ | 177,700 |
(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%, 0.01%, 0.02%, 0.03% and 0.07% of average daily net assets for the six months ended June 30, 2018 and years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively). Absent this reimbursement, total return would be lower. |
(3) | Annualized. |
(4) | Not annualized. |
(5) | Includes the effect of To Be Announced (TBA) transactions. |
25 | See Notes to Financial Statements. |
Core Bond Portfolio
June 30, 2018
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, 2018, Eaton Vance Balanced Fund and Eaton Vance Core Bond Fund held an interest of 63.4% and 36.6%, 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.
Senior Floating-Rate Loans. Interests in senior floating-rate loans (Senior Loans) for which reliable market quotations are readily available are valued generally at the average mean of bid and ask quotations obtained from a third party pricing service.
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.
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 (including options on securities, indices and foreign currencies) 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. Financial futures contracts are valued at the closing settlement price established by the board of trade or exchange on which they are traded.
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. Inflation adjustments to the principal amount of inflation-adjusted bonds and notes are reflected as interest income. Deflation adjustments to the principal amount of an inflation-adjusted bond or note are reflected as reductions to interest income to the extent of interest income previously recorded on such bond or note. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Withholding taxes on foreign interest 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
26 |
Core Bond Portfolio
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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, 2018, 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 Unfunded Loan Commitments — The Portfolio may enter into certain loan agreements all or a portion of which may be unfunded. The Portfolio is obligated to fund these commitments at the borrower’s discretion. These commitments, if any, are disclosed in the accompanying Portfolio of Investments.
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, 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 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 exercise price of the option (in the case of a put) or equal to any appreciation in the value of the index over the exercise 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 When-Issued Securities and Delayed Delivery Transactions — The Portfolio may purchase or sell securities on a delayed delivery, when-issued or forward commitment basis , including TBA (To Be Announced) securities. Payment and delivery may take place after the customary settlement period for that security. At the time the transaction is negotiated, the price of the security that will be delivered is fixed. The Portfolio maintains cash and/or security positions for these commitments such that sufficient liquid assets will be available to make payments upon settlement. Securities purchased on a delayed delivery, when-issued or forward commitment basis are marked-to-market daily and begin earning interest on settlement date. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract. A forward purchase or sale commitment may be closed by entering into an offsetting commitment or delivery of securities. The Portfolio will realize a gain or loss on investments based on the price established when the Portfolio entered into the commitment.
K Interim Financial Statements — The interim financial statements relating to June 30, 2018 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.
27 |
Core Bond Portfolio
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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, 2018, the Portfolio’s investment adviser fee amounted to $1,071,530 or 0.45% (annualized) of the Portfolio’s average daily net assets. Pursuant to a voluntary expense reimbursement, BMR was allocated $33,782 of the Portfolio’s operating expenses for the six months ended June 30, 2018. 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, 2018, 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, 2018 were as follows:
Purchases | Sales | |||||||
Investments (non-U.S. Government) | $ | 169,606,870 | $ | 99,224,977 | ||||
U.S. Government and Agency Securities | 34,566,874 | 75,556,865 | ||||||
$ | 204,173,744 | $ | 174,781,842 |
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments, including open derivative contracts, of the Portfolio at June 30, 2018, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 504,776,417 | ||
Gross unrealized appreciation | $ | 1,179,887 | ||
Gross unrealized depreciation | (11,002,350 | ) | ||
Net unrealized depreciation | $ | (9,822,463 | ) |
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, 2018 is included in the Portfolio of Investments. At June 30, 2018, the Portfolio had sufficient cash and/or securities to cover commitments under these contracts.
The Portfolio is subject to interest rate risk in the normal course of pursuing its investment objectives. Because the Portfolio holds fixed-rate bonds, the value of these bonds may decrease if interest rates rise. The Portfolio enters into U.S. Treasury futures contracts and options thereon to hedge against fluctuations in interest rates.
28 |
Core Bond Portfolio
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) and whose primary underlying risk exposure is interest rate risk at June 30, 2018 was as follows:
Fair Value | ||||||||
Derivative | Asset Derivative(1) | Liability Derivative(1) | ||||||
Financial futures contracts | $ | 388,223 | $ | (85,550 | ) |
(1) | Amount represents cumulative unrealized appreciation or (depreciation) 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 on open financial futures contracts, as applicable. |
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 interest rate risk for the six months ended June 30, 2018 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 | $ | 364,352 | $ | 28,780 | ||||
Financial futures contracts | (420,688 | ) | 280,538 |
(1) | Statement of Operations location: Net realized gain (loss) – Investment transactions and Financial futures contracts, respectively. |
(2) | Statement of Operations location: Change in unrealized appreciation (depreciation) – Investments and Financial futures contracts, respectively. |
The average notional cost of futures contracts outstanding during the six months ended June 30, 2018, which is indicative of the volume of this derivative type, was approximately as follows:
Futures Contracts — Long | Futures Contracts — Short | |||||
$35,755,000 | $ | 25,742,000 |
The average number of purchased options contracts outstanding during the six months ended June 30, 2018, which is indicative of the volume of this derivative type, was 219 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 October 30, 2018. 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, 2018.
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) |
29 |
Core Bond Portfolio
June 30, 2018
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, 2018, 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 | ||||||||||||
Corporate Bonds & Notes | $ | — | $ | 212,184,817 | $ | — | $ | 212,184,817 | ||||||||
Agency Mortgage-Backed Securities | — | 80,875,805 | — | 80,875,805 | ||||||||||||
Collateralized Mortgage Obligations | — | 23,289,298 | — | 23,289,298 | ||||||||||||
Commercial Mortgage-Backed Securities | — | 27,288,483 | — | 27,288,483 | ||||||||||||
Asset-Backed Securities | — | 104,431,387 | — | 104,431,387 | ||||||||||||
Foreign Government and Agency Securities | — | 793,851 | — | 793,851 | ||||||||||||
U.S. Treasury Obligations | — | 19,323,334 | — | 19,323,334 | ||||||||||||
Senior Floating-Rate Loans | — | 11,490,021 | — | 11,490,021 | ||||||||||||
Short-Term Investments — | ||||||||||||||||
Commercial Paper | — | 1,409,481 | — | 1,409,481 | ||||||||||||
Other | — | 13,564,804 | — | 13,564,804 | ||||||||||||
Total Investments | $ | — | $ | 494,651,281 | $ | — | $ | 494,651,281 | ||||||||
Futures Contracts | $ | 388,223 | $ | — | $ | — | $ | 388,223 | ||||||||
Total | $ | 388,223 | $ | 494,651,281 | $ | — | $ | 495,039,504 | ||||||||
Liability Description | ||||||||||||||||
Futures Contracts | $ | (85,550 | ) | $ | — | $ | — | $ | (85,550 | ) | ||||||
Total | $ | (85,550 | ) | $ | — | $ | — | $ | (85,550 | ) |
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, 2018 is not presented. At June 30, 2018, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
30 |
Eaton Vance
Core Bond Fund
June 30, 2018
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 24, 2018, 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 2018. 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 fund’s investment strategies and policies; |
• | 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 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; |
31 |
Eaton Vance
Core Bond Fund
June 30, 2018
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, 2018, with respect to one or more funds, the Board met seven 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 nine 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, including recent changes to such personnel. 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
32 |
Eaton Vance
Core Bond Fund
June 30, 2018
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 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, 2017 for the Fund. In this regard, the Board noted that the performance of the Fund was lower than the median performance of the Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was lower than its primary benchmark index for the three-year period. On the basis of the foregoing, the performance of the Fund over other periods 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, 2017, 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 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 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.
33 |
Eaton Vance
Core Bond Fund
June 30, 2018
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
Richard F. Froio
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
Richard F. Froio
Chief Compliance Officer
Trustees of Eaton Vance Core Bond Fund and Core Bond Portfolio
William H. Park
Chairperson
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 |
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 Advisers International Ltd., 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.
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.
35 |
This Page Intentionally Left Blank
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 6.30.18
Eaton Vance
Dividend Builder Fund
Semiannual Report
June 30, 2018
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, 2018
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 | 20 | |||
Officers and Trustees | 23 | |||
Important Notices | 24 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
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 | 0.98 | % | 12.98 | % | 11.29 | % | 5.84 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | –4.84 | 6.47 | 9.98 | 5.21 | ||||||||||||||||||
Class C at NAV | 11/01/1993 | 12/18/1981 | 0.66 | 12.14 | 10.47 | 5.05 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | –0.34 | 11.14 | 10.47 | 5.05 | ||||||||||||||||||
Class I at NAV | 06/20/2005 | 12/18/1981 | 1.17 | 13.28 | 11.58 | 6.10 | ||||||||||||||||||
S&P 500 Index | — | — | 2.65 | % | 14.37 | % | 13.41 | % | 10.16 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | |||||||||||||||||||||
1.02 | % | 1.77 | % | 0.77 | % |
Fund Profile
Sector Allocation (% of net assets)4
Top 10 Holdings (% of net assets)4
Apple, Inc. | 4.1 | % | ||
Alphabet, Inc., Class C | 3.0 | |||
Home Depot, Inc. (The) | 2.9 | |||
Verizon Communications, Inc. | 2.9 | |||
Amazon.com, Inc. | 2.9 | |||
HP, Inc. | 2.1 | |||
Facebook, Inc., Class A | 2.1 | |||
Exxon Mobil Corp. | 2.0 | |||
PepsiCo, Inc. | 2.0 | |||
Pfizer, Inc. | 1.9 | |||
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, 2018
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 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
Important Notice to Shareholders
On June 8, 2018, the Fund received its pro-rata share of net assets from Dividend Builder Portfolio, a separate registered investment company, in which the Fund invested and the Portfolio was liquidated. As of June 11, 2018, the Fund invests its assets directly. |
3 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
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, 2018 – June 30, 2018).
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 (1/1/18) | Ending Account Value (6/30/18) | Expenses Paid During Period* (1/1/18 – 6/30/18) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,009.80 | $ | 5.13 | 1.03 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,006.60 | $ | 8.86 | 1.78 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,011.70 | $ | 3.89 | 0.78 | % | ||||||||
Hypothetical | ||||||||||||||||
(5% return per year before expenses) | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,019.70 | $ | 5.16 | 1.03 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,016.00 | $ | 8.90 | 1.78 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,020.90 | $ | 3.91 | 0.78 | % |
* | 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, 2017. The Example reflects the expenses of both the Fund and the Portfolio for the period while the Fund was making investments directly in the Portfolio. |
4 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Portfolio of Investments (Unaudited)
Common Stocks — 99.5% |
| |||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 2.4% | ||||||||
Lockheed Martin Corp. | 41,400 | $ | 12,230,802 | |||||
Textron, Inc. | 153,900 | 10,143,549 | ||||||
$ | 22,374,351 | |||||||
Auto Components — 0.6% | ||||||||
Delphi Technologies PLC | 112,767 | $ | 5,126,388 | |||||
$ | 5,126,388 | |||||||
Automobiles — 0.4% | ||||||||
Ford Motor Co. | 361,100 | $ | 3,997,377 | |||||
$ | 3,997,377 | |||||||
Banks — 5.5% | ||||||||
Bank of America Corp. | 548,100 | $ | 15,450,939 | |||||
Canadian Imperial Bank of Commerce(1) | 107,072 | 9,314,079 | ||||||
JPMorgan Chase & Co. | 168,900 | 17,599,380 | ||||||
People’s United Financial, Inc. | 507,300 | 9,177,057 | ||||||
$ | 51,541,455 | |||||||
Beverages — 2.9% | ||||||||
Anheuser-Busch InBev SA/NV | 85,800 | $ | 8,654,208 | |||||
PepsiCo, Inc. | 168,700 | 18,366,369 | ||||||
$ | 27,020,577 | |||||||
Biotechnology — 2.5% | ||||||||
AbbVie, Inc. | 116,000 | $ | 10,747,400 | |||||
Alexion Pharmaceuticals, Inc.(2) | 18,000 | 2,234,700 | ||||||
Biogen, Inc.(2) | 8,700 | 2,525,088 | ||||||
Celgene Corp.(2) | 31,640 | 2,512,849 | ||||||
Gilead Sciences, Inc. | 53,600 | 3,797,024 | ||||||
Vertex Pharmaceuticals, Inc.(2) | 10,100 | 1,716,596 | ||||||
$ | 23,533,657 | |||||||
Capital Markets — 2.8% | ||||||||
Blackstone Group LP (The) | 297,100 | $ | 9,557,707 | |||||
CME Group, Inc. | 72,200 | 11,835,024 | ||||||
Lazard, Ltd., Class A | 89,100 | 4,357,881 | ||||||
$ | 25,750,612 | |||||||
Chemicals — 1.2% | ||||||||
DowDuPont, Inc. | 165,400 | $ | 10,903,168 | |||||
$ | 10,903,168 |
Security | Shares | Value | ||||||
Communications Equipment — 0.9% | ||||||||
Cisco Systems, Inc. | 186,000 | $ | 8,003,580 | |||||
$ | 8,003,580 | |||||||
Construction & Engineering — 0.8% | ||||||||
Fluor Corp. | 150,200 | $ | 7,326,756 | |||||
$ | 7,326,756 | |||||||
Consumer Finance — 1.0% | ||||||||
Navient Corp. | 752,100 | $ | 9,799,863 | |||||
$ | 9,799,863 | |||||||
Containers & Packaging — 1.8% | ||||||||
International Paper Co. | 325,353 | $ | 16,944,384 | |||||
$ | 16,944,384 | |||||||
Diversified Telecommunication Services — 2.9% | ||||||||
Verizon Communications, Inc. | 544,880 | $ | 27,412,913 | |||||
$ | 27,412,913 | |||||||
Electric Utilities — 4.2% | ||||||||
Edison International | 254,800 | $ | 16,121,196 | |||||
Evergy, Inc. | 120,397 | 6,760,291 | ||||||
PPL Corp.(1) | 214,200 | 6,115,410 | ||||||
Southern Co. (The) | 226,500 | 10,489,215 | ||||||
$ | 39,486,112 | |||||||
Electronic Equipment, Instruments & Components — 0.7% | ||||||||
FLIR Systems, Inc. | 117,300 | $ | 6,096,081 | |||||
$ | 6,096,081 | |||||||
Energy Equipment & Services — 0.8% | ||||||||
Schlumberger, Ltd. | 109,400 | $ | 7,333,082 | |||||
$ | 7,333,082 | |||||||
Equity Real Estate Investment Trusts (REITs) — 3.8% | ||||||||
AvalonBay Communities, Inc. | 59,800 | $ | 10,279,022 | |||||
National Retail Properties, Inc. | 213,300 | 9,376,668 | ||||||
Simon Property Group, Inc. | 94,100 | 16,014,879 | ||||||
$ | 35,670,569 | |||||||
Food & Staples Retailing — 0.5% | ||||||||
Walmart, Inc. | 59,600 | $ | 5,104,740 | |||||
$ | 5,104,740 |
5 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Health Care Equipment & Supplies — 1.8% | ||||||||
Danaher Corp. | 72,500 | $ | 7,154,300 | |||||
Medtronic PLC | 112,200 | 9,605,442 | ||||||
$ | 16,759,742 | |||||||
Health Care Providers & Services — 2.1% | ||||||||
Aetna, Inc. | 52,400 | $ | 9,615,400 | |||||
Anthem, Inc. | 43,400 | 10,330,502 | ||||||
$ | 19,945,902 | |||||||
Hotels, Restaurants & Leisure — 1.8% | ||||||||
Extended Stay America, Inc. | 336,900 | $ | 7,280,409 | |||||
Las Vegas Sands Corp. | 125,516 | 9,584,402 | ||||||
$ | 16,864,811 | |||||||
Independent Power and Renewable Electricity Producers — 0.6% | ||||||||
NextEra Energy Partners, L.P. | 121,300 | $ | 5,661,071 | |||||
$ | 5,661,071 | |||||||
Industrial Conglomerates — 1.5% | ||||||||
3M Co. | 71,400 | $ | 14,045,808 | |||||
$ | 14,045,808 | |||||||
Insurance — 4.1% | ||||||||
American Financial Group, Inc. | 83,200 | $ | 8,929,856 | |||||
American International Group, Inc. | 333,200 | 17,666,264 | ||||||
First American Financial Corp. | 220,900 | 11,424,948 | ||||||
$ | 38,021,068 | |||||||
Internet & Direct Marketing Retail — 2.9% | ||||||||
Amazon.com, Inc.(2) | 15,900 | $ | 27,026,820 | |||||
$ | 27,026,820 | |||||||
Internet Software & Services — 5.7% | ||||||||
Alphabet, Inc., Class C(2) | 24,814 | $ | 27,683,739 | |||||
Facebook, Inc., Class A(2) | 98,800 | 19,198,816 | ||||||
Twitter, Inc.(2) | 140,600 | 6,140,002 | ||||||
$ | 53,022,557 | |||||||
IT Services — 4.3% | ||||||||
Amdocs, Ltd. | 110,300 | $ | 7,300,757 | |||||
Cognizant Technology Solutions Corp., Class A | 84,300 | 6,658,857 | ||||||
International Business Machines Corp. | 32,672 | 4,564,278 | ||||||
Leidos Holdings, Inc. | 146,200 | 8,625,800 |
Security | Shares | Value | ||||||
IT Services (continued) | ||||||||
Western Union Co. (The)(1) | 623,600 | $ | 12,677,788 | |||||
$ | 39,827,480 | |||||||
Machinery — 2.0% | ||||||||
PACCAR, Inc. | 164,800 | $ | 10,211,008 | |||||
Parker-Hannifin Corp. | 55,700 | 8,680,845 | ||||||
$ | 18,891,853 | |||||||
Media — 1.9% | ||||||||
Comcast Corp., Class A | 194,300 | $ | 6,374,983 | |||||
Walt Disney Co. (The) | 108,200 | 11,340,442 | ||||||
$ | 17,715,425 | |||||||
Metals & Mining — 0.3% | ||||||||
Rio Tinto PLC ADR(1) | 58,400 | $ | 3,240,032 | |||||
$ | 3,240,032 | |||||||
Oil, Gas & Consumable Fuels — 6.1% | ||||||||
BP PLC | 1,314,100 | $ | 9,998,353 | |||||
ConocoPhillips | 115,600 | 8,048,072 | ||||||
Exxon Mobil Corp. | 227,600 | 18,829,348 | ||||||
Phillips 66 | 100,900 | 11,332,079 | ||||||
Royal Dutch Shell PLC, Class B | 259,500 | 9,293,474 | ||||||
$ | 57,501,326 | |||||||
Pharmaceuticals — 6.6% | ||||||||
Bristol-Myers Squibb Co. | 135,200 | $ | 7,481,968 | |||||
Eli Lilly & Co. | 98,200 | 8,379,406 | ||||||
GlaxoSmithKline PLC ADR | 240,100 | 9,678,431 | ||||||
Johnson & Johnson | 148,600 | 18,031,124 | ||||||
Pfizer, Inc. | 500,100 | 18,143,628 | ||||||
$ | 61,714,557 | |||||||
Road & Rail — 1.0% | ||||||||
Kansas City Southern | 89,600 | $ | 9,494,016 | |||||
$ | 9,494,016 | |||||||
Semiconductors & Semiconductor Equipment — 4.0% | ||||||||
Broadcom, Inc. | 36,900 | $ | 8,953,416 | |||||
QUALCOMM, Inc. | 219,200 | 12,301,504 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 180,100 | 6,584,456 | ||||||
Texas Instruments, Inc. | 87,800 | 9,679,950 | ||||||
$ | 37,519,326 |
6 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Software — 4.2% | ||||||||
Adobe Systems, Inc.(2) | 66,000 | $ | 16,091,460 | |||||
Microsoft Corp. | 162,967 | 16,070,176 | ||||||
salesforce.com, Inc.(2) | 50,700 | 6,915,480 | ||||||
$ | 39,077,116 | |||||||
Specialty Retail — 2.9% | ||||||||
Home Depot, Inc. (The) | 140,600 | $ | 27,431,060 | |||||
$ | 27,431,060 | |||||||
Technology Hardware, Storage & Peripherals — 6.2% | ||||||||
Apple, Inc. | 206,637 | $ | 38,250,575 | |||||
HP, Inc. | 871,600 | 19,776,604 | ||||||
$ | 58,027,179 | |||||||
Textiles, Apparel & Luxury Goods — 1.8% | ||||||||
Tapestry, Inc. | 238,400 | $ | 11,135,664 | |||||
VF Corp. | 71,400 | 5,820,528 | ||||||
$ | 16,956,192 | |||||||
Tobacco — 2.0% | ||||||||
Altria Group, Inc. | 160,890 | $ | 9,136,943 | |||||
Philip Morris International, Inc. | 123,135 | 9,941,920 | ||||||
$ | 19,078,863 | |||||||
Total Common Stocks |
| $ | 931,247,869 | |||||
Short-Term Investments — 0.4% |
| |||||||
Description | Units/Shares | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 2.09%(3) | 767,349 | $ | 767,349 | |||||
State Street Navigator Securities Lending Government Money Market Portfolio(4) | 3,281,058 | 3,281,058 | ||||||
Total Short-Term Investments |
| $ | 4,048,407 | |||||
Total Investments — 99.9% |
| $ | 935,296,276 | |||||
Other Assets, Less Liabilities — 0.1% |
| $ | 1,103,921 | |||||
Net Assets — 100.0% |
| $ | 936,400,197 |
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, 2018. The aggregate market value of securities on loan at June 30, 2018 was $8,906,851. |
(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, 2018. |
(4) | Represents investment of cash collateral received in connection with securities lending. |
Abbreviations:
ADR | – | American Depositary Receipt |
7 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Unaffiliated investments, at value including $8,906,851 of securities on loan (identified cost, $813,988,420) | $ | 934,528,927 | ||
Affiliated investment, at value (identified cost, $767,349) | 767,349 | |||
Dividends receivable | 1,638,773 | |||
Dividends receivable from affiliated investment | 6,791 | |||
Receivable for investments sold | 15,114,144 | |||
Receivable for Fund shares sold | 168,796 | |||
Securities lending income receivable | 4,595 | |||
Tax reclaims receivable | 904,816 | |||
Total assets | $ | 953,134,191 | ||
Liabilities | ||||
Collateral for securities loaned | $ | 3,281,058 | ||
Payable for investments purchased | 11,266,570 | |||
Payable for Fund shares redeemed | 1,071,764 | |||
Payable to affiliates: | ||||
Investment adviser fee | 498,545 | |||
Distribution and service fees | 248,290 | |||
Trustees’ fees | 10,490 | |||
Accrued expenses | 357,277 | |||
Total liabilities | $ | 16,733,994 | ||
Net Assets | $ | 936,400,197 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 770,983,164 | ||
Accumulated undistributed net investment income | 1,739,715 | |||
Accumulated net realized gain | 43,140,498 | |||
Net unrealized appreciation | 120,536,820 | |||
Total | $ | 936,400,197 | ||
Class A Shares | ||||
Net Assets | $ | 644,466,196 | ||
Shares Outstanding | 44,256,365 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.56 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 15.45 | ||
Class C Shares | ||||
Net Assets | $ | 134,149,359 | ||
Shares Outstanding | 9,164,150 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.64 | ||
Class I Shares | ||||
Net Assets | $ | 157,784,642 | ||
Shares Outstanding | 10,844,461 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.55 |
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
Dividend Builder Fund
June 30, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends (net of foreign taxes, $66,958) | $ | 1,530,099 | ||
Dividends allocated from Portfolio (net of foreign taxes, $47,686) | 11,650,689 | |||
Dividends from affiliated investment | 1,068 | |||
Securities lending income, net | 3,561 | |||
Securities lending income allocated from Portfolio, net | 15,626 | |||
Expenses allocated from Portfolio | (2,882,726 | ) | ||
Total investment income | $ | 10,318,317 | ||
Expenses | ||||
Investment adviser fee | $ | 332,308 | ||
Distribution and service fees | ||||
Class A | 817,019 | |||
Class C | 714,980 | |||
Trustees’ fees and expenses | 10,615 | |||
Custodian fee | 74,227 | |||
Transfer and dividend disbursing agent fees | 336,715 | |||
Legal and accounting services | 27,124 | |||
Printing and postage | 31,061 | |||
Registration fees | 26,983 | |||
Miscellaneous | 19,568 | |||
Total expenses | $ | 2,390,600 | ||
Net investment income | $ | 7,927,717 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 3,899,201 | ||
Investment transactions allocated from Portfolio | 27,883,868 | |||
Investment transactions — affiliated investment | (282 | ) | ||
Foreign currency transactions | (1,525 | ) | ||
Foreign currency transactions allocated from Portfolio | (3,560 | ) | ||
Net realized gain | $ | 31,777,702 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (22,815,925 | ) | |
Investments allocated from Portfolio | (7,398,254 | ) | ||
Foreign currency | 34,707 | |||
Foreign currency allocated from Portfolio | (56,395 | ) | ||
Net change in unrealized appreciation (depreciation) | $ | (30,235,867 | ) | |
Net realized and unrealized gain | $ | 1,541,835 | ||
Net increase in net assets from operations | $ | 9,469,552 |
9 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment income | $ | 7,927,717 | $ | 18,304,783 | ||||
Net realized gain | 31,777,702 | 80,093,848 | ||||||
Net change in unrealized appreciation (depreciation) | (30,235,867 | ) | 67,675,672 | |||||
Net increase in net assets from operations | $ | 9,469,552 | $ | 166,074,303 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (5,970,811 | ) | $ | (12,311,304 | ) | ||
Class C | (761,267 | ) | (1,676,912 | ) | ||||
Class I | (1,674,422 | ) | (3,038,650 | ) | ||||
From net realized gain | ||||||||
Class A | — | (52,786,290 | ) | |||||
Class C | — | (11,708,051 | ) | |||||
Class I | — | (12,683,590 | ) | |||||
Total distributions to shareholders | $ | (8,406,500 | ) | $ | (94,204,797 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 13,054,197 | $ | 32,845,467 | ||||
Class C | 3,885,011 | 8,547,081 | ||||||
Class I | 13,942,174 | 68,649,361 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 5,113,520 | 55,910,323 | ||||||
Class C | 704,709 | 12,314,314 | ||||||
Class I | 1,503,812 | 13,790,271 | ||||||
Cost of shares redeemed | ||||||||
Class A | (48,802,327 | ) | (149,700,017 | ) | ||||
Class C | (19,947,380 | ) | (46,479,020 | ) | ||||
Class I | (22,438,984 | ) | (41,660,421 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (52,985,268 | ) | $ | (45,782,641 | ) | ||
Net increase (decrease) in net assets | $ | (51,922,216 | ) | $ | 26,086,865 | |||
Net Assets |
| |||||||
At beginning of period | $ | 988,322,413 | $ | 962,235,548 | ||||
At end of period | $ | 936,400,197 | $ | 988,322,413 | ||||
Accumulated undistributed net investment income included in net assets |
| |||||||
At end of period | $ | 1,739,715 | $ | 2,218,498 |
10 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 14.550 | $ | 13.510 | $ | 13.110 | $ | 14.190 | $ | 13.430 | $ | 10.870 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.125 | $ | 0.282 | $ | 0.278 | $ | 0.238 | $ | 0.269 | $ | 0.158 | ||||||||||||
Net realized and unrealized gain | 0.017 | 2.212 | 0.907 | 0.178 | 1.269 | 2.582 | ||||||||||||||||||
Total income from operations | $ | 0.142 | $ | 2.494 | $ | 1.185 | $ | 0.416 | $ | 1.538 | $ | 2.740 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.132 | ) | $ | (0.264 | ) | $ | (0.264 | ) | $ | (0.236 | ) | $ | (0.195 | ) | $ | (0.180 | ) | ||||||
From net realized gain | — | (1.190 | ) | (0.521 | ) | (1.260 | ) | (0.583 | ) | — | ||||||||||||||
Total distributions | $ | (0.132 | ) | $ | (1.454 | ) | $ | (0.785 | ) | $ | (1.496 | ) | $ | (0.778 | ) | $ | (0.180 | ) | ||||||
Net asset value — End of period | $ | 14.560 | $ | 14.550 | $ | 13.510 | $ | 13.110 | $ | 14.190 | $ | 13.430 | ||||||||||||
Total Return(2) | 0.98 | %(3) | 18.89 | % | 9.21 | % | 2.91 | % | 11.73 | % | 25.40 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 644,466 | $ | 674,421 | $ | 685,372 | $ | 711,199 | $ | 758,216 | $ | 787,254 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.03 | %(6) | 1.03 | % | 1.04 | % | 1.04 | % | 1.05 | % | 1.06 | % | ||||||||||||
Net investment income | 1.73 | %(6) | 1.98 | % | 2.09 | % | 1.67 | % | 1.92 | % | 1.30 | % | ||||||||||||
Portfolio Turnover of the Portfolio(7) | 37 | %(3) | 86 | % | 97 | % | 99 | % | 93 | % | 59 | % | ||||||||||||
Portfolio Turnover of the Fund | 6 | %(3)(8) | — | — | — | — | — |
(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 for the period while the Fund was investing in the Portfolio. |
(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. |
(7) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(8) | For the period from June 11, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
11 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 14.620 | $ | 13.580 | $ | 13.160 | $ | 14.250 | $ | 13.480 | $ | 10.910 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.071 | $ | 0.177 | $ | 0.179 | $ | 0.132 | $ | 0.163 | $ | 0.067 | ||||||||||||
Net realized and unrealized gain | 0.026 | 2.209 | 0.926 | 0.167 | 1.278 | 2.592 | ||||||||||||||||||
Total income from operations | $ | 0.097 | $ | 2.386 | $ | 1.105 | $ | 0.299 | $ | 1.441 | $ | 2.659 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.077 | ) | $ | (0.156 | ) | $ | (0.164 | ) | $ | (0.129 | ) | $ | (0.088 | ) | $ | (0.089 | ) | ||||||
From net realized gain | — | (1.190 | ) | (0.521 | ) | (1.260 | ) | (0.583 | ) | — | ||||||||||||||
Total distributions | $ | (0.077 | ) | $ | (1.346 | ) | $ | (0.685 | ) | $ | (1.389 | ) | $ | (0.671 | ) | $ | (0.089 | ) | ||||||
Net asset value — End of period | $ | 14.640 | $ | 14.620 | $ | 13.580 | $ | 13.160 | $ | 14.250 | $ | 13.480 | ||||||||||||
Total Return(2) | 0.66 | %(3) | 17.89 | % | 8.51 | % | 2.05 | % | 10.90 | % | 24.47 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 134,149 | $ | 149,298 | $ | 163,138 | $ | 165,915 | $ | 175,086 | $ | 175,875 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.78 | %(6) | 1.78 | % | 1.79 | % | 1.79 | % | 1.80 | % | 1.81 | % | ||||||||||||
Net investment income | 0.97 | %(6) | 1.24 | % | 1.34 | % | 0.92 | % | 1.16 | % | 0.55 | % | ||||||||||||
Portfolio Turnover of the Portfolio(7) | 37 | %(3) | 86 | % | 97 | % | 99 | % | 93 | % | 59 | % | ||||||||||||
Portfolio Turnover of the Fund | 6 | %(3)(8) | — | — | — | — | — |
(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 for the period while the Fund was investing in the Portfolio. |
(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. |
(7) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(8) | For the period from June 11, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
12 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 14.530 | $ | 13.500 | $ | 13.100 | $ | 14.180 | $ | 13.430 | $ | 10.870 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.143 | $ | 0.316 | $ | 0.312 | $ | 0.274 | $ | 0.296 | $ | 0.189 | ||||||||||||
Net realized and unrealized gain | 0.027 | 2.204 | 0.906 | 0.178 | 1.268 | 2.581 | ||||||||||||||||||
Total income from operations | $ | 0.170 | $ | 2.520 | $ | 1.218 | $ | 0.452 | $ | 1.564 | $ | 2.770 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.150 | ) | $ | (0.300 | ) | $ | (0.297 | ) | $ | (0.272 | ) | $ | (0.231 | ) | $ | (0.210 | ) | ||||||
From net realized gain | — | (1.190 | ) | (0.521 | ) | (1.260 | ) | (0.583 | ) | — | ||||||||||||||
Total distributions | $ | (0.150 | ) | $ | (1.490 | ) | $ | (0.818 | ) | $ | (1.532 | ) | $ | (0.814 | ) | $ | (0.210 | ) | ||||||
Net asset value — End of period | $ | 14.550 | $ | 14.530 | $ | 13.500 | $ | 13.100 | $ | 14.180 | $ | 13.430 | ||||||||||||
Total Return(2) | 1.17 | %(3) | 19.12 | % | 9.49 | % | 3.10 | % | 12.01 | % | 25.72 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 157,785 | $ | 164,604 | $ | 113,726 | $ | 107,963 | $ | 103,942 | $ | 67,746 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 0.78 | %(6) | 0.78 | % | 0.79 | % | 0.79 | % | 0.80 | % | 0.81 | % | ||||||||||||
Net investment income | 1.98 | %(6) | 2.22 | % | 2.35 | % | 1.92 | % | 2.10 | % | 1.55 | % | ||||||||||||
Portfolio Turnover of the Portfolio(7) | 37 | %(3) | 86 | % | 97 | % | 99 | % | 93 | % | 59 | % | ||||||||||||
Portfolio Turnover | 6 | %(3)(8) | — | — | — | — | — |
(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 for the period while the Fund was investing in the Portfolio. |
(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. |
(7) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(8) | For the period from June 11, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
13 | See Notes to Financial Statements. |
Eaton Vance
Dividend Builder Fund
June 30, 2018
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’s investment objective is to seek total return. Prior to the close of business on June 8, 2018, the Fund invested 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. As of the close of business on June 8, 2018, the Fund received its pro-rata share of net assets from the Portfolio as part of a complete liquidation of the Portfolio. As of June 11, 2018, the Fund invests directly in securities. 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.
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 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.
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 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. In consideration of recent decisions rendered by European courts, prior to its liquidation as of the close of business on June 8, 2018, the Portfolio 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
14 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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 Fund’s financial statements for such outstanding reclaims. Prior to the close of business on June 8, 2018, the net investment income or loss consisted 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.
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, 2018, 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 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 Written Options — Upon the writing of a call or a put option, the premium received by the Fund 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 Fund’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 Fund is required to deliver an amount of cash determined by the excess of the exercise 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 exercise 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 Fund. The Fund, 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 Fund may also bear the risk of not being able to enter into a closing transaction if a liquid secondary market does not exist.
J Purchased Options — Upon the purchase of a call or put option, the premium paid by the Fund 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 Fund’s policies on investment valuations discussed above. As the purchaser of an index option, the Fund has the right to receive a cash payment equal to any depreciation in the value of the index below the exercise price of the option (in the case of a put) or equal to any appreciation in the value of the index over the exercise price of the option (in the case of a call) as of the valuation date of the option. If an option which the Fund had purchased expires on the stipulated expiration date, the Fund will realize a loss in the amount of the cost of the option. If the Fund enters into a closing sale transaction, the Fund 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 Fund 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 Fund exercises a call option on a security, the cost of the security which the Fund purchases upon exercise will be increased by the premium originally paid. The risk associated with purchasing options is limited to the premium originally paid.
15 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
K Interim Financial Statements — The interim financial statements relating to June 30, 2018 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. 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, 2018, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 815,702,076 | ||
Gross unrealized appreciation | $ | 140,215,329 | ||
Gross unrealized depreciation | (20,621,129 | ) | ||
Net unrealized appreciation | $ | 119,594,200 |
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. Pursuant to the investment advisory agreement dated June 8, 2018 between the Fund and BMR, the fee is computed at an annual rate of 0.65% of the Fund’s average daily net assets up to $500 million, 0.625% from $500 million up to $1 billion, 0.600% 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. Prior to the close of business on June 8, 2018, when the Fund’s assets were invested in the Portfolio, the Fund was allocated its share of the Portfolio’s investment adviser fee. The Portfolio paid advisory fees to BMR on the same fee schedule as that of the Fund as described above. For the six months ended June 30, 2018, the Fund’s allocated portion of the investment adviser fee paid by the Portfolio amounted to $2,725,054 and the investment adviser fee paid by the Fund amounted to $332,308. For the six months ended June 30, 2018, the Fund’s investment adviser fee, including the investment adviser fee allocated from the Portfolio, was 0.64% (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.
EVM serves as the administrator of the Fund, but receives no compensation. 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, 2018, EVM earned $57,023 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 $13,117 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2018. 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, 2018, 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, 2018 amounted to $817,019 for Class A shares.
16 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
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, 2018, the Fund paid or accrued to EVD $536,235 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, 2018 amounted to $178,745 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, 2018, the Fund was informed that EVD received approximately $1,000 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 by the Portfolio, other than short-term obligations and investments transferred to the Fund, for the period from January 1, 2018 through June 8, 2018 aggregated $352,684,895 and $398,845,581, respectively. Purchases and sales of investments by the Fund, other than short-term obligations and investments acquired in the transfer of net assets from the Portfolio, for the period from June 11, 2018 through June 30, 2018 aggregated $56,985,826 and $62,798,833, respectively. Increases and decreases in the Fund’s investment in the Portfolio for the period from January 1, 2018 through June 8, 2018 were $245,479 and $1,018,982,880, respectively. Included in decreases is $962,305,499, representing the Fund’s interest in the Portfolio as of the close of business on June 8, 2018, which was exchanged for the net assets of the Portfolio on that date having the same fair value. The Fund’s cost of its investment in the Portfolio on such date of $818,987,459 was carried forward to the net assets acquired from the Portfolio and no gain or loss was recognized on the exchange.
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, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 888,449 | 2,305,590 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 351,017 | 3,895,803 | ||||||
Redemptions | (3,344,956 | ) | (10,551,829 | ) | ||||
Net decrease | (2,105,490 | ) | (4,350,436 | ) | ||||
Class C | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 262,444 | 594,697 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 48,081 | 852,568 | ||||||
Redemptions | (1,356,747 | ) | (3,252,696 | ) | ||||
Net decrease | (1,046,222 | ) | (1,805,431 | ) |
17 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
Class I | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 958,648 | 4,866,028 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 103,336 | 960,791 | ||||||
Redemptions | (1,542,414 | ) | (2,923,307 | ) | ||||
Net increase (decrease) | (480,430 | ) | 2,903,512 |
8 Financial Instruments
The Fund 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 Fund 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, 2018, there were no obligations outstanding under these financial instruments.
9 Line of Credit
Effective June 8, 2018, 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 October 30, 2018. 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, 2018.
10 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.
11 Securities Lending Agreement
The Fund has established a securities lending agreement with State Street Bank and Trust Company (SSBT) as securities lending agent in which the Fund 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 Fund 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 Fund 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 Fund earns a negotiated lending fee from the borrower. A portion of the income earned by the Fund 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 Fund 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 Fund and cannot be sold or re-pledged by the Fund; accordingly, such collateral is not reflected in the Statement of Assets and Liabilities.
The Fund is subject to possible delay in the recovery of loaned securities. Pursuant to the securities lending agreement, SSBT has provided indemnification to the Fund in the event of default by a borrower with respect to a loan. The Fund bears the risk of loss with respect to the investment of cash collateral.
18 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
At June 30, 2018, the value of the securities loaned (all common stocks) and the value of the collateral received, which exceeded the value of the securities loaned, amounted to $8,906,851 and $9,121,804, respectively. Collateral received was comprised of cash of $3,281,058 and
U.S. Government and/or agencies securities of $5,840,746. The securities lending transactions have no contractual maturity date and each of the Fund 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, 2018 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 12) at June 30, 2018.
12 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, 2018, 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 | ||||||||||||||||
Consumer Discretionary | $ | 115,118,073 | $ | — | $ | — | $ | 115,118,073 | ||||||||
Consumer Staples | 42,549,972 | 8,654,208 | — | 51,204,180 | ||||||||||||
Energy | 45,542,581 | 19,291,827 | — | 64,834,408 | ||||||||||||
Financials | 125,112,998 | — | — | 125,112,998 | ||||||||||||
Health Care | 121,953,858 | — | — | 121,953,858 | ||||||||||||
Industrials | 72,132,784 | — | — | 72,132,784 | ||||||||||||
Information Technology | 241,573,319 | — | — | 241,573,319 | ||||||||||||
Materials | 31,087,584 | — | — | 31,087,584 | ||||||||||||
Real Estate | 35,670,569 | — | — | 35,670,569 | ||||||||||||
Telecommunication Services | 27,412,913 | — | — | 27,412,913 | ||||||||||||
Utilities | 45,147,183 | — | — | 45,147,183 | ||||||||||||
Total Common Stocks | $ | 903,301,834 | $ | 27,946,035 | * | $ | — | $ | 931,247,869 | |||||||
Short-Term Investments | $ | 3,281,058 | $ | 767,349 | $ | — | $ | 4,048,407 | ||||||||
Total Investments | $ | 906,582,892 | $ | 28,713,384 | $ | — | $ | 935,296,276 |
* | 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. |
At June 30, 2018, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
19 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
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 24, 2018, 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 2018. 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 fund’s investment strategies and policies; |
• | 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 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
Dividend Builder Fund
June 30, 2018
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, 2018, with respect to one or more funds, the Board met seven 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 nine 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 that at its meeting held on February 7 and 8, 2018, the Board, including a majority of the Independent Trustees, voted to approve a restructuring (the “Restructuring”) pursuant to which the Fund would withdraw its assets in-kind from the Portfolio and the Portfolio would terminate. The Board further considered that, in connection with the Restructuring, the Board, including a majority of the Independent Trustees, voted to approve an
21 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
Board of Trustees’ Contract Approval — continued
investment advisory agreement for the Fund with the Adviser (the “Fund Agreement”), which would become effective upon the Fund’s withdrawal of its assets from the Portfolio (the “Effective Date”). The Board noted that its approval of the Fund Agreement will allow the Adviser to manage the assets of the Fund directly upon the Effective Date, which was expected to occur prior to the fiscal year end of 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.
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, 2017 for the Fund. In this regard, the Board noted that the performance of the Fund was lower than the median performance of the Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was lower than its benchmark index for the three-year period. 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, 2017, 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 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.
22 |
Eaton Vance
Dividend Builder Fund
June 30, 2018
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
Richard F. Froio
Chief Compliance Officer
Trustees of Eaton Vance Dividend Builder Fund
William H. Park
Chairperson
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 |
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 Advisers International Ltd., 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.
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. |
7697 6.30.18
Eaton Vance
Greater India Fund
Semiannual Report
June 30, 2018
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, 2018
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 | 27 | |||
Officers and Trustees | 31 | |||
Important Notices | 32 |
Eaton Vance
Greater India Fund
June 30, 2018
Performance1,2
Portfolio Manager Hiren Dasani, CFA, of Goldman Sachs Asset Management, L.P. (GSAM)
% 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 | –8.58 | % | 4.86 | % | 13.05 | % | 6.34 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | –13.84 | –1.18 | 11.72 | 5.71 | ||||||||||||||||||
Class B at NAV | 05/02/1994 | 05/02/1994 | –8.89 | 4.13 | 12.27 | 5.64 | ||||||||||||||||||
Class B with 5% Maximum Sales Charge | — | — | –13.44 | –0.87 | 12.02 | 5.64 | ||||||||||||||||||
Class C at NAV | 07/07/2006 | 05/02/1994 | –8.89 | 4.15 | 12.27 | 5.64 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | –9.80 | 3.15 | 12.27 | 5.64 | ||||||||||||||||||
Class I at NAV | 10/01/2009 | 05/02/1994 | –8.45 | 5.17 | 13.39 | 6.64 | ||||||||||||||||||
MSCI India Index | — | — | –7.51 | % | 6.47 | % | 8.98 | % | 5.18 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class B | Class C | Class I | ||||||||||||||||||||
1.68 | % | 2.38 | % | 2.38 | % | 1.38 | % |
Fund Profile4
Sector Allocation (% of net assets)5
Top 10 Holdings (% of net assets)5
Infosys, Ltd. | 8.4 | % | ||
Maruti Suzuki India, Ltd. | 6.3 | |||
HDFC Bank, Ltd. | 4.5 | |||
Housing Development Finance Corp., Ltd. | 4.4 | |||
Cognizant Technology Solutions Corp., Class A | 4.0 | |||
Reliance Industries, Ltd. | 3.8 | |||
Yes Bank, Ltd. | 3.4 | |||
Hindustan Unilever, Ltd. | 3.3 | |||
Axis Bank, Ltd. | 3.2 | |||
Bajaj Finance, Ltd. | 3.0 | |||
Total | 44.3 | % |
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, 2018
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. 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, Goldman Sachs Asset Management International (GSAM beginning October 19, 2017) began sub- advising the Fund. Performance prior to September 15, 2016, reflects the Fund’s performance under a former sub-adviser. |
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. |
3 |
Eaton Vance
Greater India Fund
June 30, 2018
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, 2018 – June 30, 2018).
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 (1/1/18) | Ending Account Value (6/30/18) | Expenses Paid During Period* (1/1/18 – 6/30/18) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 914.20 | $ | 7.64 | 1.61 | % | ||||||||
Class B | $ | 1,000.00 | $ | 911.10 | $ | 10.99 | 2.32 | % | ||||||||
Class C | $ | 1,000.00 | $ | 911.10 | $ | 10.95 | 2.31 | % | ||||||||
Class I | $ | 1,000.00 | $ | 915.50 | $ | 6.22 | 1.31 | % | ||||||||
Hypothetical | ||||||||||||||||
(5% return per year before expenses) | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,016.80 | $ | 8.05 | 1.61 | % | ||||||||
Class B | $ | 1,000.00 | $ | 1,013.30 | $ | 11.58 | 2.32 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,013.30 | $ | 11.53 | 2.31 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,018.30 | $ | 6.56 | 1.31 | % |
* | 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, 2017. The Example reflects the expenses of both the Fund and the Portfolio. |
4 |
Eaton Vance
Greater India Fund
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Investment in Greater India Portfolio, at value (identified cost, $190,549,890) | $ | 241,216,548 | ||
Receivable for Fund shares sold | 63,126 | |||
Total assets | $ | 241,279,674 | ||
Liabilities | ||||
Payable for Fund shares redeemed | $ | 599,106 | ||
Payable to affiliates: | ||||
Administration fee | 30,190 | |||
Distribution and service fees | 64,994 | |||
Trustees’ fees | 125 | |||
Accrued expenses | 100,458 | |||
Total liabilities | $ | 794,873 | ||
Net Assets | $ | 240,484,801 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 187,723,662 | ||
Accumulated undistributed net investment income | 2,224,754 | |||
Accumulated net realized loss from Portfolio | (130,273 | ) | ||
Net unrealized appreciation from Portfolio | 50,666,658 | |||
Total | $ | 240,484,801 | ||
Class A Shares | ||||
Net Assets | $ | 170,056,698 | ||
Shares Outstanding | 5,050,348 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 33.67 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 35.72 | ||
Class B Shares | ||||
Net Assets | $ | 1,087,487 | ||
Shares Outstanding | 36,964 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 29.42 | ||
Class C Shares | ||||
Net Assets | $ | 25,673,208 | ||
Shares Outstanding | 879,344 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 29.20 | ||
Class I Shares | ||||
Net Assets | $ | 43,667,408 | ||
Shares Outstanding | 1,271,151 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 34.35 |
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, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends allocated from Portfolio | $ | 1,629,387 | ||
Interest allocated from Portfolio | 2,468 | |||
Expenses allocated from Portfolio | (1,244,292 | ) | ||
Total investment income from Portfolio | $ | 387,563 | ||
Expenses | ||||
Administration fee | $ | 191,723 | ||
Distribution and service fees | ||||
Class A | 268,005 | |||
Class B | 7,560 | |||
Class C | 138,501 | |||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 11,588 | |||
Transfer and dividend disbursing agent fees | 144,523 | |||
Legal and accounting services | 17,443 | |||
Printing and postage | 27,436 | |||
Registration fees | 32,062 | |||
Miscellaneous | 7,686 | |||
Total expenses | $ | 846,777 | ||
Net investment loss | $ | (459,214 | ) | |
Realized and Unrealized Gain (Loss) from Portfolio | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 8,610,576 | ||
Financial futures contracts | 79,546 | |||
Foreign currency transactions | (188,214 | ) | ||
Net realized gain | $ | 8,501,908 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (31,511,194 | ) | |
Financial futures contracts | (1,356 | ) | ||
Foreign currency | (7,435 | ) | ||
Net change in unrealized appreciation (depreciation) | $ | (31,519,985 | ) | |
Net realized and unrealized loss | $ | (23,018,077 | ) | |
Net decrease in net assets from operations | $ | (23,477,291 | ) |
6 | See Notes to Financial Statements. |
Eaton Vance
Greater India Fund
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment income (loss) | $ | (459,214 | ) | $ | 73,896 | |||
Net realized gain | 8,501,908 | 6,224,328 | ||||||
Net change in unrealized appreciation (depreciation) | (31,519,985 | ) | 82,158,381 | |||||
Net increase (decrease) in net assets from operations | $ | (23,477,291 | ) | $ | 88,456,605 | |||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | — | $ | (6,264,273 | ) | |||
Class B | — | (60,706 | ) | |||||
Class C | — | (952,147 | ) | |||||
Class I | — | (1,706,551 | ) | |||||
Total distributions to shareholders | $ | — | $ | (8,983,677 | ) | |||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 6,150,415 | $ | 17,106,407 | ||||
Class B | 5,070 | 13,784 | ||||||
Class C | 1,242,816 | 4,814,595 | ||||||
Class I | 8,820,516 | 27,236,258 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | — | 5,659,300 | ||||||
Class B | — | 55,076 | ||||||
Class C | — | 853,966 | ||||||
Class I | — | 1,188,806 | ||||||
Cost of shares redeemed | ||||||||
Class A | (12,484,985 | ) | (39,097,762 | ) | ||||
Class B | (153,722 | ) | (496,150 | ) | ||||
Class C | (3,128,162 | ) | (6,363,095 | ) | ||||
Class I | (9,373,286 | ) | (19,831,021 | ) | ||||
Net asset value of shares exchanged | ||||||||
Class A | 688,631 | 1,598,335 | ||||||
Class B | (688,631 | ) | (1,598,335 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (8,921,338 | ) | $ | (8,859,836 | ) | ||
Net increase (decrease) in net assets | $ | (32,398,629 | ) | $ | 70,613,092 | |||
Net Assets | ||||||||
At beginning of period | $ | 272,883,430 | $ | 202,270,338 | ||||
At end of period | $ | 240,484,801 | $ | 272,883,430 | ||||
Accumulated undistributed net investment income included in net assets | ||||||||
At end of period | $ | 2,224,754 | $ | 2,683,968 |
7 | See Notes to Financial Statements. |
Eaton Vance
Greater India Fund
June 30, 2018
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 36.830 | $ | 26.300 | $ | 25.770 | $ | 27.310 | $ | 19.980 | $ | 22.210 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | (0.058 | ) | $ | 0.016 | $ | (0.200 | ) | $ | (0.245 | ) | $ | (0.116 | ) | $ | 0.002 | ||||||||
Net realized and unrealized gain (loss) | (3.102 | ) | 11.737 | 0.878 | (1.090 | ) | 7.956 | (2.232 | ) | |||||||||||||||
Total income (loss) from operations | $ | (3.160 | ) | $ | 11.753 | $ | 0.678 | $ | (1.335 | ) | $ | 7.840 | $ | (2.230 | ) | |||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (1.223 | ) | $ | (0.148 | ) | $ | (0.205 | ) | $ | (0.510 | ) | $ | — | ||||||||
Total distributions | $ | — | $ | (1.223 | ) | $ | (0.148 | ) | $ | (0.205 | ) | $ | (0.510 | ) | $ | — | ||||||||
Net asset value — End of period | $ | 33.670 | $ | 36.830 | $ | 26.300 | $ | 25.770 | $ | 27.310 | $ | 19.980 | ||||||||||||
Total Return(2) | (8.58 | )%(3) | 44.80 | % | 2.64 | %(4) | (4.96 | )%(4) | 39.28 | %(4) | (10.04 | )%(4) | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 170,057 | $ | 192,016 | $ | 149,950 | $ | 172,386 | $ | 195,146 | $ | 154,207 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(6) | 1.61 | %(7) | 1.68 | % | 1.88 | %(4) | 1.88 | %(4) | 1.88 | %(4) | 1.88 | %(4) | ||||||||||||
Net investment income (loss) | (0.33 | )%(7) | 0.05 | % | (0.75 | )% | (0.88 | )% | (0.48 | )% | 0.01 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 15 | %(3) | 25 | % | 91 | % | 30 | % | 22 | % | 42 | % |
(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% and 0.14% of average daily net assets for the years ended December 31, 2016, 2015, 2014 and 2013, 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, 2018
Financial Highlights — continued
Class B | ||||||||||||||||||||||||
Six Months Ended (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 32.300 | $ | 23.090 | $ | 22.650 | $ | 24.190 | $ | 17.680 | $ | 19.790 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.174 | ) | $ | (0.171 | ) | $ | (0.334 | ) | $ | (0.401 | ) | $ | (0.261 | ) | $ | (0.123 | ) | ||||||
Net realized and unrealized gain (loss) | (2.706 | ) | 10.267 | 0.774 | (0.938 | ) | 7.024 | (1.987 | ) | |||||||||||||||
Total income (loss) from operations | $ | (2.880 | ) | $ | 10.096 | $ | 0.440 | $ | (1.339 | ) | $ | 6.763 | $ | (2.110 | ) | |||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (0.886 | ) | $ | — | $ | (0.201 | ) | $ | (0.253 | ) | $ | — | |||||||||
Total distributions | $ | — | $ | (0.886 | ) | $ | — | $ | (0.201 | ) | $ | (0.253 | ) | $ | — | |||||||||
Net asset value — End of period | $ | 29.420 | $ | 32.300 | $ | 23.090 | $ | 22.650 | $ | 24.190 | $ | 17.680 | ||||||||||||
Total Return(2) | (8.89 | )%(3) | 43.78 | % | 1.94 | %(4) | (5.62 | )%(4) | 38.27 | %(4) | (10.66 | )%(4) | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 1,087 | $ | 2,078 | $ | 3,120 | $ | 6,970 | $ | 16,502 | $ | 31,336 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(6) | 2.32 | %(7) | 2.38 | % | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | ||||||||||||
Net investment loss | (1.14 | )%(7) | (0.60 | )% | (1.45 | )% | (1.62 | )% | (1.27 | )% | (0.68 | )% | ||||||||||||
Portfolio Turnover of the Portfolio | 15 | %(3) | 25 | % | 91 | % | 30 | % | 22 | % | 42 | % |
(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% and 0.14% of average daily net assets for the years ended December 31, 2016, 2015, 2014 and 2013, 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, 2018
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 32.050 | $ | 23.020 | $ | 22.580 | $ | 24.120 | $ | 17.720 | $ | 19.840 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.157 | ) | $ | (0.186 | ) | $ | (0.336 | ) | $ | (0.383 | ) | $ | (0.256 | ) | $ | (0.122 | ) | ||||||
Net realized and unrealized gain (loss) | (2.693 | ) | 10.247 | 0.776 | (0.954 | ) | 7.029 | (1.998 | ) | |||||||||||||||
Total income (loss) from operations | $ | (2.850 | ) | $ | 10.061 | $ | 0.440 | $ | (1.337 | ) | $ | 6.773 | $ | (2.120 | ) | |||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (1.031 | ) | $ | — | $ | (0.203 | ) | $ | (0.373 | ) | $ | — | |||||||||
Total distributions | $ | — | $ | (1.031 | ) | $ | — | $ | (0.203 | ) | $ | (0.373 | ) | $ | — | |||||||||
Net asset value — End of period | $ | 29.200 | $ | 32.050 | $ | 23.020 | $ | 22.580 | $ | 24.120 | $ | 17.720 | ||||||||||||
Total Return(2) | (8.89 | )%(3) | 43.81 | % | 1.95 | %(4) | (5.63 | )%(4) | 38.25 | %(4) | (10.69 | )%(4) | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 25,673 | $ | 30,195 | $ | 22,335 | $ | 28,276 | $ | 31,918 | $ | 24,749 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(6) | 2.31 | %(7) | 2.38 | % | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | 2.58 | %(4) | ||||||||||||
Net investment loss | (1.04 | )%(7) | (0.65 | )% | (1.44 | )% | (1.56 | )% | (1.19 | )% | (0.68 | )% | ||||||||||||
Portfolio Turnover of the Portfolio | 15 | %(3) | 25 | % | 91 | % | 30 | % | 22 | % | 42 | % |
(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% and 0.14% of average daily net assets for the years ended December 31, 2016, 2015, 2014 and 2013, 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, 2018
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 37.520 | $ | 26.770 | $ | 26.230 | $ | 27.710 | $ | 20.260 | $ | 22.460 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | (0.007 | ) | $ | 0.140 | $ | (0.126 | ) | $ | (0.166 | ) | $ | (0.044 | ) | $ | 0.057 | ||||||||
Net realized and unrealized gain (loss) | (3.163 | ) | 11.936 | 0.900 | (1.108 | ) | 8.078 | (2.257 | ) | |||||||||||||||
Total income (loss) from operations | $ | (3.170 | ) | $ | 12.076 | $ | 0.774 | $ | (1.274 | ) | $ | 8.034 | $ | (2.200 | ) | |||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | (1.326 | ) | $ | (0.234 | ) | $ | (0.206 | ) | $ | (0.584 | ) | $ | — | ||||||||
Total distributions | $ | — | $ | (1.326 | ) | $ | (0.234 | ) | $ | (0.206 | ) | $ | (0.584 | ) | $ | — | ||||||||
Net asset value — End of period | $ | 34.350 | $ | 37.520 | $ | 26.770 | $ | 26.230 | $ | 27.710 | $ | 20.260 | ||||||||||||
Total Return(2) | (8.45 | )%(3) | 45.22 | % | 2.97 | %(4) | (4.70 | )%(4) | 39.74 | %(4) | (9.83 | )%(4) | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 43,667 | $ | 48,595 | $ | 26,866 | $ | 29,959 | $ | 35,388 | $ | 18,909 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(6) | 1.31 | %(7) | 1.38 | % | 1.58 | %(4) | 1.58 | %(4) | 1.58 | %(4) | 1.58 | %(4) | ||||||||||||
Net investment income (loss) | (0.04 | )%(7) | 0.41 | % | (0.46 | )% | (0.59 | )% | (0.18 | )% | 0.28 | % | ||||||||||||
Portfolio Turnover of the Portfolio | 15 | %(3) | 25 | % | 91 | % | 30 | % | 22 | % | 42 | % |
(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% and 0.14% of average daily net assets for the years ended December 31, 2016, 2015, 2014 and 2013, 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, 2018
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, 2018). 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, 2018, 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, 2018 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, 2018
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, 2017, the Fund had a net capital loss of $108,105 attributable to security transactions incurred after October 31, 2017 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, 2018.
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, L.P. a portion of its investment adviser fee for sub-advisory services provided to the Fund. For the six months ended June 30, 2018, 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, 2018, the administration fee amounted to $191,723.
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, 2018, EVM earned $18,799 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 $18,317 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2018. 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, 2018 amounted to $268,005 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, 2018, the Fund paid or accrued to EVD $5,670 and $103,876 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, 2018 amounted to $1,890 and $34,625 for Class B and Class C 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
13 |
Eaton Vance
Greater India Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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, 2018, the Fund was informed that EVD received approximately $2,000 of CDSCs paid by Class C shareholders and no CDSCs paid by Class A and Class B shareholders.
6 Investment Transactions
For the six months ended June 30, 2018, increases and decreases in the Fund’s investment in the Portfolio aggregated $5,279,974 and $14,868,315, 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, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 173,214 | 528,248 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 156,562 | ||||||
Redemptions | (355,616 | ) | (1,220,925 | ) | ||||
Exchange from Class B shares | 19,772 | 48,236 | ||||||
Net decrease | (162,630 | ) | (487,879 | ) | ||||
Class B | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 157 | 542 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 1,750 | ||||||
Redemptions | (4,959 | ) | (17,904 | ) | ||||
Exchange to Class A shares | (22,586 | ) | (55,152 | ) | ||||
Net decrease | (27,388 | ) | (70,764 | ) | ||||
Class C | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 39,667 | 168,712 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 27,174 | ||||||
Redemptions | (102,475 | ) | (223,799 | ) | ||||
Net decrease | (62,808 | ) | (27,913 | ) |
14 |
Eaton Vance
Greater India Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
Class I | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 241,159 | 843,895 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 32,284 | ||||||
Redemptions | (265,084 | ) | (584,582 | ) | ||||
Net increase (decrease) | (23,925 | ) | 291,597 |
15 |
Greater India Portfolio
June 30, 2018
Portfolio of Investments (Unaudited)
Common Stocks — 99.8% |
| |||||||
Security | Shares | Value | ||||||
India — 95.8% | ||||||||
Auto Components — 1.4% | ||||||||
MRF, Ltd. | 3,154 | $ | 3,457,917 | |||||
$ | 3,457,917 | |||||||
Automobiles — 8.9% | ||||||||
Mahindra & Mahindra, Ltd. | 464,154 | $ | 6,075,415 | |||||
Maruti Suzuki India, Ltd. | 118,615 | 15,269,539 | ||||||
$ | 21,344,954 | |||||||
Banks — 14.6% | ||||||||
Axis Bank, Ltd. | 1,037,912 | $ | 7,708,734 | |||||
Bandhan Bank, Ltd.(1)(2) | 170,755 | 1,316,971 | ||||||
Federal Bank, Ltd. | 954,107 | 1,138,418 | ||||||
HDFC Bank, Ltd. | 352,586 | 10,874,430 | ||||||
IndusInd Bank, Ltd. | 105,888 | 2,997,244 | ||||||
RBL Bank, Ltd.(1) | 365,386 | 2,949,201 | ||||||
Yes Bank, Ltd. | 1,647,049 | 8,173,397 | ||||||
$ | 35,158,395 | |||||||
Beverages — 1.0% | ||||||||
United Breweries, Ltd. | 139,855 | $ | 2,357,136 | |||||
$ | 2,357,136 | |||||||
Biotechnology — 0.9% | ||||||||
Biocon, Ltd. | 228,170 | $ | 2,056,415 | |||||
$ | 2,056,415 | |||||||
Chemicals — 2.3% | ||||||||
Castrol India, Ltd. | 570,150 | $ | 1,363,261 | |||||
UPL, Ltd. | 469,941 | 4,245,808 | ||||||
$ | 5,609,069 | |||||||
Construction & Engineering — 1.1% | ||||||||
Voltas, Ltd. | 360,925 | $ | 2,746,743 | |||||
$ | 2,746,743 | |||||||
Construction Materials — 3.8% | ||||||||
Century Textiles & Industries, Ltd. | 181,003 | $ | 2,347,640 | |||||
Dalmia Bharat, Ltd. | 61,347 | 2,048,713 | ||||||
Grasim Industries, Ltd. | 28,212 | 414,832 | ||||||
Grasim Industries, Ltd. GDR(3) | 291,800 | 4,288,089 | ||||||
$ | 9,099,274 |
Security | Shares | Value | ||||||
Consumer Finance — 6.2% | ||||||||
Bajaj Finance, Ltd. | 212,553 | $ | 7,147,685 | |||||
Bharat Financial Inclusion, Ltd.(2) | 166,217 | 2,821,076 | ||||||
Mahindra & Mahindra Financial Services, Ltd. | 570,553 | 3,935,851 | ||||||
Muthoot Finance, Ltd. | 174,463 | 965,694 | ||||||
$ | 14,870,306 | |||||||
Diversified Financial Services — 1.5% | ||||||||
Bajaj Holdings & Investment, Ltd. | 88,079 | $ | 3,703,968 | |||||
$ | 3,703,968 | |||||||
Electrical Equipment — 0.4% | ||||||||
Graphite India, Ltd. | 86,164 | $ | 1,056,474 | |||||
$ | 1,056,474 | |||||||
Food Products — 2.6% | ||||||||
Britannia Industries, Ltd. | 60,017 | $ | 5,465,121 | |||||
GlaxoSmithKline Consumer Healthcare, Ltd. | 9,026 | 855,932 | ||||||
$ | 6,321,053 | |||||||
Hotels, Restaurants & Leisure — 0.7% | ||||||||
Indian Hotels Co., Ltd. (The) | 923,711 | $ | 1,780,510 | |||||
$ | 1,780,510 | |||||||
Household Durables — 2.2% | ||||||||
Crompton Greaves Consumer Electricals, Ltd. | 885,858 | $ | 2,917,863 | |||||
Whirlpool of India, Ltd. | 105,860 | 2,363,383 | ||||||
$ | 5,281,246 | |||||||
Household Products — 3.3% | ||||||||
Hindustan Unilever, Ltd. | 335,920 | $ | 8,021,222 | |||||
$ | 8,021,222 | |||||||
Industrial Conglomerates — 0.9% | ||||||||
Siemens, Ltd. | 155,154 | $ | 2,218,993 | |||||
$ | 2,218,993 | |||||||
Insurance — 1.4% | ||||||||
ICICI Lombard General Insurance Co., Ltd.(1) | 121,681 | $ | 1,260,823 | |||||
ICICI Prudential Life Insurance Co., Ltd.(1) | 397,908 | 2,193,234 | ||||||
$ | 3,454,057 |
16 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Internet Software & Services — 1.6% | ||||||||
Info Edge India, Ltd. | 220,829 | $ | 3,807,540 | |||||
$ | 3,807,540 | |||||||
IT Services — 10.6% | ||||||||
HCL Technologies, Ltd. | 388,225 | $ | 5,249,405 | |||||
Infosys, Ltd. | 1,051,996 | 20,221,037 | ||||||
$ | 25,470,442 | |||||||
Life Sciences Tools & Services — 1.2% | ||||||||
Divi’s Laboratories, Ltd. | 196,559 | $ | 2,981,028 | |||||
$ | 2,981,028 | |||||||
Machinery — 4.2% | ||||||||
AIA Engineering, Ltd. | 93,336 | $ | 2,047,048 | |||||
Eicher Motors, Ltd. | 12,698 | 5,320,033 | ||||||
Thermax, Ltd. | 186,957 | 2,823,862 | ||||||
$ | 10,190,943 | |||||||
Metals & Mining — 3.5% | ||||||||
Hindalco Industries, Ltd. | 1,120,475 | $ | 3,768,417 | |||||
Hindustan Zinc, Ltd. | 673,786 | 2,738,801 | ||||||
Jindal Steel & Power, Ltd.(2) | 564,567 | 1,837,065 | ||||||
$ | 8,344,283 | |||||||
Oil, Gas & Consumable Fuels — 3.9% | ||||||||
Mangalore Refinery & Petrochemicals, Ltd. | 350,664 | $ | 414,647 | |||||
Reliance Industries, Ltd. | 640,592 | 9,108,507 | ||||||
$ | 9,523,154 | |||||||
Personal Products — 1.7% | ||||||||
Procter & Gamble Hygiene & Health Care, Ltd. | 27,742 | $ | 4,012,620 | |||||
$ | 4,012,620 | |||||||
Pharmaceuticals — 4.8% | ||||||||
Abbott India, Ltd. | 34,365 | $ | 3,614,135 | |||||
Cipla, Ltd. | 482,187 | 4,340,826 | ||||||
Eris Lifesciences, Ltd.(1)(2) | 178,741 | 1,781,062 | ||||||
Lupin, Ltd. | 147,465 | 1,950,518 | ||||||
$ | 11,686,541 | |||||||
Real Estate Management & Development — 1.2% | ||||||||
Oberoi Realty, Ltd. | 214,170 | $ | 1,491,290 | |||||
Prestige Estates Projects, Ltd. | 325,464 | 1,282,134 | ||||||
$ | 2,773,424 |
Security | Shares | Value | ||||||
Road & Rail — 0.9% | ||||||||
Container Corp. of India, Ltd. | 219,524 | $ | 2,081,786 | |||||
$ | 2,081,786 | |||||||
Textiles, Apparel & Luxury Goods — 0.4% | ||||||||
Aditya Birla Fashion and Retail, Ltd.(2) | 471,197 | $ | 945,131 | |||||
$ | 945,131 | |||||||
Thrifts & Mortgage Finance — 4.4% | ||||||||
Housing Development Finance Corp., Ltd. | 377,013 | $ | 10,505,309 | |||||
$ | 10,505,309 | |||||||
Tobacco — 2.1% | ||||||||
ITC, Ltd. | 1,292,441 | $ | 4,999,834 | |||||
$ | 4,999,834 | |||||||
Wireless Telecommunication Services — 2.1% | ||||||||
Idea Cellular, Ltd.(2) | 5,990,884 | $ | 5,165,349 | |||||
$ | 5,165,349 | |||||||
Total India |
| $ | 231,025,116 | |||||
United States — 4.0% | ||||||||
IT Services — 4.0% | ||||||||
Cognizant Technology Solutions Corp., Class A | 121,937 | $ | 9,631,804 | |||||
$ | 9,631,804 | |||||||
Total United States |
| $ | 9,631,804 | |||||
Total Common Stocks |
| $ | 240,656,920 |
17 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Short-Term Investments — 0.1% |
| |||||||
Description | Principal Amount (000’s omitted) | Value | ||||||
State Street Bank and Trust Eurodollar Time Deposit, 0.28%, 7/2/18 | $ | 394 | $ | 393,648 | ||||
Total Short-Term Investments |
| $ | 393,648 | |||||
Total Investments — 99.9% |
| $ | 241,050,568 | |||||
Other Assets, Less Liabilities — 0.1% |
| $ | 167,803 | |||||
Net Assets — 100.0% |
| $ | 241,218,371 |
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, 2018, the aggregate value of these securities is $9,501,291 or 3.9% 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, 2018, the aggregate value of these securities is $4,288,089 or 1.8% of the Portfolio’s net assets. |
Abbreviations:
GDR | – | Global Depositary Receipt |
18 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Unaffiliated investments, at value (identified cost, $190,444,746) | $ | 241,050,568 | ||
Foreign currency, at value (identified cost, $626,930) | 626,930 | |||
Dividends and interest receivable | 329,709 | |||
Receivable for investments sold | 96,381 | |||
Receivable for foreign taxes | 42,974 | |||
Total assets | $ | 242,146,562 | ||
Liabilities |
| |||
Payable for investments purchased | $ | 615,326 | ||
Payable to affiliates: | ||||
Investment adviser fee | 171,235 | |||
Trustees’ fees | 2,988 | |||
Accrued expenses | 138,642 | |||
Total liabilities | $ | 928,191 | ||
Net Assets applicable to investors’ interest in Portfolio | $ | 241,218,371 | ||
Sources of Net Assets |
| |||
Investors’ capital | $ | 190,617,037 | ||
Net unrealized appreciation | 50,601,334 | |||
Total | $ | 241,218,371 |
19 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends | $ | 1,629,399 | ||
Interest | 2,468 | |||
Total investment income | $ | 1,631,867 | ||
Expenses | ||||
Investment adviser fee | $ | 1,087,430 | ||
Trustees’ fees and expenses | 5,435 | |||
Custodian fee | 101,221 | |||
Legal and accounting services | 41,866 | |||
Miscellaneous | 8,348 | |||
Total expenses | $ | 1,244,300 | ||
Net investment income | $ | 387,567 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 8,610,641 | ||
Financial futures contracts | 79,546 | |||
Foreign currency transactions | (188,215 | ) | ||
Net realized gain | $ | 8,501,972 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (31,511,425 | ) | |
Financial futures contracts | (1,356 | ) | ||
Foreign currency | (7,436 | ) | ||
Net change in unrealized appreciation (depreciation) | $ | (31,520,217 | ) | |
Net realized and unrealized loss | $ | (23,018,245 | ) | |
Net decrease in net assets from operations | $ | (22,630,678 | ) |
20 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment income | $ | 387,567 | $ | 1,894,484 | ||||
Net realized gain | 8,501,972 | 6,224,372 | ||||||
Net change in unrealized appreciation (depreciation) | (31,520,217 | ) | 82,158,948 | |||||
Net increase (decrease) in net assets from operations | $ | (22,630,678 | ) | $ | 90,277,804 | |||
Capital transactions — | ||||||||
Contributions | $ | 5,279,974 | $ | 10,165,205 | ||||
Withdrawals | (14,868,315 | ) | (30,668,994 | ) | ||||
Net decrease in net assets from capital transactions | $ | (9,588,341 | ) | $ | (20,503,789 | ) | ||
Net increase (decrease) in net assets | $ | (32,219,019 | ) | $ | 69,774,015 | |||
Net Assets |
| |||||||
At beginning of period | $ | 273,437,390 | $ | 203,663,375 | ||||
At end of period | $ | 241,218,371 | $ | 273,437,390 |
21 | See Notes to Financial Statements. |
Greater India Portfolio
June 30, 2018
Financial Highlights
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
Ratios/Supplemental Data | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(1) | 0.97 | %(2) | 0.98 | % | 1.19 | % | 1.23 | % | 1.22 | % | 1.31 | % | ||||||||||||
Net investment income (loss) | 0.30 | %(2) | 0.76 | % | (0.06 | )% | (0.23 | )% | 0.17 | % | 0.58 | % | ||||||||||||
Portfolio Turnover | 15 | %(3) | 25 | % | 91 | % | 30 | % | 22 | % | 42 | % | ||||||||||||
Total Return | (8.28 | )%(3) | 45.78 | % | 3.35 | % | (4.33 | )% | 40.17 | % | (9.52 | )% | ||||||||||||
Net assets, end of period (000’s omitted) | $ | 241,218 | $ | 273,437 | $ | 203,663 | $ | 238,167 | $ | 280,593 | $ | 231,169 |
(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, 2018
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, 2018, 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.
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. Non-cash dividends are recorded at the fair value of the securities received. 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.
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
23 |
Greater India Portfolio
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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, 2018, the Portfolio, for tax reporting in India, had accumulated losses of INR 699,797,944 (having a value of approximately $10,214,000 at June 30, 2018) 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), March 31, 2022 (INR 90,144,310) and March 31, 2026 (INR 74,501,836).
As of June 30, 2018, 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, 2018 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 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, 2018, the investment adviser fee amounted to $1,087,430 or 0.85% (annualized) of the Portfolio’s average daily net assets. Pursuant to a sub-advisory agreement, BMR pays Goldman Sachs Asset Management, L.P. a portion of its investment adviser fee for sub-advisory services provided to the Portfolio.
24 |
Greater India Portfolio
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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, 2018, 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 $38,591,127 and $45,939,539, respectively, for the six months ended June 30, 2018.
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Portfolio at June 30, 2018, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 201,774,745 | ||
Gross unrealized appreciation | $ | 48,426,655 | ||
Gross unrealized depreciation | (9,150,832 | ) | ||
Net unrealized appreciation | $ | 39,275,823 |
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. At June 30, 2018, there were no obligations outstanding under these financial instruments.
The Portfolio is subject to equity price risk in the normal course of pursuing its investment objective. During the six months ended June 30, 2018, the Portfolio entered into equity index futures contracts to manage cash flows.
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, 2018 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 | $ | 79,546 | $ | (1,356 | ) |
(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, 2018, which is indicative of the volume of this derivative type, was approximately $924,000.
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 October 30, 2018. 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, 2018.
25 |
Greater India Portfolio
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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.
At June 30, 2018, 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 | $ | — | $ | 32,809,758 | $ | — | $ | 32,809,758 | ||||||||
Consumer Staples | — | 25,711,865 | — | 25,711,865 | ||||||||||||
Energy | — | 9,523,154 | — | 9,523,154 | ||||||||||||
Financials | — | 67,692,035 | — | 67,692,035 | ||||||||||||
Health Care | — | 16,723,984 | — | 16,723,984 | ||||||||||||
Industrials | — | 18,294,939 | — | 18,294,939 | ||||||||||||
Information Technology | 9,631,804 | 29,277,982 | — | 38,909,786 | ||||||||||||
Materials | — | 23,052,626 | — | 23,052,626 | ||||||||||||
Real Estate | — | 2,773,424 | — | 2,773,424 | ||||||||||||
Telecommunication Services | — | 5,165,349 | — | 5,165,349 | ||||||||||||
Total Common Stocks | $ | 9,631,804 | $ | 231,025,116 | * | $ | — | $ | 240,656,920 | |||||||
Short-Term Investments | $ | — | $ | 393,648 | $ | — | $ | 393,648 | ||||||||
Total Investments | $ | 9,631,804 | $ | 231,418,764 | $ | — | $ | 241,050,568 |
* | 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. |
At June 30, 2018, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
26 |
Eaton Vance
Greater India Fund
June 30, 2018
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 24, 2018, 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 2018. 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 fund’s investment strategies and policies; |
• | 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 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; |
27 |
Eaton Vance
Greater India Fund
June 30, 2018
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, 2018, with respect to one or more funds, the Board met seven 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 nine 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 Greater India Fund (the “Fund”), as well as the investment advisory agreement of Greater India Portfolio (the “Portfolio”), the portfolio in which the Fund invests, each with Boston Management and Research (the “Adviser”) and an investment sub-advisory agreement with Goldman Sachs Asset Management, L.P. (the “Sub-adviser”) each with of the Fund and the Portfolio, 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 and the sub-advisory agreements for the Fund and the Portfolio (collectively, the “investment advisory agreements”).
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreements of the Fund and the Portfolio, the Board evaluated the nature, extent and quality of services provided to the Fund and the Portfolio 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 and 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 Fund and the Portfolio, 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 investment strategy of the Fund and the Portfolio. The Board also considered the abilities and experience of the Sub-adviser’s investment professionals in investing in equity securities of companies in India and surrounding countries of the Indian subcontinent provided by investment professionals located in the region. 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 the Portfolio, by senior
28 |
Eaton Vance
Greater India Fund
June 30, 2018
Board of Trustees’ Contract Approval — continued
management, as well as the infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Fund and 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 Fund and the Portfolio.
The Board noted that under the terms of the investment advisory agreement of the Fund, the Adviser may invest assets of the Fund directly in securities, for which it would receive a fee, or in the Portfolio, for which it receives no separate fee but for which the Adviser receives an advisory fee from the Portfolio.
The Board considered the compliance programs of the Adviser, the Sub-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 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 the Sub-adviser, taken as a whole, are appropriate and consistent with the terms of the applicable 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, 2017 for the Fund. In this regard, the Board noted that the performance of the Fund was equal to the median performance of the Fund’s peer group and custom peer group for the three-year period. The Board also noted that the performance of the Fund was higher than its primary and secondary benchmark indexes for the three-year period. 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, 2017, 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 and/or Sub-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 and/or Sub-adviser provide 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 and/or Sub-adviser as between the Fund and other types of clients. 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 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 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 Fund and 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.
29 |
Eaton Vance
Greater India Fund
June 30, 2018
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 fees, which include 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
Greater India Fund
June 30, 2018
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
Richard F. Froio
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
Richard F. Froio
Chief Compliance Officer
Trustees of Eaton Vance Greater India Fund and Greater India Portfolio
William H. Park
Chairperson
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 |
31 |
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 Advisers International Ltd., 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.
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 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, L.P.
200 West Street
New York, NY 10282
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 6.30.18
Eaton Vance
Growth Fund
Semiannual Report
June 30, 2018
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, 2018
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 | 20 | |||
Officers and Trustees | 25 | |||
Important Notices | 26 |
Eaton Vance
Growth Fund
June 30, 2018
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 | 10.17 | % | 21.02 | % | 16.01 | % | 10.41 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | 3.82 | 14.07 | 14.65 | 9.75 | ||||||||||||||||||
Class C at NAV | 09/09/2002 | 09/09/2002 | 9.79 | 20.12 | 15.15 | 9.58 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 8.79 | 19.12 | 15.15 | 9.58 | ||||||||||||||||||
Class I at NAV | 05/03/2007 | 09/09/2002 | 10.31 | 21.32 | 16.30 | 10.68 | ||||||||||||||||||
Class R at NAV | 08/03/2009 | 09/09/2002 | 10.04 | 20.75 | 15.73 | 10.16 | ||||||||||||||||||
Russell 1000® Growth Index | — | — | 7.25 | % | 22.51 | % | 16.35 | % | 11.82 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | Class R | ||||||||||||||||||||
Gross | 1.09 | % | 1.84 | % | 0.84 | % | 1.34 | % | ||||||||||||||||
Net | 1.05 | 1.80 | 0.80 | 1.30 |
Fund Profile
Sector Allocation (% of net assets)4
Top 10 Holdings (% of net assets)4
Amazon.com, Inc. | 7.3 | % | ||
Visa, Inc., Class A | 4.6 | |||
Facebook, Inc., Class A | 4.5 | |||
Alphabet, Inc., Class C | 4.4 | |||
Alphabet, Inc., Class A | 3.0 | |||
salesforce.com, Inc. | 3.0 | |||
Microsoft Corp. | 2.7 | |||
Adobe Systems, Inc. | 2.4 | |||
Twitter, Inc. | 2.2 | |||
Apple, Inc. | 2.1 | |||
Total | 36.2 | % |
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
Growth Fund
June 30, 2018
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 4/30/19. 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 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
Important Notice to Shareholders
On May 11, 2018, the Fund received its pro-rata share of net assets from Growth Portfolio, a separate registered investment company, in which the Fund invested and the Portfolio was liquidated. As of May 14, 2018, the Fund invests its assets directly. |
3 |
Eaton Vance
Growth Fund
June 30, 2018
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, 2018 – June 30, 2018).
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 (1/1/18) | Ending Account Value (6/30/18) | Expenses Paid During Period* (1/1/18 – 6/30/18) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,101.70 | $ | 5.47 | ** | 1.05 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,097.90 | $ | 9.36 | ** | 1.80 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,103.10 | $ | 4.17 | ** | 0.80 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,100.40 | $ | 6.77 | ** | 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, 2017. The Example reflects the expenses of both the Fund and the Portfolio for the period while the Fund was making investments directly in the Portfolio. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
4 |
Eaton Vance
Growth Fund
June 30, 2018
Portfolio of Investments (Unaudited)
Common Stocks — 98.6% |
| |||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 2.7% | ||||||||
Boeing Co. (The) | 7,451 | $ | 2,499,885 | |||||
Raytheon Co. | 36,521 | 7,055,127 | ||||||
$ | 9,555,012 | |||||||
Air Freight & Logistics — 1.7% | ||||||||
FedEx Corp. | 26,337 | $ | 5,980,079 | |||||
$ | 5,980,079 | |||||||
Auto Components — 1.4% | ||||||||
Aptiv PLC | 56,481 | $ | 5,175,354 | |||||
$ | 5,175,354 | |||||||
Banks — 2.3% | ||||||||
JPMorgan Chase & Co. | 36,503 | $ | 3,803,613 | |||||
KeyCorp | 217,448 | 4,248,934 | ||||||
$ | 8,052,547 | |||||||
Beverages — 3.5% | ||||||||
Coca-Cola Co. (The) | 163,101 | $ | 7,153,610 | |||||
Constellation Brands, Inc., Class A | 15,311 | 3,351,118 | ||||||
PepsiCo, Inc. | 17,039 | 1,855,036 | ||||||
$ | 12,359,764 | |||||||
Biotechnology — 4.8% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 42,464 | $ | 5,271,905 | |||||
Biogen, Inc.(1) | 12,840 | 3,726,682 | ||||||
Celgene Corp.(1) | 27,497 | 2,183,812 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 34,251 | 5,821,300 | ||||||
$ | 17,003,699 | |||||||
Capital Markets — 2.8% | ||||||||
Charles Schwab Corp. (The) | 98,070 | $ | 5,011,377 | |||||
Goldman Sachs Group, Inc. (The) | 22,619 | 4,989,073 | ||||||
$ | 10,000,450 | |||||||
Chemicals — 2.7% | ||||||||
Ecolab, Inc. | 51,866 | $ | 7,278,356 | |||||
Sherwin-Williams Co. (The) | 5,460 | 2,225,332 | ||||||
$ | 9,503,688 |
Security | Shares | Value | ||||||
Commercial Services & Supplies — 1.7% | ||||||||
Waste Connections, Inc. | 34,998 | $ | 2,634,650 | |||||
Waste Management, Inc. | 43,254 | 3,518,280 | ||||||
$ | 6,152,930 | |||||||
Communications Equipment — 1.9% | ||||||||
Palo Alto Networks, Inc.(1) | 33,356 | $ | 6,853,657 | |||||
$ | 6,853,657 | |||||||
Electrical Equipment — 1.5% | ||||||||
Rockwell Automation, Inc. | 32,025 | $ | 5,323,516 | |||||
$ | 5,323,516 | |||||||
Energy Equipment & Services — 0.6% | ||||||||
Halliburton Co. | 51,887 | $ | 2,338,028 | |||||
$ | 2,338,028 | |||||||
Food Products — 1.3% | ||||||||
Conagra Brands, Inc. | 49,540 | $ | 1,770,064 | |||||
Pinnacle Foods, Inc. | 45,362 | 2,951,252 | ||||||
$ | 4,721,316 | |||||||
Health Care Equipment & Supplies — 3.0% | ||||||||
Abbott Laboratories | 87,226 | $ | 5,319,914 | |||||
Danaher Corp. | 35,092 | 3,462,879 | ||||||
Intuitive Surgical, Inc.(1) | 4,253 | 2,034,975 | ||||||
$ | 10,817,768 | |||||||
Health Care Providers & Services — 2.7% | ||||||||
Anthem, Inc. | 14,522 | $ | 3,456,671 | |||||
UnitedHealth Group, Inc. | 24,667 | 6,051,802 | ||||||
$ | 9,508,473 | |||||||
Hotels, Restaurants & Leisure — 0.8% | ||||||||
Starbucks Corp. | 59,807 | $ | 2,921,572 | |||||
$ | 2,921,572 | |||||||
Internet & Direct Marketing Retail — 9.7% | ||||||||
Amazon.com, Inc.(1) | 15,342 | $ | 26,078,331 | |||||
Booking Holdings, Inc.(1) | 1,696 | 3,437,945 | ||||||
Netflix, Inc.(1) | 12,341 | 4,830,638 | ||||||
$ | 34,346,914 |
5 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Internet Software & Services — 17.9% | ||||||||
Alibaba Group Holding, Ltd. ADR(1) | 15,527 | $ | 2,880,724 | |||||
Alphabet, Inc., Class A(1) | 9,512 | 10,740,855 | ||||||
Alphabet, Inc., Class C(1) | 14,013 | 15,633,604 | ||||||
Facebook, Inc., Class A(1) | 81,407 | 15,819,008 | ||||||
GoDaddy, Inc., Class A(1) | 99,831 | 7,048,069 | ||||||
IAC/InterActiveCorp(1) | 23,170 | 3,533,193 | ||||||
Twitter, Inc.(1) | 178,406 | 7,790,990 | ||||||
$ | 63,446,443 | |||||||
IT Services — 4.6% | ||||||||
Visa, Inc., Class A(2) | 123,225 | $ | 16,321,151 | |||||
$ | 16,321,151 | |||||||
Life Sciences Tools & Services — 1.4% | ||||||||
Agilent Technologies, Inc. | 50,724 | $ | 3,136,772 | |||||
Illumina, Inc.(1) | 6,145 | 1,716,237 | ||||||
$ | 4,853,009 | |||||||
Machinery — 0.5% | ||||||||
Xylem, Inc. | 25,530 | $ | 1,720,211 | |||||
$ | 1,720,211 | |||||||
Media — 1.8% | ||||||||
Walt Disney Co. (The) | 60,012 | $ | 6,289,858 | |||||
$ | 6,289,858 | |||||||
Metals & Mining — 0.7% | ||||||||
Freeport-McMoRan, Inc. | 139,121 | $ | 2,401,228 | |||||
$ | 2,401,228 | |||||||
Oil, Gas & Consumable Fuels — 0.9% | ||||||||
Devon Energy Corp. | 70,033 | $ | 3,078,651 | |||||
$ | 3,078,651 | |||||||
Road & Rail — 2.7% | ||||||||
CSX Corp. | 109,574 | $ | 6,988,630 | |||||
J.B. Hunt Transport Services, Inc. | 22,638 | 2,751,649 | ||||||
$ | 9,740,279 | |||||||
Semiconductors & Semiconductor Equipment — 1.7% | ||||||||
Broadcom, Inc. | 6,832 | $ | 1,657,716 | |||||
Texas Instruments, Inc. | 38,506 | 4,245,287 | ||||||
$ | 5,903,003 |
Security | Shares | Value | ||||||
Software — 11.8% | ||||||||
Activision Blizzard, Inc. | 88,384 | $ | 6,745,467 | |||||
Adobe Systems, Inc.(1) | 34,697 | 8,459,476 | ||||||
Intuit, Inc. | 24,430 | 4,991,171 | ||||||
Microsoft Corp. | 97,054 | 9,570,495 | ||||||
SailPoint Technologies Holding, Inc.(1) | 60,536 | 1,485,553 | ||||||
salesforce.com, Inc.(1) | 77,454 | 10,564,726 | ||||||
$ | 41,816,888 | |||||||
Specialty Retail — 4.4% | ||||||||
Home Depot, Inc. (The) | 26,480 | $ | 5,166,248 | |||||
TJX Cos., Inc. (The) | 55,924 | 5,322,846 | ||||||
Ulta Beauty, Inc.(1) | 22,320 | 5,210,827 | ||||||
$ | 15,699,921 | |||||||
Technology Hardware, Storage & Peripherals — 3.5% | ||||||||
Apple, Inc. | 41,194 | $ | 7,625,421 | |||||
HP, Inc. | 220,287 | 4,998,312 | ||||||
$ | 12,623,733 | |||||||
Textiles, Apparel & Luxury Goods — 1.6% | ||||||||
NIKE, Inc., Class B | 71,572 | $ | 5,702,857 | |||||
$ | 5,702,857 | |||||||
Total Common Stocks |
| $ | 350,211,999 | |||||
Short-Term Investments — 1.1% |
| |||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 2.09%(3) | 3,916,407 | $ | 3,916,407 | |||||
Total Short-Term Investments |
| $ | 3,916,407 | |||||
Total Investments — 99.7% |
| $ | 354,128,406 | |||||
Other Assets, Less Liabilities — 0.3% |
| $ | 986,103 | |||||
Net Assets — 100.0% |
| $ | 355,114,509 |
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
6 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
(1) | Non-income producing security. |
(2) | All or a portion of this security was on loan at June 30, 2018. The aggregate market value of securities on loan at June 30, 2018 was $16,157,840. |
(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, 2018. |
Abbreviations:
ADR | – | American Depositary Receipt |
7 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Unaffiliated investments, at value including $16,157,840 of securities on loan (identified cost, $205,438,966) | $ | 350,211,999 | ||
Affiliated investment, at value (identified cost, $3,916,649) | 3,916,407 | |||
Dividends receivable | 167,252 | |||
Dividends receivable from affiliated investment | 5,048 | |||
Receivable for investments sold | 2,139,469 | |||
Receivable for Fund shares sold | 1,393,936 | |||
Securities lending income receivable | 1,881 | |||
Tax reclaims receivable | 168,852 | |||
Receivable from affiliate | 7,544 | |||
Total assets | $ | 358,012,388 | ||
Liabilities | ||||
Payable for investments purchased | $ | 2,093,398 | ||
Payable for Fund shares redeemed | 374,322 | |||
Payable to affiliates: | ||||
Investment adviser fee | 192,492 | |||
Distribution and service fees | 83,896 | |||
Trustees’ fees | 3,618 | |||
Accrued expenses | 150,153 | |||
Total liabilities | $ | 2,897,879 | ||
Net Assets | $ | 355,114,509 | ||
Sources of Net Assets | ||||
Paid-in capital | $ | 189,576,478 | ||
Accumulated distributions in excess of net investment income | (337,641 | ) | ||
Accumulated net realized gain | 21,100,318 | |||
Net unrealized appreciation | 144,775,354 | |||
Total | $ | 355,114,509 | ||
Class A Shares | ||||
Net Assets | $ | 221,555,390 | ||
Shares Outstanding | 7,546,030 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 29.36 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 31.15 | ||
Class C Shares | ||||
Net Assets | $ | 42,677,423 | ||
Shares Outstanding | 1,699,528 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 25.11 | ||
Class I Shares | ||||
Net Assets | $ | 87,241,453 | ||
Shares Outstanding | 2,892,183 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 30.16 | ||
Class R Shares | ||||
Net Assets | $ | 3,640,243 | ||
Shares Outstanding | 126,808 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 28.71 |
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
Growth Fund
June 30, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends | $ | 474,323 | ||
Dividends allocated from Portfolio | 1,041,221 | |||
Dividends from affiliated investment | 7,584 | |||
Securities lending income, net | 3,070 | |||
Securities lending income allocated from Portfolio, net | 7,507 | |||
Expenses allocated from Portfolio | (874,548 | ) | ||
Total investment income | $ | 659,157 | ||
Expenses | ||||
Investment adviser fee | $ | 305,128 | ||
Distribution and service fees | ||||
Class A | 269,493 | |||
Class C | 213,463 | |||
Class R | 9,116 | |||
Trustees’ fees and expenses | 3,743 | |||
Custodian fee | 34,420 | |||
Transfer and dividend disbursing agent fees | 174,167 | |||
Legal and accounting services | 16,949 | |||
Printing and postage | 16,157 | |||
Registration fees | 27,924 | |||
Miscellaneous | 10,568 | |||
Total expenses | $ | 1,081,128 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 84,330 | ||
Total expense reductions | $ | 84,330 | ||
Net expenses | $ | 996,798 | ||
Net investment loss | $ | (337,641 | ) | |
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 701,281 | ||
Investment transactions allocated from Portfolio | 21,385,025 | |||
Investment transactions — affiliated investment | 102 | |||
Foreign currency transactions allocated from Portfolio | (9,371 | ) | ||
Net realized gain | $ | 22,077,037 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 2,955,142 | ||
Investment allocated from Portfolio | 8,803,575 | |||
Investments — affiliated investment | (242 | ) | ||
Foreign currency | 748 | |||
Foreign currency allocated from Portfolio | (773 | ) | ||
Net change in unrealized appreciation (depreciation) | $ | 11,758,450 | ||
Net realized and unrealized gain | $ | 33,835,487 | ||
Net increase in net assets from operations | $ | 33,497,846 |
9 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment loss | $ | (337,641 | ) | $ | (418,497 | ) | ||
Net realized gain | 22,077,037 | 20,552,961 | ||||||
Net change in unrealized appreciation (depreciation) | 11,758,450 | 51,170,227 | ||||||
Net increase in net assets from operations | $ | 33,497,846 | $ | 71,304,691 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | — | $ | (227,167 | ) | |||
Class I | — | (249,851 | ) | |||||
From net realized gain | ||||||||
Class A | — | (9,729,500 | ) | |||||
Class C | — | (2,220,208 | ) | |||||
Class I | — | (3,488,207 | ) | |||||
Class R | — | (163,345 | ) | |||||
Total distributions to shareholders | $ | — | $ | (16,078,278 | ) | |||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 6,197,074 | $ | 16,240,954 | ||||
Class C | 2,089,275 | 4,144,516 | ||||||
Class I | 10,538,143 | 26,639,386 | ||||||
Class R | 389,033 | 728,201 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | — | 9,145,153 | ||||||
Class C | — | 2,019,402 | ||||||
Class I | — | 3,553,117 | ||||||
Class R | — | 112,580 | ||||||
Cost of shares redeemed | ||||||||
Class A | (15,255,791 | ) | (45,564,024 | ) | ||||
Class C | (4,868,186 | ) | (13,034,293 | ) | ||||
Class I | (10,199,332 | ) | (24,272,291 | ) | ||||
Class R | (550,948 | ) | (1,205,617 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (11,660,732 | ) | $ | (21,492,916 | ) | ||
Net increase in net assets | $ | 21,837,114 | $ | 33,733,497 | ||||
Net Assets |
| |||||||
At beginning of period | $ | 333,277,395 | $ | 299,543,898 | ||||
At end of period | $ | 355,114,509 | $ | 333,277,395 | ||||
Accumulated distributions in excess of net investment income included in net assets |
| |||||||
At end of period | $ | (337,641 | ) | $ | — |
10 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2018
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 26.650 | $ | 22.300 | $ | 22.230 | $ | 21.670 | $ | 20.920 | $ | 17.540 | ||||||||||||
Income (Loss) From Operations |
| |||||||||||||||||||||||
Net investment income (loss)(1) | $ | (0.023 | ) | $ | (0.021 | ) | $ | 0.047 | $ | 0.140 | $ | (0.000 | )(2) | $ | 0.012 | |||||||||
Net realized and unrealized gain | 2.733 | 5.680 | 0.451 | 1.387 | 2.889 | 6.069 | ||||||||||||||||||
Total income from operations | $ | 2.710 | $ | 5.659 | $ | 0.498 | $ | 1.527 | $ | 2.889 | $ | 6.081 | ||||||||||||
Less Distributions |
| |||||||||||||||||||||||
From net investment income | $ | — | $ | (0.029 | ) | $ | (0.085 | ) | $ | — | $ | — | $ | (0.001 | ) | |||||||||
From net realized gain | — | (1.280 | ) | (0.343 | ) | (0.967 | ) | (2.139 | ) | (2.700 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.309 | ) | $ | (0.428 | ) | $ | (0.967 | ) | $ | (2.139 | ) | $ | (2.701 | ) | |||||||
Net asset value — End of period | $ | 29.360 | $ | 26.650 | $ | 22.300 | $ | 22.230 | $ | 21.670 | $ | 20.920 | ||||||||||||
Total Return(3)(4) | 10.17 | %(5) | 25.42 | % | 2.32 | % | 7.04 | % | 14.23 | % | 35.35 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 221,555 | $ | 209,606 | $ | 194,018 | $ | 214,135 | $ | 88,448 | $ | 89,426 | ||||||||||||
Ratios (as a percentage of average daily net assets):(6) | ||||||||||||||||||||||||
Expenses(4)(7) | 1.05 | %(8) | 1.05 | % | 1.05 | % | 1.05 | % | 1.15 | % | 1.25 | % | ||||||||||||
Net investment income (loss) | (0.16 | )%(8) | (0.08 | )% | 0.22 | % | 0.62 | % | (0.00 | )%(9) | 0.06 | % | ||||||||||||
Portfolio Turnover of the Portfolio(10) | 20 | %(5) | 50 | % | 60 | % | 55 | % | 38 | % | 42 | % | ||||||||||||
Portfolio Turnover of the Fund | 5 | %(5)(11) | — | — | — | — | — |
(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 0.05%, 0.06%, 0.08%, 0.07%, 0.12% and 0.10% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively). Absent this reimbursement, total return would be lower. |
(5) | Not annualized. |
(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) | Amount is less than (0.005)%. |
(10) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(11) | For the period from May 14, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
11 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2018
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 22.870 | $ | 19.410 | $ | 19.460 | $ | 19.230 | $ | 18.920 | $ | 16.190 | ||||||||||||
Income (Loss) From Operations |
| |||||||||||||||||||||||
Net investment loss(1) | $ | (0.110 | ) | $ | (0.183 | ) | $ | (0.101 | ) | $ | (0.025 | ) | $ | (0.149 | ) | $ | (0.127 | ) | ||||||
Net realized and unrealized gain | 2.350 | 4.923 | 0.394 | 1.222 | 2.598 | 5.558 | ||||||||||||||||||
Total income from operations | $ | 2.240 | $ | 4.740 | $ | 0.293 | $ | 1.197 | $ | 2.449 | $ | 5.431 | ||||||||||||
Less Distributions |
| |||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (0.001 | ) | |||||||||||
From net realized gain | — | (1.280 | ) | (0.343 | ) | (0.967 | ) | (2.139 | ) | (2.700 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.280 | ) | $ | (0.343 | ) | $ | (0.967 | ) | $ | (2.139 | ) | $ | (2.701 | ) | |||||||
Net asset value — End of period | $ | 25.110 | $ | 22.870 | $ | 19.410 | $ | 19.460 | $ | 19.230 | $ | 18.920 | ||||||||||||
Total Return(2)(3) | 9.79 | %(4) | 24.45 | % | 1.57 | % | 6.20 | % | 13.41 | % | 34.27 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 42,677 | $ | 41,450 | $ | 41,272 | $ | 48,285 | $ | 30,552 | $ | 29,318 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 1.80 | %(7) | 1.80 | % | 1.80 | % | 1.80 | % | 1.90 | % | 2.00 | % | ||||||||||||
Net investment loss | (0.91 | )%(7) | (0.83 | )% | (0.53 | )% | (0.13 | )% | (0.75 | )% | (0.68 | )% | ||||||||||||
Portfolio Turnover of the Portfolio(8) | 20 | %(4) | 50 | % | 60 | % | 55 | % | 38 | % | 42 | % | ||||||||||||
Portfolio Turnover of the Fund | 5 | %(4)(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) | The administrator reimbursed certain operating expenses (equal to 0.05%, 0.06%, 0.08%, 0.07%, 0.12% and 0.10% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively). Absent this reimbursement, total return would be lower. |
(4) | Not annualized. |
(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 14, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
12 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2018
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 27.340 | $ | 22.850 | $ | 22.760 | $ | 22.120 | $ | 21.250 | $ | 17.750 | ||||||||||||
Income (Loss) From Operations |
| |||||||||||||||||||||||
Net investment income(1) | $ | 0.013 | $ | 0.043 | $ | 0.108 | $ | 0.192 | $ | 0.056 | $ | 0.063 | ||||||||||||
Net realized and unrealized gain | 2.807 | 5.820 | 0.461 | 1.415 | 2.953 | 6.138 | ||||||||||||||||||
Total income from operations | $ | 2.820 | $ | 5.863 | $ | 0.569 | $ | 1.607 | $ | 3.009 | $ | 6.201 | ||||||||||||
Less Distributions |
| |||||||||||||||||||||||
From net investment income | $ | — | $ | (0.093 | ) | $ | (0.136 | ) | $ | — | $ | — | $ | (0.001 | ) | |||||||||
From net realized gain | — | (1.280 | ) | (0.343 | ) | (0.967 | ) | (2.139 | ) | (2.700 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.373 | ) | $ | (0.479 | ) | $ | (0.967 | ) | $ | (2.139 | ) | $ | (2.701 | ) | |||||||
Net asset value — End of period | $ | 30.160 | $ | 27.340 | $ | 22.850 | $ | 22.760 | $ | 22.120 | $ | 21.250 | ||||||||||||
Total Return(2)(3) | 10.31 | %(4) | 25.72 | % | 2.59 | % | 7.26 | % | 14.58 | % | 35.61 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 87,241 | $ | 78,775 | $ | 61,036 | $ | 58,746 | $ | 32,051 | $ | 28,336 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 0.80 | %(7) | 0.80 | % | 0.80 | % | 0.80 | % | 0.90 | % | 1.00 | % | ||||||||||||
Net investment income | 0.09 | %(7) | 0.16 | % | 0.48 | % | 0.84 | % | 0.25 | % | 0.31 | % | ||||||||||||
Portfolio Turnover of the Portfolio(8) | 20 | %(4) | 50 | % | 60 | % | 55 | % | 38 | % | 42 | % | ||||||||||||
Portfolio Turnover of the Fund | 5 | %(4)(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) | The administrator reimbursed certain operating expenses (equal to 0.05%, 0.06%, 0.08%, 0.07%, 0.12% and 0.10% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively). Absent this reimbursement, total return would be lower. |
(4) | Not annualized. |
(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 14, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
13 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2018
Financial Highlights — continued
Class R | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 26.090 | $ | 21.880 | $ | 21.800 | $ | 21.320 | $ | 20.660 | $ | 17.400 | ||||||||||||
Income (Loss) From Operations |
| |||||||||||||||||||||||
Net investment income (loss)(1) | $ | (0.057 | ) | $ | (0.082 | ) | $ | (0.010 | ) | $ | 0.059 | $ | (0.052 | ) | $ | (0.037 | ) | |||||||
Net realized and unrealized gain | 2.677 | 5.572 | 0.439 | 1.388 | 2.851 | 5.998 | ||||||||||||||||||
Total income from operations | $ | 2.620 | $ | 5.490 | $ | 0.429 | $ | 1.447 | $ | 2.799 | $ | 5.961 | ||||||||||||
Less Distributions |
| |||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | (0.006 | ) | $ | — | $ | — | $ | (0.001 | ) | ||||||||||
From net realized gain | — | (1.280 | ) | (0.343 | ) | (0.967 | ) | (2.139 | ) | (2.700 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.280 | ) | $ | (0.349 | ) | $ | (0.967 | ) | $ | (2.139 | ) | $ | (2.701 | ) | |||||||
Net asset value — End of period | $ | 28.710 | $ | 26.090 | $ | 21.880 | $ | 21.800 | $ | 21.320 | $ | 20.660 | ||||||||||||
Total Return(2)(3) | 10.04 | %(4) | 25.12 | % | 2.03 | % | 6.77 | % | 13.98 | % | 34.94 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 3,640 | $ | 3,447 | $ | 3,217 | $ | 4,186 | $ | 2,932 | $ | 2,417 | ||||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||||||
Expenses(3)(6) | 1.30 | %(7) | 1.30 | % | 1.30 | % | 1.30 | % | 1.40 | % | 1.50 | % | ||||||||||||
Net investment income (loss) | (0.41 | )%(7) | (0.33 | )% | (0.05 | )% | 0.27 | % | (0.24 | )% | (0.18 | )% | ||||||||||||
Portfolio Turnover of the Portfolio(8) | 20 | %(4) | 50 | % | 60 | % | 55 | % | 38 | % | 42 | % | ||||||||||||
Portfolio Turnover of the Fund | 5 | %(4)(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) | The administrator reimbursed certain operating expenses (equal to 0.05%, 0.06%, 0.08%, 0.07%, 0.12% and 0.10% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively). Absent this reimbursement, total return would be lower. |
(4) | Not annualized. |
(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 14, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
14 | See Notes to Financial Statements. |
Eaton Vance
Growth Fund
June 30, 2018
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’s investment objective is to seek total return. Prior to the close of business on May 11, 2018, the Fund invested 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. As of the close of business on May 11, 2018, the Fund received its pro-rata share of net assets from the Portfolio as part of a complete liquidation of the Portfolio. As of May 14, 2018, the Fund invests directly in securities. 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 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.
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 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. Prior to the close of business on May 11, 2018, the net investment income or loss consisted 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.
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.
15 |
Eaton Vance
Growth Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
As of June 30, 2018, 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 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, 2018 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, 2017, the Fund had a net capital loss of $1,125,809 attributable to security transactions incurred after October 31, 2017 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, 2018.
The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2018, as determined on a federal income tax basis, were as follows:
Aggregate cost | $209,361,234 | |||
Gross unrealized appreciation | $ | 148,092,357 | ||
Gross unrealized depreciation | (3,325,185 | ) | ||
Net unrealized appreciation | $ | 144,767,172 |
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. Pursuant to the investment advisory agreement dated May 11, 2018 between the Fund and BMR, the fee is computed at an annual rate of 0.65% 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
16 |
Eaton Vance
Growth Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
reduced. Prior to the close of business on May 11, 2018, when the Fund’s assets were invested in the Portfolio, the Fund was allocated its share of the Portfolio’s investment adviser fee. The Portfolio paid advisory fees to BMR on the same fee schedule as that of the Fund as described above. For the six months ended June 30, 2018, the Fund’s allocated portion of the investment adviser fee paid by the Portfolio amounted to $815,923 and the investment adviser fee paid by the Fund amounted to $305,128. For the six months ended June 30, 2018, the Fund’s investment adviser fee, including the investment adviser fee allocated from the Portfolio, was 0.65% (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.
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, 2019. Pursuant to this agreement, EVM was allocated $84,330 of the Fund’s operating expenses for the six months ended June 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, 2018, EVM earned $43,617 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 $10,642 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2018. 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. 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, 2018, 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, 2018 amounted to $269,493 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, 2018, the Fund paid or accrued to EVD $160,097 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, 2018, the Fund paid or accrued to EVD $4,558 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, 2018 amounted to $53,366 and $4,558 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, 2018, the Fund was informed that EVD received approximately $300 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 by the Portfolio, other than short-term obligations and investments transferred to the Fund, for the period from January 1, 2018 through May 11, 2018 aggregated $68,217,266 and $79,472,784, respectively. Purchases and sales of investments by the Fund, other than short-term obligations and investments acquired in the transfer of net assets from the Portfolio, for the period from May 14, 2018 through June 30, 2018 aggregated $18,374,506 and $22,543,887, respectively. Increases and decreases in the Fund’s investment in the Portfolio for the period from January 1, 2018 through May 11, 2018 were $2,793,641 and $366,650,976, respectively. Included in decreases is $352,496,467, representing
17 |
Eaton Vance
Growth Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
the Fund’s interest in the Portfolio as of the close of business on May 11, 2018, which was exchanged for the net assets of the Portfolio on that date having the same fair value. The Fund’s cost of its investment in the Portfolio on such date of $210,676,761 was carried forward to the net assets acquired from the Portfolio and no gain or loss was recognized on the exchange.
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, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 217,258 | 638,568 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 345,274 | ||||||
Redemptions | (537,766 | ) | (1,818,551 | ) | ||||
Net decrease | (320,508 | ) | (834,709 | ) | ||||
Class C | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 85,996 | 190,702 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 88,765 | ||||||
Redemptions | (198,563 | ) | (593,625 | ) | ||||
Net decrease | (112,567 | ) | (314,158 | ) | ||||
Class I | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 360,251 | 1,031,313 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 130,793 | ||||||
Redemptions | (349,223 | ) | (952,038 | ) | ||||
Net increase | 11,028 | 210,068 | ||||||
Class R | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 14,264 | 29,282 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 4,340 | ||||||
Redemptions | (19,610 | ) | (48,501 | ) | ||||
Net decrease | (5,346 | ) | (14,879 | ) |
8 Line of Credit
Effective June 8, 2018, 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 October 30, 2018. 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
18 |
Eaton Vance
Growth Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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, 2018.
9 Securities Lending Agreement
The Fund has established a securities lending agreement with State Street Bank and Trust Company (SSBT) as securities lending agent in which the Fund 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 Fund 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 Fund 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 Fund earns a negotiated lending fee from the borrower. A portion of the income earned by the Fund 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 Fund 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 Fund and cannot be sold or re-pledged by the Fund; accordingly, such collateral is not reflected in the Statement of Assets and Liabilities.
The Fund is subject to possible delay in the recovery of loaned securities. Pursuant to the securities lending agreement, SSBT has provided indemnification to the Fund in the event of default by a borrower with respect to a loan. The Fund bears the risk of loss with respect to the investment of cash collateral.
At June 30, 2018, 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 $16,157,840 and $16,529,916, respectively. Collateral received was comprised of non-cash U.S. Government securities. The securities lending transactions have no contractual maturity date and each of the Fund and borrower has the option to terminate a loan at any time.
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, 2018, 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 | $ | 350,211,999 | * | $ | — | $ | — | $ | 350,211,999 | |||||||
Short-Term Investments | — | 3,916,407 | — | 3,916,407 | ||||||||||||
Total Investments | $ | 350,211,999 | $ | 3,916,407 | $ | — | $ | 354,128,406 |
* | The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments. |
At June 30, 2018, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
19 |
Eaton Vance
Growth Fund
June 30, 2018
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 for a fund to enter into an investment advisory agreement with an investment adviser, the fund’s board of trustees, including a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), must approve the agreement and its terms at an in-person 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 (the “Eaton Vance Funds”) advised by either Eaton Vance Management or its affiliate, Boston Management and Research (together, “Eaton Vance”), held on February 7 and 8, 2018 (the “Meeting”), the Board, including a majority of the Independent Trustees, voted to approve a restructuring (the “Restructuring”) pursuant to which Eaton Vance Growth Fund (the “Fund”) would withdraw its assets in kind from the Growth Portfolio (the “Master Portfolio”) and terminate the Master Portfolio. The Board noted that the Fund is a feeder fund in a master/feeder structure and invests substantially all of its assets in the Master Portfolio, which has the same investment objective and investment strategies as those of the Fund. In light of this master/feeder structure, the Fund had not previously entered into any direct investment advisory agreement. Accordingly, in connection with the Restructuring, the Board, including a majority of the Independent Trustees, voted to approve an investment advisory agreement for the Fund with Boston Management and Research (the “Adviser”) (the “Fund Agreement”). The Board’s approval of the Fund Agreement allows the Adviser to manage the assets of the Fund directly upon the closing of the Restructuring.
Prior to voting its approval of the Fund Agreement, the Board received information from Eaton Vance that the Board considered reasonably necessary to evaluate the terms of the Fund Agreement. The Board considered information furnished by Eaton Vance for the Meeting relating specifically to the Fund, as well as information furnished for prior meetings of the Board and its committees, including information provided in connection with the annual contract review process for the Eaton Vance Funds, which occurred in April 2017 (the “2017 Approval Process”). As part of this review, the Board considered information provided by Eaton Vance and its affiliates during the 2017 Approval Process relating to the Board’s approval of the Master Portfolio’s investment advisory agreement (the “Master Portfolio Agreement”).
With respect to the approval of the Fund Agreement, the Board specifically noted that the terms of the Fund Agreement are substantially identical to the terms of the Master Portfolio Agreement, including the fee rates payable under the Fund Agreement, which are the same as the fee rates payable under the Master Portfolio Agreement.
Information considered by the Board relating to the Fund Agreement included, among other things, the following:
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees payable by the Master Portfolio with the fees payable by comparable funds identified by the data provider (“comparable funds”); |
• | A report from an independent data provider comparing the total expense ratio and its components of the Master Portfolio with those of comparable funds; |
• | A report from an independent data provider comparing the investment performance of the Fund to the investment performance of comparable funds over various time periods; |
• | Data comparing the investment performance of the Fund with the performance of benchmark indices over various time periods; |
• | Comparative information concerning the fees charged and the services provided by Eaton Vance 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 the Master Portfolio; |
• | Profitability analyses for Eaton Vance; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services to be provided to the Fund, including the investment strategies and processes to be employed; |
• | 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 policies and practices with respect to trading, including processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by Eaton Vance as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
Information about the Adviser
• | Reports detailing the financial results and condition of the Adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the Fund, and information relating to their compensation and responsibilities with respect to managing other mutual funds and, if applicable, investment accounts; |
• | The Code of Ethics of Eaton Vance, together with information relating to compliance with and the administration; |
20 |
Eaton Vance
Growth Fund
June 30, 2018
Board of Trustees’ Contract Approval — continued
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
• | Information concerning the resources devoted to compliance by the Adviser (including descriptions of various compliance programs); |
• | Descriptions of the business continuity and disaster recovery plans of the Adviser and its affiliates; |
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 the Adviser and its affiliates; and |
• | The terms of the Fund Agreement. |
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 Board concluded that the terms of the proposed Fund Agreement are in the interests of shareholders and, therefore, the Board, including a majority of the Independent Trustees, voted to approve the Fund Agreement.
Nature, Extent and Quality of Services
In considering whether to approve the Fund Agreement, the Board evaluated the nature, extent and quality of services to be 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 Master Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services. 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 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.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services to be provided by the Adviser, taken as a whole, will be appropriate and consistent with the terms of the Fund Agreement.
Performance, Management Fees, Profitability and Economies of Scale
The Board considered the fact that, as part of the 2017 Approval Process with respect to the Master Portfolio, the Board had concluded that (i) the performance of the Fund was satisfactory, (ii) the management fees were reasonable, (iii) the profits being realized by the Adviser and its affiliates were reasonable and (iv) the Fund shared in any benefits from economies of scale and the structure of the advisory fee, which includes breakpoints at several asset levels, allowed the Fund and the Master Portfolio to benefit from any economies of scale in the future. The Board concluded that the appointment of the Adviser as the investment adviser of the Fund is not expected to adversely affect the performance of the Fund, the reasonableness of the management fees payable to the Adviser by the Fund, the profits to be realized by the Adviser and its affiliates in managing the Fund or the extent to which the Fund can be expected to benefit from economies of scale in the future. The Board recognized that continuation of the Fund Agreement for an additional one-year term was being considered by the Board as part of the 2018 annual contract review process, which began in January 2018, and that updated information regarding each of these matters would be reviewed by the Board as part of that process.
21 |
Eaton Vance
Growth Fund
June 30, 2018
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 24, 2018, 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 2018. 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 fund’s investment strategies and policies; |
• | 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 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; |
22 |
Eaton Vance
Growth Fund
June 30, 2018
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, 2018, with respect to one or more funds, the Board met seven 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 nine 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 that at its meeting held on February 7 and 8, 2018, the Board, including a majority of the Independent Trustees, voted to approve a restructuring (the “Restructuring”) pursuant to which the Fund would withdraw its assets in-kind from the Portfolio and the Portfolio would terminate. The Board further considered that, in connection with the Restructuring, the Board, including a majority of the Independent Trustees, voted to approve an investment advisory agreement for the Fund with the Adviser (the “Fund Agreement”), which would become effective upon the Fund’s withdrawal of its
23 |
Eaton Vance
Growth Fund
June 30, 2018
Board of Trustees’ Contract Approval — continued
assets from the Portfolio (the “Effective Date”). The Board noted that its approval of the Fund Agreement will allow the Adviser to manage the assets of the Fund directly upon the Effective Date, which was expected to occur prior to the fiscal year end of 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.
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, 2017 for the Fund. In this regard, the Board noted that the performance of the Fund was lower than the median performance of the Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was lower than its benchmark index for the three-year period. On the basis of the foregoing, the performance of the Fund over other periods 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, 2017, 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 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.
24 |
Eaton Vance
Growth Fund
June 30, 2018
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
Richard F. Froio
Chief Compliance Officer
Trustees of Eaton Vance Growth Fund
William H. Park
Chairperson
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 |
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 Advisers International Ltd., 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.
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
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. |
7729 6.30.18
Eaton Vance
Large-Cap Value Fund
Semiannual Report
June 30, 2018
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, 2018
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 | 23 | |||
Officers and Trustees | 29 | |||
Important Notices | 30 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Performance1,2
Portfolio Managers Edward J. Perkin, CFA and Aaron S. Dunn, CFA
% 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 | 0.15 | % | 10.43 | % | 9.52 | % | 6.03 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | –5.61 | 4.07 | 8.23 | 5.41 | ||||||||||||||||||
Class C at NAV | 11/04/1994 | 09/23/1931 | –0.28 | 9.59 | 8.68 | 5.23 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | –1.27 | 8.59 | 8.68 | 5.23 | ||||||||||||||||||
Class I at NAV | 12/28/2004 | 09/23/1931 | 0.27 | 10.68 | 9.78 | 6.31 | ||||||||||||||||||
Class R at NAV | 02/18/2004 | 09/23/1931 | 0.02 | 10.12 | 9.23 | 5.77 | ||||||||||||||||||
Class R6 at NAV | 07/01/2014 | 09/23/1931 | 0.26 | 10.77 | 9.85 | 6.35 | ||||||||||||||||||
Russell 1000® Value Index | — | — | –1.69 | % | 6.77 | % | 10.34 | % | 8.49 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | Class R | Class R6 | |||||||||||||||||||
1.06 | % | 1.81 | % | 0.81 | % | 1.31 | % | 0.73 | % |
Fund Profile
Sector Allocation (% of net assets)4
Top 10 Holdings (% of net assets)4
Exxon Mobil Corp. | 4.2 | % | ||
Verizon Communications, Inc. | 4.0 | |||
Johnson & Johnson | 3.6 | |||
JPMorgan Chase & Co. | 3.2 | |||
Pfizer, Inc. | 2.9 | |||
Bank of America Corp. | 2.8 | |||
QUALCOMM, Inc. | 2.7 | |||
NextEra Energy, Inc. | 2.3 | |||
ConocoPhillips | 2.1 | |||
Simon Property Group, Inc. | 2.0 | |||
Total | 29.8 | % |
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, 2018
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 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
Important Notice to Shareholders
On June 15, 2018, the Fund received its pro-rata share of net assets from Large-Cap Value Portfolio, a separate registered investment company, in which the Fund invested and the Portfolio was liquidated. As of June 18, 2018, the Fund invests its assets directly. |
3 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
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, 2018 – June 30, 2018).
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 (1/1/18) | Ending Account Value (6/30/18) | Expenses Paid During Period* (1/1/18 – 6/30/18) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,001.50 | $ | 5.26 | 1.06 | % | ||||||||
Class C | $ | 1,000.00 | $ | 997.20 | $ | 8.96 | 1.81 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,002.70 | $ | 4.02 | 0.81 | % | ||||||||
Class R | $ | 1,000.00 | $ | 1,000.20 | $ | 6.50 | 1.31 | % | ||||||||
Class R6 | $ | 1,000.00 | $ | 1,002.60 | $ | 3.62 | 0.73 | % | ||||||||
Hypothetical | ||||||||||||||||
(5% return per year before expenses) | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,019.50 | $ | 5.31 | 1.06 | % | ||||||||
Class C | $ | 1,000.00 | $ | 1,015.80 | $ | 9.05 | 1.81 | % | ||||||||
Class I | $ | 1,000.00 | $ | 1,020.80 | $ | 4.06 | 0.81 | % | ||||||||
Class R | $ | 1,000.00 | $ | 1,018.30 | $ | 6.56 | 1.31 | % | ||||||||
Class R6 | $ | 1,000.00 | $ | 1,021.20 | $ | 3.66 | 0.73 | % |
* | 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, 2017. The Example reflects the expenses of both the Fund and the Portfolio for the period while the Fund was making investments directly in the Portfolio. |
4 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Portfolio of Investments (Unaudited)
Common Stocks — 98.7% |
| |||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 2.8% | ||||||||
Hexcel Corp. | 326,461 | $ | 21,670,481 | |||||
Textron, Inc. | 496,242 | 32,707,310 | ||||||
$ | 54,377,791 | |||||||
Air Freight & Logistics — 0.7% | ||||||||
C.H. Robinson Worldwide, Inc. | 167,030 | $ | 13,973,730 | |||||
$ | 13,973,730 | |||||||
Banks — 11.8% | ||||||||
Bank of America Corp. | 1,924,021 | $ | 54,238,152 | |||||
First Republic Bank | 151,514 | 14,665,040 | ||||||
JPMorgan Chase & Co. | 599,220 | 62,438,724 | ||||||
KeyCorp | 1,398,365 | 27,324,052 | ||||||
PNC Financial Services Group, Inc. (The) | 250,490 | 33,841,199 | ||||||
Sterling Bancorp | 447,835 | 10,524,123 | ||||||
U.S. Bancorp | 557,814 | 27,901,856 | ||||||
$ | 230,933,146 | |||||||
Beverages — 1.8% | ||||||||
PepsiCo, Inc. | 325,281 | $ | 35,413,342 | |||||
$ | 35,413,342 | |||||||
Biotechnology — 1.4% | ||||||||
Gilead Sciences, Inc. | 372,183 | $ | 26,365,444 | |||||
$ | 26,365,444 | |||||||
Capital Markets — 2.7% | ||||||||
Charles Schwab Corp. (The) | 314,524 | $ | 16,072,177 | |||||
Credit Suisse Group AG | 1,157,763 | 17,312,104 | ||||||
Raymond James Financial, Inc. | 210,755 | 18,830,959 | ||||||
$ | 52,215,240 | |||||||
Chemicals — 1.2% | ||||||||
DowDuPont, Inc. | 346,869 | $ | 22,865,605 | |||||
$ | 22,865,605 | |||||||
Construction & Engineering — 1.5% | ||||||||
Fluor Corp. | 579,200 | $ | 28,253,376 | |||||
$ | 28,253,376 |
Security | Shares | Value | ||||||
Consumer Finance — 1.6% | ||||||||
Ally Financial, Inc. | 457,040 | $ | 12,006,441 | |||||
Discover Financial Services | 276,450 | 19,464,844 | ||||||
$ | 31,471,285 | |||||||
Containers & Packaging — 1.3% | ||||||||
Ball Corp. | 737,584 | $ | 26,221,111 | |||||
$ | 26,221,111 | |||||||
Diversified Financial Services — 1.5% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 152,059 | $ | 28,381,812 | |||||
$ | 28,381,812 | |||||||
Diversified Telecommunication Services — 4.0% | ||||||||
Verizon Communications, Inc. | 1,562,425 | $ | 78,605,602 | |||||
$ | 78,605,602 | |||||||
Electric Utilities — 3.5% | ||||||||
Edison International | 384,051 | $ | 24,298,907 | |||||
NextEra Energy, Inc. | 267,953 | 44,756,189 | ||||||
$ | 69,055,096 | |||||||
Electronic Equipment, Instruments & Components — 1.5% | ||||||||
FLIR Systems, Inc. | 571,221 | $ | 29,686,355 | |||||
$ | 29,686,355 | |||||||
Energy Equipment & Services — 2.1% | ||||||||
Halliburton Co. | 592,966 | $ | 26,719,048 | |||||
Oceaneering International, Inc. | 564,067 | 14,361,146 | ||||||
$ | 41,080,194 | |||||||
Equity Real Estate Investment Trusts (REITs) — 6.7% | ||||||||
AvalonBay Communities, Inc. | 209,824 | $ | 36,066,647 | |||||
Boston Properties, Inc. | 198,143 | 24,851,095 | ||||||
Invitation Homes, Inc.(2) | 626,543 | 14,448,082 | ||||||
Public Storage | 69,658 | 15,802,614 | ||||||
Simon Property Group, Inc. | 226,322 | 38,517,741 | ||||||
$ | 129,686,179 | |||||||
Food Products — 3.1% | ||||||||
McCormick & Co., Inc.(2) | 190,275 | $ | 22,089,025 | |||||
Mondelez International, Inc., Class A | 924,874 | 37,919,834 | ||||||
$ | 60,008,859 |
5 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Health Care Equipment & Supplies — 2.6% | ||||||||
Baxter International, Inc. | 359,239 | $ | 26,526,208 | |||||
Boston Scientific Corp.(1) | 737,351 | 24,111,377 | ||||||
$ | 50,637,585 | |||||||
Health Care Providers & Services — 2.3% | ||||||||
Aetna, Inc. | 79,725 | $ | 14,629,537 | |||||
Anthem, Inc. | 125,751 | 29,932,511 | ||||||
$ | 44,562,048 | |||||||
Hotels, Restaurants & Leisure — 1.0% | ||||||||
Starbucks Corp. | 413,110 | $ | 20,180,424 | |||||
$ | 20,180,424 | |||||||
Household Products — 1.5% | ||||||||
Colgate-Palmolive Co. | 463,658 | $ | 30,049,675 | |||||
$ | 30,049,675 | |||||||
Industrial Conglomerates — 0.9% | ||||||||
General Electric Co. | 1,289,964 | $ | 17,556,410 | |||||
$ | 17,556,410 | |||||||
Insurance — 1.9% | ||||||||
American Financial Group, Inc. | 136,741 | $ | 14,676,411 | |||||
American International Group, Inc. | 411,082 | 21,795,568 | ||||||
$ | 36,471,979 | |||||||
Internet Software & Services — 1.6% | ||||||||
Alphabet, Inc., Class C(1) | 28,028 | $ | 31,269,438 | |||||
$ | 31,269,438 | |||||||
IT Services — 2.0% | ||||||||
Leidos Holdings, Inc. | 645,259 | $ | 38,070,281 | |||||
$ | 38,070,281 | |||||||
Machinery — 2.4% | ||||||||
Gardner Denver Holdings, Inc.(1) | 584,163 | $ | 17,168,550 | |||||
Parker-Hannifin Corp. | 190,695 | 29,719,816 | ||||||
$ | 46,888,366 | |||||||
Media — 1.3% | ||||||||
Walt Disney Co. (The) | 237,824 | $ | 24,926,333 | |||||
$ | 24,926,333 |
Security | Shares | Value | ||||||
Multi-Utilities — 2.9% | ||||||||
CMS Energy Corp. | 665,021 | $ | 31,442,193 | |||||
Sempra Energy | 221,169 | 25,679,933 | ||||||
$ | 57,122,126 | |||||||
Oil, Gas & Consumable Fuels — 8.9% | ||||||||
ConocoPhillips | 575,152 | $ | 40,042,082 | |||||
EOG Resources, Inc. | 253,821 | 31,582,947 | ||||||
Exxon Mobil Corp. | 982,580 | 81,288,843 | ||||||
Phillips 66 | 190,124 | 21,352,827 | ||||||
$ | 174,266,699 | |||||||
Pharmaceuticals — 8.9% | ||||||||
GlaxoSmithKline PLC ADR(2) | 368,379 | $ | 14,849,358 | |||||
Johnson & Johnson | 571,489 | 69,344,475 | ||||||
Merck & Co., Inc. | 557,535 | 33,842,375 | ||||||
Pfizer, Inc. | 1,544,223 | 56,024,410 | ||||||
$ | 174,060,618 | |||||||
Road & Rail — 1.7% | ||||||||
CSX Corp. | 531,832 | $ | 33,920,245 | |||||
$ | 33,920,245 | |||||||
Semiconductors & Semiconductor Equipment — 2.7% | ||||||||
QUALCOMM, Inc. | 924,431 | $ | 51,879,068 | |||||
$ | 51,879,068 | |||||||
Software — 1.0% | ||||||||
Oracle Corp. | 439,505 | $ | 19,364,590 | |||||
$ | 19,364,590 | |||||||
Specialty Retail — 3.2% | ||||||||
Home Depot, Inc. (The) | 122,741 | $ | 23,946,769 | |||||
Tiffany & Co. | 114,530 | 15,072,148 | ||||||
TJX Cos., Inc. (The) | 249,668 | 23,763,400 | ||||||
$ | 62,782,317 | |||||||
Technology Hardware, Storage & Peripherals — 1.0% | ||||||||
Apple, Inc. | 108,860 | $ | 20,151,075 | |||||
$ | 20,151,075 |
6 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Textiles, Apparel & Luxury Goods — 1.7% | ||||||||
Tapestry, Inc. | 481,618 | $ | 22,496,377 | |||||
VF Corp. | 127,725 | 10,412,142 | ||||||
$ | 32,908,519 | |||||||
Total Common Stocks | $ | 1,925,661,963 | ||||||
Short-Term Investments — 2.3% | ||||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 2.09%(3) | 45,811,175 | $ | 45,811,175 | |||||
Total Short-Term Investments | $ | 45,811,175 | ||||||
Total Investments — 101.0% | $ | 1,971,473,138 | ||||||
Other Assets, Less Liabilities — (1.0)% | $ | (19,452,810 | ) | |||||
Net Assets — 100.0% | $ | 1,952,020,328 |
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, 2018. The aggregate market value of securities on loan at June 30, 2018 was $15,832,961. |
(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, 2018. |
Abbreviations:
ADR | – | American Depositary Receipt |
7 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Unaffiliated investments, at value including $15,832,961 of securities on loan (identified cost, $1,689,239,850) | $ | 1,925,661,963 | ||
Affiliated investment, at value (identified cost, $45,811,175) | 45,811,175 | |||
Dividends receivable | 1,853,698 | |||
Dividends receivable from affiliated investment | 18,960 | |||
Receivable for Fund shares sold | 2,239,306 | |||
Securities lending income receivable | 2,600 | |||
Tax reclaims receivable | 2,926,685 | |||
Total assets | $ | 1,978,514,387 | ||
Liabilities |
| |||
Payable for investments purchased | $ | 18,673,921 | ||
Payable for Fund shares redeemed | 5,630,282 | |||
Payable to affiliates: | ||||
Investment adviser fee | 1,031,714 | |||
Distribution and service fees | 347,618 | |||
Trustees’ fees | 125 | |||
Accrued expenses | 810,399 | |||
Total liabilities | $ | 26,494,059 | ||
Net Assets | $ | 1,952,020,328 | ||
Sources of Net Assets |
| |||
Paid-in capital | $ | 1,629,422,713 | ||
Accumulated undistributed net investment income | 1,089,208 | |||
Accumulated net realized gain | 85,281,089 | |||
Net unrealized appreciation | 236,227,318 | |||
Total | $ | 1,952,020,328 |
8 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Statement of Assets and Liabilities (Unaudited) — continued
Class A Shares | June 30, 2018 | |||
Net Assets | $ | 664,729,346 | ||
Shares Outstanding | 34,217,623 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 19.43 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 20.62 | ||
Class C Shares |
| |||
Net Assets | $ | 213,023,629 | ||
Shares Outstanding | 10,955,405 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 19.44 | ||
Class I Shares |
| |||
Net Assets | $ | 806,507,231 | ||
Shares Outstanding | 41,356,612 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 19.50 | ||
Class R Shares |
| |||
Net Assets | $ | 72,525,636 | ||
Shares Outstanding | 3,743,499 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 19.37 | ||
Class R6 Shares |
| |||
Net Assets | $ | 195,234,486 | ||
Shares Outstanding | 10,005,729 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 19.51 |
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. |
9 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends | $ | 1,353,007 | ||
Dividends allocated from Portfolio (net of foreign taxes, $26,754) | 22,355,324 | |||
Dividends from affiliated investment | 56,361 | |||
Securities lending income, net | 1,489 | |||
Securities lending income allocated from Portfolio, net | 56,439 | |||
Expenses allocated from Portfolio | (6,193,837 | ) | ||
Total investment income | $ | 17,628,783 | ||
Expenses |
| |||
Investment adviser fee | $ | 442,663 | ||
Distribution and service fees | ||||
Class A | 863,848 | |||
Class C | 1,132,164 | |||
Class R | 196,710 | |||
Trustees’ fees and expenses | 250 | |||
Custodian fee | 152,003 | |||
Transfer and dividend disbursing agent fees | 837,211 | |||
Legal and accounting services | 35,910 | |||
Printing and postage | 82,993 | |||
Registration fees | 44,244 | |||
ReFlow liquidity program fees | 387,051 | |||
Miscellaneous | 36,651 | |||
Total expenses | $ | 4,211,698 | ||
Net investment income | $ | 13,417,085 | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 10,959,635 | (1) | |
Investment transactions allocated from Portfolio | 91,776,324 | (2) | ||
Investment transactions — affiliated investment | (2,960 | ) | ||
Foreign currency transactions allocated from Portfolio | (2,853 | ) | ||
Net realized gain | $ | 102,730,146 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | (29,986,594 | ) | |
Investments allocated from Portfolio | (82,761,152 | ) | ||
Investments — affiliated investment | 2,959 | |||
Foreign currency | 12,615 | |||
Foreign currency allocated from Portfolio | (45,872 | ) | ||
Net change in unrealized appreciation (depreciation) | $ | (112,778,044 | ) | |
Net realized and unrealized loss | $ | (10,047,898 | ) | |
Net increase in net assets from operations | $ | 3,369,187 |
(1) | Includes $2,460,660 of net realized gains from redemptions in-kind. |
(2) | Includes $35,452,860 of net realized gains from redemptions in-kind. |
10 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment income | $ | 13,417,085 | $ | 35,759,816 | ||||
Net realized gain | 102,730,146 | (1) | 323,293,196 | (2) | ||||
Net change in unrealized appreciation (depreciation) | (112,778,044 | ) | (29,685,699 | ) | ||||
Net increase in net assets from operations | $ | 3,369,187 | $ | 329,367,313 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (4,224,841 | ) | $ | (10,463,844 | ) | ||
Class C | (535,306 | ) | (1,260,961 | ) | ||||
Class I | (6,203,617 | ) | (19,104,475 | ) | ||||
Class R | (376,408 | ) | (928,683 | ) | ||||
Class R6 | (1,563,623 | ) | (1,275,109 | ) | ||||
From net realized gain | ||||||||
Class A | — | (33,556,769 | ) | |||||
Class C | — | (10,862,857 | ) | |||||
Class I | — | (45,867,557 | ) | |||||
Class R | — | (3,911,850 | ) | |||||
Class R6 | — | (4,264,518 | ) | |||||
Total distributions to shareholders | $ | (12,903,795 | ) | $ | (131,496,623 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 24,869,854 | $ | 63,821,918 | ||||
Class C | 2,656,646 | 10,371,659 | ||||||
Class I | 229,720,155 | 857,211,602 | ||||||
Class R | 4,212,559 | 11,146,267 | ||||||
Class R6 | 128,028,804 | 59,786,291 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 3,767,791 | 39,847,811 | ||||||
Class C | 475,241 | 10,620,399 | ||||||
Class I | 4,972,879 | 53,885,545 | ||||||
Class R | 344,119 | 4,419,613 | ||||||
Class R6 | 1,563,623 | 5,539,255 | ||||||
Cost of shares redeemed | ||||||||
Class A | (101,642,253 | ) | (373,123,326 | ) | ||||
Class C | (30,197,880 | ) | (101,297,200 | ) | ||||
Class I | (457,759,540 | ) | (1,529,195,227 | ) | ||||
Class R | (18,280,277 | ) | (37,258,754 | ) | ||||
Class R6 | (19,309,020 | ) | (22,731,835 | ) | ||||
Net decrease in net assets from Fund share transactions | $ | (226,577,299 | ) | $ | (946,955,982 | ) | ||
Net decrease in net assets | $ | (236,111,907 | ) | $ | (749,085,292 | ) | ||
Net Assets |
| |||||||
At beginning of period | $ | 2,188,132,235 | $ | 2,937,217,527 | ||||
At end of period | $ | 1,952,020,328 | $ | 2,188,132,235 | ||||
Accumulated undistributed net investment income included in net assets |
| |||||||
At end of period | $ | 1,089,208 | $ | 575,918 |
(1) | Includes $37,913,520 of net realized gains from redemptions in-kind. |
(2) | Includes $116,142,543 of net realized gains from redemptions in-kind. |
11 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 19.520 | $ | 18.030 | $ | 16.690 | $ | 18.740 | $ | 23.910 | $ | 19.500 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.123 | $ | 0.246 | $ | 0.279 | $ | 0.246 | $ | 0.317 | $ | 0.267 | ||||||||||||
Net realized and unrealized gain (loss) | (0.093 | ) | 2.393 | 1.301 | (0.456 | ) | 2.001 | 5.402 | ||||||||||||||||
Total income (loss) from operations | $ | 0.030 | $ | 2.639 | $ | 1.580 | $ | (0.210 | ) | $ | 2.318 | $ | 5.669 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.120 | ) | $ | (0.240 | ) | $ | (0.240 | ) | $ | (0.260 | ) | $ | (0.320 | ) | $ | (0.266 | ) | ||||||
From net realized gain | — | (0.909 | ) | — | (1.580 | ) | (7.168 | ) | (0.993 | ) | ||||||||||||||
Total distributions | $ | (0.120 | ) | $ | (1.149 | ) | $ | (0.240 | ) | $ | (1.840 | ) | $ | (7.488 | ) | $ | (1.259 | ) | ||||||
Net asset value — End of period | $ | 19.430 | $ | 19.520 | $ | 18.030 | $ | 16.690 | $ | 18.740 | $ | 23.910 | ||||||||||||
Total Return(2) | 0.15 | %(3) | 14.80 | % | 9.56 | % | (1.08 | )% | 10.96 | % | 29.34 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 664,729 | $ | 741,193 | $ | 942,192 | $ | 1,127,754 | $ | 1,486,142 | $ | 2,912,022 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.06 | %(6) | 1.06 | % | 1.06 | % | 1.05 | % | 1.01 | % | 0.99 | % | ||||||||||||
Net investment income | 1.27 | %(6) | 1.31 | % | 1.67 | % | 1.33 | % | 1.29 | % | 1.20 | % | ||||||||||||
Portfolio Turnover of the Portfolio(7) | 34 | %(3) | 105 | % | 94 | % | 98 | % | 75 | % | 49 | % | ||||||||||||
Portfolio Turnover of the Fund | 5 | %(3)(8) | — | — | — | — | — |
(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 for the period while the Fund was investing in the Portfolio. |
(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. |
(7) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(8) | For the period from June 18, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
12 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 19.540 | $ | 18.040 | $ | 16.700 | $ | 18.750 | $ | 23.920 | $ | 19.510 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.051 | $ | 0.107 | $ | 0.154 | $ | 0.107 | $ | 0.132 | $ | 0.100 | ||||||||||||
Net realized and unrealized gain (loss) | (0.105 | ) | 2.394 | 1.298 | (0.453 | ) | 1.999 | 5.401 | ||||||||||||||||
Total income (loss) from operations | $ | (0.054 | ) | $ | 2.501 | $ | 1.452 | $ | (0.346 | ) | $ | 2.131 | $ | 5.501 | ||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.046 | ) | $ | (0.092 | ) | $ | (0.112 | ) | $ | (0.124 | ) | $ | (0.133 | ) | $ | (0.098 | ) | ||||||
From net realized gain | — | (0.909 | ) | — | (1.580 | ) | (7.168 | ) | (0.993 | ) | ||||||||||||||
Total distributions | $ | (0.046 | ) | $ | (1.001 | ) | $ | (0.112 | ) | $ | (1.704 | ) | $ | (7.301 | ) | $ | (1.091 | ) | ||||||
Net asset value — End of period | $ | 19.440 | $ | 19.540 | $ | 18.040 | $ | 16.700 | $ | 18.750 | $ | 23.920 | ||||||||||||
Total Return(2) | (0.28 | )%(3) | 13.96 | % | 8.74 | % | (1.82 | )% | 10.12 | % | 28.37 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 213,024 | $ | 241,192 | $ | 300,456 | $ | 345,531 | $ | 419,453 | $ | 454,829 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.81 | %(6) | 1.81 | % | 1.81 | % | 1.80 | % | 1.76 | % | 1.74 | % | ||||||||||||
Net investment income | 0.52 | %(6) | 0.57 | % | 0.92 | % | 0.58 | % | 0.54 | % | 0.45 | % | ||||||||||||
Portfolio Turnover of the Portfolio(7) | 34 | %(3) | 105 | % | 94 | % | 98 | % | 75 | % | 49 | % | ||||||||||||
Portfolio Turnover of the Fund | 5 | %(3)(8) | — | — | — | — | — |
(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 for the period while the Fund was investing in the Portfolio. |
(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. |
(7) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(8) | For the period from June 18, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
13 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 19.590 | $ | 18.090 | $ | 16.750 | $ | 18.800 | $ | 23.970 | $ | 19.550 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.147 | $ | 0.296 | $ | 0.323 | $ | 0.293 | $ | 0.383 | $ | 0.326 | ||||||||||||
Net realized and unrealized gain (loss) | (0.092 | ) | 2.401 | 1.300 | (0.458 | ) | 2.002 | 5.411 | ||||||||||||||||
Total income (loss) from operations | $ | 0.055 | $ | 2.697 | $ | 1.623 | $ | (0.165 | ) | $ | 2.385 | $ | 5.737 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.145 | ) | $ | (0.288 | ) | $ | (0.283 | ) | $ | (0.305 | ) | $ | (0.387 | ) | $ | (0.324 | ) | ||||||
From net realized gain | — | (0.909 | ) | — | (1.580 | ) | (7.168 | ) | (0.993 | ) | ||||||||||||||
Total distributions | $ | (0.145 | ) | $ | (1.197 | ) | $ | (0.283 | ) | $ | (1.885 | ) | $ | (7.555 | ) | $ | (1.317 | ) | ||||||
Net asset value — End of period | $ | 19.500 | $ | 19.590 | $ | 18.090 | $ | 16.750 | $ | 18.800 | $ | 23.970 | ||||||||||||
Total Return(2) | 0.27 | %(3) | 15.10 | % | 9.80 | % | (0.83 | )% | 11.22 | % | 29.65 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 806,507 | $ | 1,032,300 | $ | 1,555,075 | $ | 1,664,998 | $ | 1,969,601 | $ | 2,892,359 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 0.81 | %(6) | 0.81 | % | 0.81 | % | 0.80 | % | 0.76 | % | 0.74 | % | ||||||||||||
Net investment income | 1.52 | %(6) | 1.57 | % | 1.92 | % | 1.58 | % | 1.55 | % | 1.46 | % | ||||||||||||
Portfolio Turnover of the Portfolio(7) | 34 | %(3) | 105 | % | 94 | % | 98 | % | 75 | % | 49 | % | ||||||||||||
Portfolio Turnover of the Fund | 5 | %(3)(8) | — | — | — | — | — |
(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 for the period while the Fund was investing in the Portfolio. |
(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. |
(7) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(8) | For the period from June 18, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
14 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Financial Highlights — continued
Class R | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 19.460 | $ | 17.980 | $ | 16.650 | $ | 18.690 | $ | 23.870 | $ | 19.470 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.098 | $ | 0.199 | $ | 0.237 | $ | 0.199 | $ | 0.255 | $ | 0.212 | ||||||||||||
Net realized and unrealized gain (loss) | (0.093 | ) | 2.382 | 1.292 | (0.445 | ) | 1.993 | 5.391 | ||||||||||||||||
Total income (loss) from operations | $ | 0.005 | $ | 2.581 | $ | 1.529 | $ | (0.246 | ) | $ | 2.248 | $ | 5.603 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.095 | ) | $ | (0.192 | ) | $ | (0.199 | ) | $ | (0.214 | ) | $ | (0.260 | ) | $ | (0.210 | ) | ||||||
From net realized gain | — | (0.909 | ) | — | (1.580 | ) | (7.168 | ) | (0.993 | ) | ||||||||||||||
Total distributions | $ | (0.095 | ) | $ | (1.101 | ) | $ | (0.199 | ) | $ | (1.794 | ) | $ | (7.428 | ) | $ | (1.203 | ) | ||||||
Net asset value — End of period | $ | 19.370 | $ | 19.460 | $ | 17.980 | $ | 16.650 | $ | 18.690 | $ | 23.870 | ||||||||||||
Total Return(2) | 0.02 | %(3) | 14.50 | % | 9.26 | % | (1.33 | )% | 10.71 | % | 29.01 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 72,526 | $ | 86,706 | $ | 101,010 | $ | 109,468 | $ | 151,329 | $ | 162,242 | ||||||||||||
Ratios (as a percentage of average daily net assets):(4) | ||||||||||||||||||||||||
Expenses(5) | 1.31 | %(6) | 1.31 | % | 1.31 | % | 1.30 | % | 1.26 | % | 1.24 | % | ||||||||||||
Net investment income | 1.02 | %(6) | 1.06 | % | 1.42 | % | 1.08 | % | 1.04 | % | 0.95 | % | ||||||||||||
Portfolio Turnover of the Portfolio(7) | 34 | %(3) | 105 | % | �� | 94 | % | 98 | % | 75 | % | 49 | % | |||||||||||
Portfolio Turnover of the Fund | 5 | %(3)(8) | — | — | — | — | — |
(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 for the period while the Fund was investing in the Portfolio. |
(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. |
(7) | Portfolio turnover represents the rate of portfolio activity for the period while the Fund was investing in the Portfolio. |
(8) | For the period from June 18, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
15 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Financial Highlights — continued
Class R6 | ||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | Period Ended December 31, 2014(1) | ||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||
Net asset value — Beginning of period | $ | 19.610 | $ | 18.100 | $ | 16.760 | $ | 18.810 | $ | 25.890 | ||||||||||
Income (Loss) From Operations | ||||||||||||||||||||
Net investment income(2) | $ | 0.158 | $ | 0.311 | $ | 0.339 | $ | 0.321 | $ | 0.194 | ||||||||||
Net realized and unrealized gain (loss) | (0.105 | ) | 2.413 | 1.301 | (0.469 | ) | 0.089 | |||||||||||||
Total income (loss) from operations | $ | 0.053 | $ | 2.724 | $ | 1.640 | $ | (0.148 | ) | $ | 0.283 | |||||||||
Less Distributions | ||||||||||||||||||||
From net investment income | $ | (0.153 | ) | $ | (0.305 | ) | $ | (0.300 | ) | $ | (0.322 | ) | $ | (0.195 | ) | |||||
From net realized gain | — | (0.909 | ) | — | (1.580 | ) | (7.168 | ) | ||||||||||||
Total distributions | $ | (0.153 | ) | $ | (1.214 | ) | $ | (0.300 | ) | $ | (1.902 | ) | $ | (7.363 | ) | |||||
Net asset value — End of period | $ | 19.510 | $ | 19.610 | $ | 18.100 | $ | 16.760 | $ | 18.810 | ||||||||||
Total Return(3) | 0.26 | %(4) | 15.25 | % | 9.90 | % | (0.79 | )% | 2.28 | %(4) | ||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 195,234 | $ | 86,742 | $ | 38,485 | $ | 32,525 | $ | 1 | ||||||||||
Ratios (as a percentage of average daily net assets):(5) | ||||||||||||||||||||
Expenses(6) | 0.73 | %(7) | 0.73 | % | 0.71 | % | 0.71 | % | 0.65 | %(7) | ||||||||||
Net investment income | 1.63 | %(7) | 1.64 | % | 2.01 | % | 1.73 | % | 1.54 | %(7) | ||||||||||
Portfolio Turnover of the Portfolio(8) | 34 | %(4) | 105 | % | 94 | % | 98 | % | 75 | %(9) | ||||||||||
Portfolio Turnover of the Fund | 5 | %(4)(10) | — | — | — | — |
(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 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 Portfolio’s year ended December 31, 2014. |
(10) | For the period from June 18, 2018 through June 30, 2018 when the Fund was making investments directly in securities. |
16 | See Notes to Financial Statements. |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
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’s investment objective is to seek total return. Prior to the close of business on June 15, 2018, the Fund invested 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. As of the close of business on June 15, 2018, the Fund received its pro-rata share of net assets from the Portfolio as part of a complete liquidation of the Portfolio. As of June 18, 2018, the Fund invests directly in securities. 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 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.
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 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. 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 Fund’s understanding of the applicable countries’ tax rules and rates. In consideration of recent decisions rendered by European courts, the Portfolio 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
17 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, no amounts are reflected in the Fund’s financial statements for such outstanding reclaims. Prior to the close of business on June 15, 2018, the net investment income or loss consisted 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.
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, 2018, 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 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, 2018 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.
The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2018, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 1,742,135,921 | ||
Gross unrealized appreciation | $ | 257,792,954 | ||
Gross unrealized depreciation | (28,455,737 | ) | ||
Net unrealized appreciation | $ | 229,337,217 |
18 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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. Pursuant to the investment advisory agreement dated June 15, 2018 between the Fund and BMR, the fee is computed at an annual rate of 0.625% of the Fund’s average daily net assets up to $2 billion, 0.60% on net assets of $2 billion but less than $5 billion and at reduced rates on daily net assets of $5 billion and over, and is payable monthly. Prior to the close of business on June 15, 2018, when the Fund’s assets were invested in the Portfolio, the Fund was allocated its share of the Portfolio’s investment adviser fee. The Portfolio paid advisory fees to BMR on the same fee schedule as that of the Fund as described above. For the six months ended June 30, 2018, the Fund’s allocated portion of the investment adviser fee paid by the Portfolio amounted to $5,980,401 and the investment adviser fee paid by the Fund amounted to $442,663. For the six months ended June 30, 2018, the Fund’s investment adviser fee, including the investment adviser fee allocated from the Portfolio, was 0.624% (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.
EVM serves as the administrator of the Fund, but receives no compensation. 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, 2018, EVM earned $59,510 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 $10,683 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2018. 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. 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, 2018, 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, 2018 amounted to $863,848 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, 2018, the Fund paid or accrued to EVD $849,123 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, 2018, the Fund paid or accrued to EVD $98,355 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, 2018 amounted to $283,041 and $98,355 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, 2018, the Fund was informed that EVD received approximately $2,000 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 by the Portfolio, other than short-term obligations, in-kind transactions and investments transferred to the Fund, for the period from January 1, 2018 through June 15, 2018 aggregated $695,714,647 and $752,821,499, respectively. In-kind sales for the period from January 1, 2018 through June 15, 2018 aggregated $179,755,465. Purchases and sales of investments by the Fund, other than short-term obligations,
19 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
in-kind transactions and investments acquired in the transfer of net assets from the Portfolio, for the period from June 18, 2018 through June 30, 2018 aggregated $111,897,568 and $94,803,913, respectively. In-kind sales for the period from June 18, 2018 through June 30, 2018 aggregated $21,119,953. Increases and decreases in the Fund’s investment in the Portfolio for the period from January 1, 2018 through June 15, 2018 were $1,274,998 and $2,219,167,033, respectively. Included in decreases is $1,996,862,054, representing the Fund’s interest in the Portfolio as of the close of business on June 15, 2018, which was exchanged for the net assets of the Portfolio on that date having the same fair value. The Fund’s cost of its investment in the Portfolio on such date of $1,730,663,716 was carried forward to the net assets acquired from the Portfolio and no gain or loss was recognized on the exchange.
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, 2018 | Year Ended December 31, 2017 | ||||||
Sales | 1,274,872 | 3,415,398 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 191,029 | 2,080,537 | ||||||
Redemptions | (5,222,801 | ) | (19,792,778 | ) | ||||
Net decrease | (3,756,900 | ) | (14,296,843 | ) | ||||
Class C | Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | ||||||
Sales | 135,898 | 553,201 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 24,069 | 551,526 | ||||||
Redemptions | (1,550,436 | ) | (5,418,102 | ) | ||||
Net decrease | (1,390,469 | ) | (4,313,375 | ) | ||||
Class I | Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | ||||||
Sales | 11,731,102 | 45,453,216 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 251,228 | 2,809,201 | ||||||
Redemptions | (23,312,974 | ) | (81,538,166 | ) | ||||
Net decrease | (11,330,644 | ) | (33,275,749 | ) | ||||
Class R | Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | ||||||
Sales | 217,554 | 596,258 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 17,493 | 231,042 | ||||||
Redemptions | (946,031 | ) | (1,991,331 | ) | ||||
Net decrease | (710,984 | ) | (1,164,031 | ) |
20 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
Class R6 | Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | ||||||
Sales | 6,484,824 | 3,193,361 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 78,934 | 287,615 | ||||||
Redemptions | (982,230 | ) | (1,182,622 | ) | ||||
Net increase | 5,581,528 | 2,298,354 |
8 Securities Lending Agreement
The Fund has established a securities lending agreement with State Street Bank and Trust Company (SSBT) as securities lending agent in which the Fund 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 Fund 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 Fund 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 Fund earns a negotiated lending fee from the borrower. A portion of the income earned by the Fund 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 Fund 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 Fund and cannot be sold or re-pledged by the Fund; accordingly, such collateral is not reflected in the Statement of Assets and Liabilities.
The Fund is subject to possible delay in the recovery of loaned securities. Pursuant to the securities lending agreement, SSBT has provided indemnification to the Fund in the event of default by a borrower with respect to a loan. The Fund bears the risk of loss with respect to the investment of cash collateral.
At June 30, 2018, the value of the securities loaned (all common stocks) and the value of the collateral received, which exceeded the value of the securities loaned, amounted to $15,832,961 and $16,005,390, respectively. Collateral received was comprised of U.S. Government and/or agencies securities. The securities lending transactions have no contractual maturity date and each of the Fund and borrower has the option to terminate a loan at any time.
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.
21 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
At June 30, 2018, 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 | ||||||||||||||||
Consumer Discretionary | $ | 140,797,593 | $ | — | $ | — | $ | 140,797,593 | ||||||||
Consumer Staples | 125,471,876 | — | — | 125,471,876 | ||||||||||||
Energy | 215,346,893 | — | — | 215,346,893 | ||||||||||||
Financials | 362,161,358 | 17,312,104 | — | 379,473,462 | ||||||||||||
Health Care | 295,625,695 | — | — | 295,625,695 | ||||||||||||
Industrials | 194,969,918 | — | — | 194,969,918 | ||||||||||||
Information Technology | 190,420,807 | — | — | 190,420,807 | ||||||||||||
Materials | 49,086,716 | — | — | 49,086,716 | ||||||||||||
Real Estate | 129,686,179 | — | — | 129,686,179 | ||||||||||||
Telecommunication Services | 78,605,602 | — | — | 78,605,602 | ||||||||||||
Utilities | 126,177,222 | — | — | 126,177,222 | ||||||||||||
Total Common Stocks | $ | 1,908,349,859 | $ | 17,312,104 | * | $ | — | $ | 1,925,661,963 | |||||||
Short-Term Investments | $ | — | $ | 45,811,175 | $ | — | $ | 45,811,175 | ||||||||
Total Investments | $ | 1,908,349,859 | $ | 63,123,279 | $ | — | $ | 1,971,473,138 |
* | 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. |
At June 30, 2018, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
22 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
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 for a fund to enter into an investment advisory agreement with an investment adviser, the fund’s board of trustees, including a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), must approve the agreement and its terms at an in-person 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 (the “Eaton Vance Funds”) advised by either Eaton Vance Management or its affiliate, Boston Management and Research (together, “Eaton Vance”), held on February 7 and 8, 2018 (the “Meeting”), the Board, including a majority of the Independent Trustees, voted to approve a restructuring (the “Restructuring”) pursuant to which Eaton Vance Large-Cap Value Fund (the “Fund”) would withdraw its assets in kind from the Large-Cap Value Portfolio (the “Master Portfolio”) and terminate the Master Portfolio. The Board noted that the Fund is a feeder fund in a master/feeder structure and invests substantially all of its assets in the Master Portfolio, which has the same investment objective and investment strategies as those of the Fund. In light of this master/feeder structure, the Fund had not previously entered into any direct investment advisory agreement. Accordingly, in connection with the Restructuring, the Board, including a majority of the Independent Trustees, voted to approve an investment advisory agreement for the Fund with Boston Management and Research (the “Adviser”) (the “Fund Agreement”). The Board’s approval of the Fund Agreement allows the Adviser to manage the assets of the Fund directly upon the closing of the Restructuring.
Prior to voting its approval of the Fund Agreement, the Board received information from Eaton Vance that the Board considered reasonably necessary to evaluate the terms of the Fund Agreement. The Board considered information furnished by Eaton Vance for the Meeting relating specifically to the Fund, as well as information furnished for prior meetings of the Board and its committees, including information provided in connection with the annual contract review process for the Eaton Vance Funds, which occurred in April 2017 (the “2017 Approval Process”). As part of this review, the Board considered information provided by Eaton Vance and its affiliates during the 2017 Approval Process relating to the Board’s approval of the Master Portfolio’s investment advisory agreement (the “Master Portfolio Agreement”).
With respect to the approval of the Fund Agreement, the Board specifically noted that the terms of the Fund Agreement are substantially identical to the terms of the Master Portfolio Agreement, including the fee rates payable under the Fund Agreement, which are the same as the fee rates payable under the Master Portfolio Agreement.
Information considered by the Board relating to the Fund Agreement included, among other things, the following:
Information about Fees, Performance and Expenses
• | A report from an independent data provider comparing the advisory and related fees payable by the Master Portfolio with the fees payable by comparable funds identified by the data provider (“comparable funds”); |
• | A report from an independent data provider comparing the total expense ratio and its components of the Master Portfolio with those of comparable funds; |
• | A report from an independent data provider comparing the investment performance of the Fund to the investment performance of comparable funds over various time periods; |
• | Data comparing the investment performance of the Fund with the performance of benchmark indices over various time periods; |
• | Comparative information concerning the fees charged and the services provided by Eaton Vance 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 the Master Portfolio; |
• | Profitability analyses for Eaton Vance; |
Information about Portfolio Management and Trading
• | Descriptions of the investment management services to be provided to the Fund, including the investment strategies and processes to be employed; |
• | 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 policies and practices with respect to trading, including processes for monitoring best execution of portfolio transactions; |
• | Information about the allocation of brokerage transactions and the benefits received by Eaton Vance as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and policies with respect to “soft dollars”; |
Information about the Adviser
• | Reports detailing the financial results and condition of the Adviser; |
• | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the Fund, and information relating to their compensation and responsibilities with respect to managing other mutual funds and, if applicable, investment accounts; |
• | The Code of Ethics of Eaton Vance, together with information relating to compliance with and the administration; |
• | Policies and procedures relating to proxy voting and the handling of corporate actions and class actions; |
23 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Board of Trustees’ Contract Approval — continued
• | Information concerning the resources devoted to compliance by the Adviser (including descriptions of various compliance programs); |
• | Descriptions of the business continuity and disaster recovery plans of the Adviser and its affiliates; |
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 the Adviser and its affiliates; and |
• | The terms of the Fund Agreement. |
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 Board concluded that the terms of the proposed Fund Agreement are in the interests of shareholders and, therefore, the Board, including a majority of the Independent Trustees, voted to approve the Fund Agreement.
Nature, Extent and Quality of Services
In considering whether to approve the Fund Agreement, the Board evaluated the nature, extent and quality of services to be 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 Master Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services. 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 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.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services to be provided by the Adviser, taken as a whole, will be appropriate and consistent with the terms of the Fund Agreement.
Performance, Management Fees, Profitability and Economies of Scale
The Board considered the fact that, as part of the 2017 Approval Process with respect to the Master Portfolio, the Board had concluded that (i) the performance of the Fund was satisfactory, (ii) the management fees were reasonable, (iii) the profits being realized by the Adviser and its affiliates were reasonable and (iv) the Fund shared in any benefits from economies of scale and the structure of the advisory fee, which includes breakpoints at several asset levels, allowed the Fund and the Master Portfolio to benefit from any economies of scale in the future. The Board concluded that the appointment of the Adviser as the investment adviser of the Fund is not expected to adversely affect the performance of the Fund, the reasonableness of the management fees payable to the Adviser by the Fund, the profits to be realized by the Adviser and its affiliates in managing the Fund or the extent to which the Fund can be expected to benefit from economies of scale in the future. The Board recognized that continuation of the Fund Agreement for an additional one-year term was being considered by the Board as part of the 2018 annual contract review process, which began in January 2018, and that updated information regarding each of these matters would be reviewed by the Board as part of that process.
24 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
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 24, 2018, 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 2018. 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 fund’s investment strategies and policies; |
• | 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 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; |
25 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
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, 2018, with respect to one or more funds, the Board met seven 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 nine 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, 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 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.
26 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
Board of Trustees’ Contract Approval — continued
The Board considered that at its meeting held on February 7 and 8, 2018, the Board, including a majority of the Independent Trustees, voted to approve a restructuring (the “Restructuring”) pursuant to which the Fund would withdraw its assets in-kind from the Portfolio and the Portfolio would terminate. The Board further considered that, in connection with the Restructuring, the Board, including a majority of the Independent Trustees, voted to approve an investment advisory agreement for the Fund with the Adviser (the “Fund Agreement”), which would become effective upon the Fund’s withdrawal of its assets from the Portfolio (the “Effective Date”). The Board noted that its approval of the Fund Agreement will allow the Adviser to manage the assets of the Fund directly upon the Effective Date, which was expected to occur prior to the fiscal year end of 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.
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, 2017 for the Fund. In this regard, the Board noted that the performance of the Fund was lower than the median performance of the Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was lower than its benchmark index for the three-year period. The Board considered information from the Adviser regarding the reasons for the underperformance, including securities selection, and noted certain actions being taken by the Adviser to address Fund performance. In this regard, the Board also noted that the Fund’s performance record had improved relative to its peers in more recent periods. The Board 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 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, 2017, 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.
27 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
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.
28 |
Eaton Vance
Large-Cap Value Fund
June 30, 2018
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
Richard F. Froio
Chief Compliance Officer
Trustees of Eaton Vance Large-Cap Value Fund
William H. Park
Chairperson
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 |
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 Advisers International Ltd., 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.
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
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. |
7702 6.30.18
Eaton Vance
Real Estate Fund
Semiannual Report
June 30, 2018
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, 2018
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, 2018
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 | 1.58 | % | 4.73 | % | 8.30 | % | 8.11 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | –4.26 | –1.27 | 7.03 | 7.47 | ||||||||||||||||||
Class I at NAV | 04/28/2006 | 04/28/2006 | 1.72 | 5.08 | 8.55 | 8.32 | ||||||||||||||||||
Dow Jones U.S. Select Real Estate Securities Index | — | — | 1.82 | % | 4.23 | % | 8.26 | % | 7.54 | % | ||||||||||||||
S&P 500 Index | — | — | 2.65 | 14.37 | 13.41 | 10.16 | ||||||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class I | ||||||||||||||||||||||
Gross | 1.42 | % | 1.17 | % | ||||||||||||||||||||
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 | % | ||
AvalonBay Communities, Inc. | 6.6 | |||
Public Storage | 6.0 | |||
Boston Properties, Inc. | 5.5 | |||
Equity Residential | 5.2 | |||
ProLogis, Inc. | 3.4 | |||
Mid-America Apartment Communities, Inc. | 3.2 | |||
Essex Property Trust, Inc. | 3.0 | |||
Invitation Homes, Inc. | 2.9 | |||
Regency Centers Corp. | 2.8 | |||
Total | 48.5 | % |
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, 2018
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 4/30/19. 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 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Real Estate Fund
June 30, 2018
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, 2018 – June 30, 2018).
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 (1/1/18) | Ending Account Value (6/30/18) | Expenses Paid During Period* (1/1/18 – 6/30/18) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,015.80 | $ | 6.25 | ** | 1.25 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,017.20 | $ | 5.00 | ** | 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, 2017. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
4 |
Eaton Vance
Real Estate Fund
June 30, 2018
Portfolio of Investments (Unaudited)
Common Stocks — 98.1% |
| |||||||
Security | Shares | Value | ||||||
Hotels, Restaurants & Leisure — 2.4% | ||||||||
Hilton Worldwide Holdings, Inc. | 8,713 | $ | 689,721 | |||||
Marriott International, Inc., Class A | 5,440 | 688,704 | ||||||
$ | 1,378,425 | |||||||
Other — 0.9% | ||||||||
CBRE Group, Inc., Class A(1) | 5,863 | $ | 279,900 | |||||
Jones Lang LaSalle, Inc. | 1,626 | 269,900 | ||||||
$ | 549,800 | |||||||
Real Estate Investment Trusts — 94.8% |
| |||||||
Security | Shares | Value | ||||||
Diversified, Specialty & Other — 9.6% | ||||||||
CoreSite Realty Corp. | 8,639 | $ | 957,374 | |||||
Digital Realty Trust, Inc. | 7,948 | 886,838 | ||||||
National Retail Properties, Inc. | 26,191 | 1,151,356 | ||||||
PS Business Parks, Inc. | 3,720 | 478,020 | ||||||
STORE Capital Corp. | 30,520 | 836,248 | ||||||
Vornado Realty Trust | 17,240 | 1,274,381 | ||||||
$ | 5,584,217 | |||||||
Health Care — 6.3% | ||||||||
HCP, Inc. | 32,570 | $ | 840,957 | |||||
Physicians Realty Trust | 16,825 | 268,190 | ||||||
Ventas, Inc. | 20,743 | 1,181,314 | ||||||
Welltower, Inc. | 22,111 | 1,386,139 | ||||||
$ | 3,676,600 | |||||||
Hotels & Resorts — 3.9% | ||||||||
Apple Hospitality REIT, Inc. | 30,289 | $ | 541,567 | |||||
DiamondRock Hospitality Co. | 35,031 | 430,181 | ||||||
Summit Hotel Properties, Inc. | 24,070 | 344,442 | ||||||
Sunstone Hotel Investors, Inc. | 57,134 | 949,567 | ||||||
$ | 2,265,757 | |||||||
Industrial — 8.8% | ||||||||
DCT Industrial Trust, Inc. | 8,136 | $ | 542,915 | |||||
Duke Realty Corp. | 28,679 | 832,552 | ||||||
EastGroup Properties, Inc. | 6,357 | 607,475 | ||||||
First Industrial Realty Trust, Inc. | 18,202 | 606,855 | ||||||
ProLogis, Inc. | 29,838 | 1,960,058 | ||||||
Rexford Industrial Realty, Inc. | 17,949 | 563,419 | ||||||
$ | 5,113,274 |
Security | Shares | Value | ||||||
Malls and Factory Outlets — 12.1% | ||||||||
GGP, Inc. | 29,779 | $ | 608,385 | |||||
Pennsylvania Real Estate Investment Trust | 33,223 | 365,121 | ||||||
Simon Property Group, Inc. | 33,865 | 5,763,484 | ||||||
Tanger Factory Outlet Centers, Inc. | 13,601 | 319,487 | ||||||
$ | 7,056,477 | |||||||
Multifamily — 24.2% | ||||||||
American Campus Communities, Inc. | 11,482 | $ | 492,348 | |||||
American Homes 4 Rent, Class A | 20,701 | 459,148 | ||||||
AvalonBay Communities, Inc. | 22,263 | 3,826,787 | ||||||
Camden Property Trust | 7,625 | 694,866 | ||||||
Education Realty Trust, Inc. | 8,251 | 342,417 | ||||||
Equity Residential | 47,634 | 3,033,810 | ||||||
Essex Property Trust, Inc. | 7,347 | 1,756,447 | ||||||
Invitation Homes, Inc. | 72,547 | 1,672,934 | ||||||
Mid-America Apartment Communities, Inc. | 18,302 | 1,842,462 | ||||||
$ | 14,121,219 | |||||||
Office — 12.4% | ||||||||
Boston Properties, Inc. | 25,726 | $ | 3,226,555 | |||||
Corporate Office Properties Trust | 13,601 | 394,293 | ||||||
Cousins Properties, Inc. | 87,752 | 850,317 | ||||||
Douglas Emmett, Inc. | 15,020 | 603,504 | ||||||
Highwoods Properties, Inc. | 21,170 | 1,073,954 | ||||||
Hudson Pacific Properties, Inc. | 20,988 | 743,605 | ||||||
JBG Smith Properties | 8,620 | 314,371 | ||||||
$ | 7,206,599 | |||||||
Self Storage — 9.8% | ||||||||
CubeSmart | 35,806 | $ | 1,153,669 | |||||
Extra Space Storage, Inc. | 10,887 | 1,086,632 | ||||||
Public Storage | 15,458 | 3,506,802 | ||||||
$ | 5,747,103 | |||||||
Strip Centers — 7.7% | ||||||||
Acadia Realty Trust | 27,502 | $ | 752,730 | |||||
Federal Realty Investment Trust | 10,723 | 1,356,996 | ||||||
Kimco Realty Corp. | 28,066 | 476,841 | ||||||
Regency Centers Corp. | 26,095 | 1,619,977 | ||||||
Retail Opportunity Investments Corp. | 16,382 | 313,879 | ||||||
$ | 4,520,423 | |||||||
Total Real Estate Investment Trusts |
| $ | 55,291,669 | |||||
Total Common Stocks |
| $ | 57,219,894 |
5 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Short-Term Investments — 1.7% |
| |||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 2.09%(2) | 982,817 | $ | 982,817 | |||||
Total Short-Term Investments |
| $ | 982,817 | |||||
Total Investments — 99.8% |
| $ | 58,202,711 | |||||
Other Assets, Less Liabilities — 0.2% |
| $ | 108,751 | |||||
Net Assets — 100.0% |
| $ | 58,311,462 |
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, 2018. |
6 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Unaffiliated investments, at value (identified cost, $48,386,388) | $ | 57,219,894 | ||
Affiliated investment, at value (identified cost, $982,895) | 982,817 | |||
Dividends receivable | 190,758 | |||
Dividends receivable from affiliated investment | 1,758 | |||
Receivable for Fund shares sold | 42,444 | |||
Receivable from affiliate | 3,310 | |||
Total assets | $ | 58,440,981 | ||
Liabilities |
| |||
Payable for Fund shares redeemed | $ | 39,049 | ||
Payable to affiliates: | ||||
Investment adviser fee | 29,906 | |||
Administration fee | 6,901 | |||
Distribution and service fees | 2,029 | |||
Trustees’ fees | 624 | |||
Accrued expenses | 51,010 | |||
Total liabilities | $ | 129,519 | ||
Net Assets | $ | 58,311,462 | ||
Sources of Net Assets |
| |||
Paid-in capital | $ | 49,814,708 | ||
Accumulated undistributed net investment income | 21,808 | |||
Accumulated distributions in excess of net realized gain | (358,482 | ) | ||
Net unrealized appreciation | 8,833,428 | |||
Total | $ | 58,311,462 | ||
Class A Shares |
| |||
Net Assets | $ | 10,062,345 | ||
Shares Outstanding | 719,188 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 13.99 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 14.84 | ||
Class I Shares |
| |||
Net Assets | $ | 48,249,117 | ||
Shares Outstanding | 3,449,444 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 13.99 |
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, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends | $ | 952,797 | ||
Dividends from affiliated investment | 8,568 | |||
Total investment income | $ | 961,365 | ||
Expenses | ||||
Investment adviser fee | $ | 160,882 | ||
Administration fee | 37,127 | |||
Distribution and service fees | ||||
Class A | 12,148 | |||
Trustees’ fees and expenses | 1,010 | |||
Custodian fee | 17,864 | |||
Transfer and dividend disbursing agent fees | 16,871 | |||
Legal and accounting services | 22,913 | |||
Printing and postage | 6,878 | |||
Registration fees | 16,833 | |||
Miscellaneous | 6,834 | |||
Total expenses | $ | 299,360 | ||
Deduct — | ||||
Allocation of expenses to affiliate | $ | 39,085 | ||
Total expense reductions | $ | 39,085 | ||
Net expenses | $ | 260,275 | ||
Net investment income | $ | 701,090 | ||
Realized and Unrealized Gain (Loss) |
| |||
Net realized gain (loss) — | ||||
Investment transactions | $ | 57,326 | ||
Investment transactions — affiliated investment | 7 | |||
Net realized gain | $ | 57,333 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 998,083 | ||
Investments — affiliated investment | 11 | |||
Net change in unrealized appreciation (depreciation) | $ | 998,094 | ||
Net realized and unrealized gain | $ | 1,055,427 | ||
Net increase in net assets from operations | $ | 1,756,517 |
8 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment income | $ | 701,090 | $ | 968,524 | ||||
Net realized gain | 57,333 | 493,220 | ||||||
Net change in unrealized appreciation (depreciation) | 998,094 | 656,483 | ||||||
Net increase in net assets from operations | $ | 1,756,517 | $ | 2,118,227 | ||||
Distributions to shareholders — | ||||||||
From net investment income | ||||||||
Class A | $ | (109,234 | ) | $ | (199,421 | ) | ||
Class I | (570,048 | ) | (771,108 | ) | ||||
From net realized gain | ||||||||
Class A | — | (76,638 | ) | |||||
Class I | — | (241,455 | ) | |||||
Total distributions to shareholders | $ | (679,282 | ) | $ | (1,288,622 | ) | ||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 681,022 | $ | 3,062,393 | ||||
Class I | 18,318,527 | 27,779,739 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | 109,049 | 269,513 | ||||||
Class I | 524,053 | 846,790 | ||||||
Cost of shares redeemed | ||||||||
Class A | (2,436,749 | ) | (12,582,293 | ) | ||||
Class I | (8,067,931 | ) | (19,108,242 | ) | ||||
Net increase in net assets from Fund share transactions | $ | 9,127,971 | $ | 267,900 | ||||
Net increase in net assets | $ | 10,205,206 | $ | 1,097,505 | ||||
Net Assets |
| |||||||
At beginning of period | $ | 48,106,256 | $ | 47,008,751 | ||||
At end of period | $ | 58,311,462 | $ | 48,106,256 | ||||
Accumulated undistributed net investment income included in net assets |
| |||||||
At end of period | $ | 21,808 | $ | — |
9 | See Notes to Financial Statements. |
Eaton Vance
Real Estate Fund
June 30, 2018
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.930 | $ | 13.700 | $ | 13.790 | $ | 14.030 | $ | 11.090 | $ | 11.300 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.160 | $ | 0.199 | $ | 0.158 | $ | 0.192 | $ | 0.165 | $ | 0.123 | ||||||||||||
Net realized and unrealized gain (loss) | 0.051 | 0.333 | 0.518 | 0.660 | 3.253 | (0.072 | ) | |||||||||||||||||
Total income from operations | $ | 0.211 | $ | 0.532 | $ | 0.676 | $ | 0.852 | $ | 3.418 | $ | 0.051 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.151 | ) | $ | (0.212 | ) | $ | (0.226 | ) | $ | (0.227 | ) | $ | (0.264 | ) | $ | (0.117 | ) | ||||||
From net realized gain | — | (0.090 | ) | (0.540 | ) | (0.865 | ) | (0.214 | ) | (0.144 | ) | |||||||||||||
Total distributions | $ | (0.151 | ) | $ | (0.302 | ) | $ | (0.766 | ) | $ | (1.092 | ) | $ | (0.478 | ) | $ | (0.261 | ) | ||||||
Net asset value — End of period | $ | 13.990 | $ | 13.930 | $ | 13.700 | $ | 13.790 | $ | 14.030 | $ | 11.090 | ||||||||||||
Total Return(2)(3) | 1.58 | %(4) | 3.93 | % | 4.94 | % | 6.40 | % | 31.19 | % | 0.41 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 10,062 | $ | 11,766 | $ | 21,078 | $ | 21,880 | $ | 11,204 | $ | 7,438 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(3) | 1.25 | %(5) | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | ||||||||||||
Net investment income | 2.46 | %(5) | 1.45 | % | 1.13 | % | 1.38 | % | 1.29 | % | 1.05 | % | ||||||||||||
Portfolio Turnover | 17 | %(4) | 36 | % | 52 | % | 72 | % | 31 | % | 22 | % |
(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%, 0.17%, 0.23%, 0.30%, 0.30% and 0.27% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, 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, 2018
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.930 | $ | 13.700 | $ | 13.800 | $ | 14.030 | $ | 11.100 | $ | 11.300 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income(1) | $ | 0.189 | $ | 0.271 | $ | 0.200 | $ | 0.192 | $ | 0.182 | $ | 0.151 | ||||||||||||
Net realized and unrealized gain (loss) | 0.039 | 0.301 | 0.501 | 0.703 | 3.258 | (0.060 | ) | |||||||||||||||||
Total income from operations | $ | 0.228 | $ | 0.572 | $ | 0.701 | $ | 0.895 | $ | 3.440 | $ | 0.091 | ||||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | (0.168 | ) | $ | (0.252 | ) | $ | (0.261 | ) | $ | (0.260 | ) | $ | (0.296 | ) | $ | (0.147 | ) | ||||||
From net realized gain | — | (0.090 | ) | (0.540 | ) | (0.865 | ) | (0.214 | ) | (0.144 | ) | |||||||||||||
Total distributions | $ | (0.168 | ) | $ | (0.342 | ) | $ | (0.801 | ) | $ | (1.125 | ) | $ | (0.510 | ) | $ | (0.291 | ) | ||||||
Net asset value — End of period | $ | 13.990 | $ | 13.930 | $ | 13.700 | $ | 13.800 | $ | 14.030 | $ | 11.100 | ||||||||||||
Total Return(2)(3) | 1.72 | %(4) | 4.23 | % | 5.12 | % | 6.73 | % | 31.40 | % | 0.76 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 48,249 | $ | 36,340 | $ | 25,930 | $ | 17,044 | $ | 22,115 | $ | 18,955 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(3) | 1.00 | %(5) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Net investment income | 2.91 | %(5) | 1.97 | % | 1.43 | % | 1.37 | % | 1.43 | % | 1.29 | % | ||||||||||||
Portfolio Turnover | 17 | %(4) | 36 | % | 52 | % | 72 | % | 31 | % | 22 | % |
(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%, 0.17%, 0.23%, 0.30%, 0.30% and 0.27% of average daily net assets for the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, 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, 2018
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, 2018, 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, 2018
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, 2018 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, 2018, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 49,819,239 | ||
Gross unrealized appreciation | $ | 8,878,207 | ||
Gross unrealized depreciation | (494,735 | ) | ||
Net unrealized appreciation | $ | 8,383,472 |
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, 2018, the Fund’s investment adviser fee amounted to $160,882. 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, 2018, the administration fee amounted to $37,127. 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, 2019. Pursuant to this agreement, EVM was allocated $39,085 of the Fund’s operating expenses for the six months ended June 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, 2018, EVM earned $2,261 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 $776 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2018. 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, 2018, 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 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, 2018 amounted to $12,148 for Class A shares.
13 |
Eaton Vance
Real Estate Fund
June 30, 2018
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).
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, 2018, 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 $17,333,044 and $8,419,071, respectively, for the six months ended June 30, 2018.
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, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 52,357 | 222,787 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 8,271 | 19,599 | ||||||
Redemptions | (186,003 | ) | (936,937 | ) | ||||
Net decrease | (125,375 | ) | (694,551 | ) | ||||
Class I | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 1,422,089 | 2,044,691 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | 39,680 | 61,585 | ||||||
Redemptions | (621,117 | ) | (1,390,138 | ) | ||||
Net increase | 840,652 | 716,138 |
At June 30, 2018, donor advised funds (established and maintained by a public charity) managed by EVM and an Eaton Vance collective investment trust owned in the aggregate 38.8% 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 October 30, 2018. 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, 2018.
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.
14 |
Eaton Vance
Real Estate Fund
June 30, 2018
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, 2018, 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 | $ | 57,219,894 | * | $ | — | $ | — | $ | 57,219,894 | |||||||
Short-Term Investments | — | 982,817 | — | 982,817 | ||||||||||||
Total Investments | $ | 57,219,894 | $ | 982,817 | $ | — | $ | 58,202,711 |
* | The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments. |
At June 30, 2018, 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, 2018
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 24, 2018, 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 2018. 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 fund’s investment strategies and policies; |
• | 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 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, 2018
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, 2018, with respect to one or more funds, the Board met seven 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 nine 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, 2018
Board of Trustees’ Contract Approval — continued
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, 2017 for the Fund. In this regard, the Board noted that the performance of the Fund was higher than the median performance of the Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was lower than its primary and secondary benchmark indexes for the three-year period. 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, 2017, 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 2017 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, 2018
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
Richard F. Froio
Chief Compliance Officer
Trustees of Eaton Vance Real Estate Fund
William H. Park
Chairperson
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 |
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 Advisers International Ltd., 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.
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 6.30.18
Eaton Vance
Small-Cap Fund
Semiannual Report
June 30, 2018
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, 2018
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, 2018
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 | 7.83 | % | 17.46 | % | 12.83 | % | 7.69 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | 1.65 | 10.70 | 11.50 | 7.05 | ||||||||||||||||||
Class C at NAV | 05/03/2002 | 01/02/1997 | 7.38 | 16.62 | 11.96 | 6.88 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 6.38 | 15.62 | 11.96 | 6.88 | ||||||||||||||||||
Class I at NAV | 09/02/2008 | 01/02/1997 | 7.96 | 17.78 | 13.09 | 8.25 | ||||||||||||||||||
Class R at NAV | 08/03/2009 | 01/02/1997 | 7.66 | 17.16 | 12.53 | 7.44 | ||||||||||||||||||
Russell 2000® Index | — | — | 7.66 | % | 17.57 | % | 12.45 | % | 10.59 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | Class R | ||||||||||||||||||||
Gross | 1.52 | % | 2.27 | % | 1.26 | % | 1.76 | % | ||||||||||||||||
Net | 1.35 | 2.10 | 1.10 | 1.60 |
Fund Profile
Sector Allocation (% of net assets)4
Top 10 Holdings (% of net assets)4
RealPage, Inc. | 3.0 | % | ||
ServiceMaster Global Holdings, Inc. | 2.7 | |||
Performance Food Group Co. | 2.6 | |||
ICU Medical, Inc. | 2.5 | |||
Grand Canyon Education, Inc. | 2.5 | |||
ACI Worldwide, Inc. | 2.2 | |||
Euronet Worldwide, Inc. | 2.2 | |||
Hexcel Corp. | 2.1 | |||
Balchem Corp. | 2.1 | |||
Cohen & Steers, Inc. | 2.1 | |||
Total | 24.0 | % |
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
Small-Cap Fund
June 30, 2018
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 4/30/19. 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 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Small-Cap Fund
June 30, 2018
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, 2018 – June 30, 2018).
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 (1/1/18) | Ending Account Value (6/30/18) | Expenses Paid During Period* (1/1/18 – 6/30/18) | Annualized Expense Ratio | |||||||||||||
Actual |
| |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,078.30 | $ | 6.96 | ** | 1.35 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,073.80 | $ | 10.80 | ** | 2.10 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,079.60 | $ | 5.67 | ** | 1.10 | % | |||||||
Class R | $ | 1,000.00 | $ | 1,076.60 | $ | 8.24 | ** | 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, 2017. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
4 |
Eaton Vance
Small-Cap Fund
June 30, 2018
Portfolio of Investments (Unaudited)
Common Stocks — 98.1% |
| |||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 3.0% | ||||||||
Hexcel Corp. | 26,074 | $ | 1,730,792 | |||||
Mercury Systems, Inc.(1) | 19,327 | 735,586 | ||||||
$ | 2,466,378 | |||||||
Banks — 9.7% | ||||||||
Ameris Bancorp | 16,884 | $ | 900,761 | |||||
Columbia Banking System, Inc. | 25,867 | 1,057,960 | ||||||
Sterling Bancorp | 67,136 | 1,577,696 | ||||||
Stock Yards Bancorp, Inc. | 25,331 | 966,378 | ||||||
Texas Capital Bancshares, Inc.(1) | 13,995 | 1,280,543 | ||||||
Western Alliance Bancorp(1) | 15,846 | 897,042 | ||||||
Wintrust Financial Corp. | 13,508 | 1,175,871 | ||||||
$ | 7,856,251 | |||||||
Biotechnology — 1.3% | ||||||||
Ligand Pharmaceuticals, Inc.(1) | 5,074 | $ | 1,051,181 | |||||
$ | 1,051,181 | |||||||
Capital Markets — 3.0% | ||||||||
Cohen & Steers, Inc. | 40,609 | $ | 1,693,801 | |||||
Lazard, Ltd., Class A | 14,371 | 702,886 | ||||||
$ | 2,396,687 | |||||||
Chemicals — 4.4% | ||||||||
Balchem Corp. | 17,529 | $ | 1,720,296 | |||||
NewMarket Corp. | 2,892 | 1,169,814 | ||||||
Valvoline, Inc. | 30,981 | 668,260 | ||||||
$ | 3,558,370 | |||||||
Commercial Services & Supplies — 5.1% | ||||||||
Brink’s Co. (The) | 16,468 | $ | 1,313,323 | |||||
Deluxe Corp. | 20,861 | 1,381,207 | ||||||
Multi-Color Corp. | 22,817 | 1,475,119 | ||||||
$ | 4,169,649 | |||||||
Communications Equipment — 0.5% | ||||||||
NETGEAR, Inc.(1) | 6,430 | $ | 401,875 | |||||
$ | 401,875 | |||||||
Diversified Consumer Services — 6.2% | ||||||||
Bright Horizons Family Solutions, Inc.(1) | 7,909 | $ | 810,830 | |||||
Grand Canyon Education, Inc.(1) | 17,852 | 1,992,462 |
Security | Shares | Value | ||||||
Diversified Consumer Services (continued) | ||||||||
ServiceMaster Global Holdings, Inc.(1) | 37,449 | $ | 2,227,092 | |||||
$ | 5,030,384 | |||||||
Electric Utilities — 1.4% | ||||||||
ALLETE, Inc. | 14,677 | $ | 1,136,147 | |||||
$ | 1,136,147 | |||||||
Electrical Equipment — 1.3% | ||||||||
EnerSys | 13,744 | $ | 1,025,852 | |||||
$ | 1,025,852 | |||||||
Electronic Equipment, Instruments & Components — 2.8% | ||||||||
Dolby Laboratories, Inc., Class A | 26,706 | $ | 1,647,493 | |||||
FLIR Systems, Inc. | 12,424 | 645,675 | ||||||
$ | 2,293,168 | |||||||
Energy Equipment & Services — 0.9% | ||||||||
Oceaneering International, Inc. | 28,753 | $ | 732,051 | |||||
$ | 732,051 | |||||||
Equity Real Estate Investment Trusts (REITs) — 5.7% | ||||||||
Acadia Realty Trust | 15,206 | $ | 416,188 | |||||
CubeSmart | 40,828 | 1,315,478 | ||||||
DCT Industrial Trust, Inc. | 22,147 | 1,477,869 | ||||||
Education Realty Trust, Inc. | 13,311 | 552,407 | ||||||
STORE Capital Corp. | 32,623 | 893,870 | ||||||
$ | 4,655,812 | |||||||
Food & Staples Retailing — 2.6% | ||||||||
Performance Food Group Co.(1) | 57,068 | $ | 2,094,396 | |||||
$ | 2,094,396 | |||||||
Food Products — 0.8% | ||||||||
Lancaster Colony Corp. | 4,751 | $ | 657,633 | |||||
$ | 657,633 | |||||||
Gas Utilities — 1.4% | ||||||||
ONE Gas, Inc. | 15,104 | $ | 1,128,873 | |||||
$ | 1,128,873 | |||||||
Health Care Equipment & Supplies — 7.2% | ||||||||
ICU Medical, Inc.(1) | 6,991 | $ | 2,052,907 | |||||
Integra LifeSciences Holdings Corp.(1) | 17,755 | 1,143,600 |
5 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Health Care Equipment & Supplies (continued) | ||||||||
Masimo Corp.(1) | 7,677 | $ | 749,659 | |||||
West Pharmaceutical Services, Inc. | 15,357 | 1,524,797 | ||||||
Wright Medical Group NV(1) | 15,137 | 392,956 | ||||||
$ | 5,863,919 | |||||||
Health Care Providers & Services — 2.3% | ||||||||
Amedisys, Inc.(1) | 16,922 | $ | 1,446,154 | |||||
Chemed Corp. | 1,315 | 423,180 | ||||||
$ | 1,869,334 | |||||||
Health Care Technology — 1.5% | ||||||||
Cotiviti Holdings, Inc.(1) | 26,610 | $ | 1,174,299 | |||||
$ | 1,174,299 | |||||||
Hotels, Restaurants & Leisure — 1.0% | ||||||||
Texas Roadhouse, Inc. | 12,400 | $ | 812,324 | |||||
$ | 812,324 | |||||||
Household Products — 1.5% | ||||||||
Central Garden & Pet Co., Class A(1) | 30,062 | $ | 1,216,609 | |||||
$ | 1,216,609 | |||||||
Insurance — 4.2% | ||||||||
First American Financial Corp. | 21,550 | $ | 1,114,566 | |||||
Horace Mann Educators Corp. | 33,225 | 1,481,835 | ||||||
RLI Corp. | 12,204 | 807,783 | ||||||
$ | 3,404,184 | |||||||
IT Services — 6.4% | ||||||||
Black Knight, Inc.(1) | 25,117 | $ | 1,345,015 | |||||
Conduent, Inc.(1) | 45,988 | 835,602 | ||||||
CSG Systems International, Inc. | 29,394 | 1,201,333 | ||||||
Euronet Worldwide, Inc.(1) | 21,537 | 1,804,155 | ||||||
$ | 5,186,105 | |||||||
Machinery — 2.2% | ||||||||
Milacron Holdings Corp.(1) | 47,463 | $ | 898,475 | |||||
RBC Bearings, Inc.(1) | 7,029 | 905,405 | ||||||
$ | 1,803,880 | |||||||
Marine — 1.6% | ||||||||
Kirby Corp.(1) | 15,052 | $ | 1,258,347 | |||||
$ | 1,258,347 |
Security | Shares | Value | ||||||
Oil, Gas & Consumable Fuels — 2.6% | ||||||||
Diamondback Energy, Inc. | 5,352 | $ | 704,162 | |||||
Jagged Peak Energy, Inc.(1) | 19,197 | 249,945 | ||||||
PDC Energy, Inc.(1) | 18,633 | 1,126,365 | ||||||
$ | 2,080,472 | |||||||
Pharmaceuticals — 1.3% | ||||||||
Catalent, Inc.(1) | 25,504 | $ | 1,068,363 | |||||
$ | 1,068,363 | |||||||
Road & Rail — 1.4% | ||||||||
Landstar System, Inc. | 10,076 | $ | 1,100,299 | |||||
$ | 1,100,299 | |||||||
Software — 9.1% | ||||||||
ACI Worldwide, Inc.(1) | 73,263 | $ | 1,807,398 | |||||
Altair Engineering, Inc., Class A(1) | 43,072 | 1,472,201 | ||||||
Blackbaud, Inc. | 14,300 | 1,465,035 | ||||||
Ceridian HCM Holding, Inc.(1) | 8,233 | 273,254 | ||||||
RealPage, Inc.(1) | 43,490 | 2,396,299 | ||||||
$ | 7,414,187 | |||||||
Specialty Retail — 0.2% | ||||||||
Lithia Motors, Inc., Class A | 1,550 | $ | 146,584 | |||||
$ | 146,584 | |||||||
Textiles, Apparel & Luxury Goods — 3.1% | ||||||||
Carter’s, Inc. | 6,975 | $ | 756,020 | |||||
Columbia Sportswear Co. | 6,796 | 621,630 | ||||||
Steven Madden, Ltd. | 21,059 | 1,118,233 | ||||||
$ | 2,495,883 | |||||||
Thrifts & Mortgage Finance — 0.7% | ||||||||
Essent Group, Ltd.(1) | 15,030 | $ | 538,375 | |||||
$ | 538,375 | |||||||
Trading Companies & Distributors — 1.7% | ||||||||
Applied Industrial Technologies, Inc. | 20,181 | $ | 1,415,697 | |||||
$ | 1,415,697 | |||||||
Total Common Stocks |
| $ | 79,503,568 |
6 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Short-Term Investments — 0.4% |
| |||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 2.09%(2) | 349,464 | $ | 349,464 | |||||
Total Short-Term Investments |
| $ | 349,464 | |||||
Total Investments — 98.5% |
| $ | 79,853,032 | |||||
Other Assets, Less Liabilities — 1.5% |
| $ | 1,195,361 | |||||
Net Assets — 100.0% |
| $ | 81,048,393 |
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, 2018. |
7 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Unaffiliated investments, at value (identified cost, $56,580,929) | $ | 79,503,568 | ||
Affiliated investment, at value (identified cost, $349,464) | 349,464 | |||
Dividends receivable | 53,962 | |||
Dividends receivable from affiliated investment | 1,175 | |||
Receivable for investments sold | 1,201,087 | |||
Receivable for Fund shares sold | 141,771 | |||
Receivable from affiliate | 10,905 | |||
Total assets | $ | 81,261,932 | ||
Liabilities |
| |||
Payable for Fund shares redeemed | $ | 85,490 | ||
Payable to affiliates: |
| |||
Investment adviser fee | 50,765 | |||
Administration fee | 10,153 | |||
Distribution and service fees | 12,779 | |||
Trustees’ fees | 970 | |||
Accrued expenses | 53,382 | |||
Total liabilities | $ | 213,539 | ||
Net Assets | $ | 81,048,393 | ||
Sources of Net Assets |
| |||
Paid-in capital | $ | 54,303,408 | ||
Accumulated net investment loss | (102,213 | ) | ||
Accumulated net realized gain | 3,924,559 | |||
Net unrealized appreciation | 22,922,639 | |||
Net Assets | $ | 81,048,393 | ||
Class A Shares |
| |||
Net Assets | $ | 24,721,397 | ||
Shares Outstanding | 1,743,760 | |||
Net Asset Value and Redemption Price Per Share |
| |||
(net assets ÷ shares of beneficial interest outstanding) | $ | 14.18 | ||
Maximum Offering Price Per Share |
| |||
(100 ÷ 94.25 of net asset value per share) | $ | 15.05 | ||
Class C Shares |
| |||
Net Assets | $ | 8,901,940 | ||
Shares Outstanding | 746,087 | |||
Net Asset Value and Offering Price Per Share* |
| |||
(net assets ÷ shares of beneficial interest outstanding) | $ | 11.93 | ||
Class I Shares |
| |||
Net Assets | $ | 46,609,611 | ||
Shares Outstanding | 2,988,329 | |||
Net Asset Value, Offering Price and Redemption Price Per Share |
| |||
(net assets ÷ shares of beneficial interest outstanding) | $ | 15.60 | ||
Class R Shares |
| |||
Net Assets | $ | 815,445 | ||
Shares Outstanding | 59,762 | |||
Net Asset Value, Offering Price and Redemption Price Per Share |
| |||
(net assets ÷ shares of beneficial interest outstanding) | $ | 13.64 |
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, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends | $ | 407,441 | ||
Dividends from affiliated investment | 3,972 | |||
Total investment income | $ | 411,413 | ||
Expenses |
| |||
Investment adviser fee | $ | 297,589 | ||
Administration fee | 59,518 | |||
Distribution and service fees |
| |||
Class A | 30,262 | |||
Class C | 45,341 | |||
Class R | 1,882 | |||
Trustees’ fees and expenses | 1,703 | |||
Custodian fee | 20,653 | |||
Transfer and dividend disbursing agent fees | 57,144 | |||
Legal and accounting services | 22,710 | |||
Printing and postage | 11,831 | |||
Registration fees | 29,712 | |||
Miscellaneous | 8,564 | |||
Total expenses | $ | 586,909 | ||
Deduct — |
| |||
Allocation of expenses to affiliate | $ | 72,466 | ||
Total expense reductions | $ | 72,466 | ||
Net expenses | $ | 514,443 | ||
Net investment loss | $ | (103,030 | ) | |
Realized and Unrealized Gain (Loss) |
| |||
Net realized gain (loss) — |
| |||
Investment transactions | $ | 3,974,430 | ||
Investment transactions — affiliated investment | 92 | |||
Net realized gain | $ | 3,974,522 | ||
Change in unrealized appreciation (depreciation) — |
| |||
Investments | $ | 2,135,979 | ||
Investments — affiliated investment | 37 | |||
Net change in unrealized appreciation (depreciation) | $ | 2,136,016 | ||
Net realized and unrealized gain | $ | 6,110,538 | ||
Net increase in net assets from operations | $ | 6,007,508 |
9 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
From operations — |
| |||||||
Net investment loss | $ | (103,030 | ) | $ | (301,249 | ) | ||
Net realized gain | 3,974,522 | 7,351,539 | ||||||
Net change in unrealized appreciation (depreciation) | 2,136,016 | 3,901,554 | ||||||
Net increase in net assets from operations | $ | 6,007,508 | $ | 10,951,844 | ||||
Distributions to shareholders — |
| |||||||
From net realized gain | ||||||||
Class A | $ | — | $ | (2,614,958 | ) | |||
Class C | — | (1,183,862 | ) | |||||
Class I | — | (4,242,331 | ) | |||||
Class R | — | (73,491 | ) | |||||
Total distributions to shareholders | $ | — | $ | (8,114,642 | ) | |||
Transactions in shares of beneficial interest — |
| |||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 1,695,546 | $ | 4,452,831 | ||||
Class B | — | 35,944 | ||||||
Class C | 820,690 | 2,917,320 | ||||||
Class I | 3,425,261 | 15,021,565 | ||||||
Class R | 147,554 | 234,533 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | — | 2,455,295 | ||||||
Class C | — | 1,108,865 | ||||||
Class I | — | 4,063,024 | ||||||
Class R | — | 73,491 | ||||||
Cost of shares redeemed | ||||||||
Class A | (3,651,601 | ) | (14,244,785 | ) | ||||
Class B | — | (112,082 | ) | |||||
Class C | (2,116,015 | ) | (4,575,223 | ) | ||||
Class I | (5,907,080 | ) | (10,011,521 | ) | ||||
Class R | (111,904 | ) | (171,692 | ) | ||||
Net asset value of shares exchanged | ||||||||
Class A | — | 111,870 | ||||||
Class B | — | (111,870 | ) | |||||
Net asset value of shares merged* | ||||||||
Class A | — | 878,745 | ||||||
Class B | — | (878,745 | ) | |||||
Net increase (decrease) in net assets from Fund share transactions | $ | (5,697,549 | ) | $ | 1,247,565 | |||
Net increase in net assets | $ | 309,959 | $ | 4,084,767 | ||||
Net Assets | ||||||||
At beginning of period | $ | 80,738,434 | $ | 76,653,667 | ||||
At end of period | $ | 81,048,393 | $ | 80,738,434 | ||||
Accumulated undistributed net investment income (loss) included in net assets | ||||||||
At end of period | $ | (102,213 | ) | $ | 817 |
* | 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, 2018
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 13.150 | $ | 12.740 | $ | 12.200 | $ | 15.320 | $ | 18.040 | $ | 14.170 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.021 | ) | $ | (0.057 | ) | $ | (0.053 | ) | $ | (0.078 | ) | $ | (0.078 | ) | $ | (0.084 | ) | ||||||
Net realized and unrealized gain (loss) | 1.051 | 1.916 | 2.361 | (0.205 | ) | 0.618 | 5.031 | |||||||||||||||||
Total income (loss) from operations | $ | 1.030 | $ | 1.859 | $ | 2.308 | $ | (0.283 | ) | $ | 0.540 | $ | 4.947 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (0.008 | ) | |||||||||||
From net realized gain | — | (1.449 | ) | (1.768 | ) | (2.837 | ) | (3.260 | ) | (1.069 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.449 | ) | $ | (1.768 | ) | $ | (2.837 | ) | $ | (3.260 | ) | $ | (1.077 | ) | |||||||
Net asset value — End of period | $ | 14.180 | $ | 13.150 | $ | 12.740 | $ | 12.200 | $ | 15.320 | $ | 18.040 | ||||||||||||
Total Return(2) | 7.83 | %(3) | 14.91 | %(4) | 19.32 | % | (2.78 | )% | 3.77 | %(5) | 35.25 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 24,721 | $ | 24,865 | $ | 30,174 | $ | 26,391 | $ | 29,536 | $ | 37,128 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(6) | 1.35 | %(7) | 1.42 | %(4) | 1.52 | % | 1.43 | % | 1.39 | % | 1.36 | % | ||||||||||||
Net investment loss | (0.32 | )%(7) | (0.43 | )% | (0.43 | )% | (0.52 | )% | (0.44 | )% | (0.51 | )% | ||||||||||||
Portfolio Turnover | 17 | % (3) | 50 | % | 76 | % | 71 | % | 66 | % | 44 | % |
(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 0.18% and 0.10% of average daily net assets for the six months ended June 30, 2018 and the year ended December 31, 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) | 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
Small-Cap Fund
June 30, 2018
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 11.110 | $ | 11.040 | $ | 10.850 | $ | 14.040 | $ | 16.930 | $ | 13.450 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.061 | ) | $ | (0.133 | ) | $ | (0.129 | ) | $ | (0.173 | ) | $ | (0.198 | ) | $ | (0.195 | ) | ||||||
Net realized and unrealized gain (loss) | 0.881 | 1.652 | 2.087 | (0.180 | ) | 0.568 | 4.752 | |||||||||||||||||
Total income (loss) from operations | $ | 0.820 | $ | 1.519 | $ | 1.958 | $ | (0.353 | ) | $ | 0.370 | $ | 4.557 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (0.008 | ) | |||||||||||
From net realized gain | — | (1.449 | ) | (1.768 | ) | (2.837 | ) | (3.260 | ) | (1.069 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.449 | ) | $ | (1.768 | ) | $ | (2.837 | ) | $ | (3.260 | ) | $ | (1.077 | ) | |||||||
Net asset value — End of period | $ | 11.930 | $ | 11.110 | $ | 11.040 | $ | 10.850 | $ | 14.040 | $ | 16.930 | ||||||||||||
Total Return(2) | 7.38 | %(3) | 14.11 | %(4) | 18.47 | % | (3.59 | )% | 3.02 | %(5) | 34.24 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 8,902 | $ | 9,565 | $ | 10,001 | $ | 9,040 | $ | 10,883 | $ | 13,806 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(6) | 2.10 | %(7) | 2.17 | %(4) | 2.27 | % | 2.18 | % | 2.14 | % | 2.11 | % | ||||||||||||
Net investment loss | (1.07 | )%(7) | (1.17 | )% | (1.18 | )% | (1.27 | )% | (1.18 | )% | (1.25 | )% | ||||||||||||
Portfolio Turnover | 17 | %(3) | 50 | % | 76 | % | 71 | % | 66 | % | 44 | % |
(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 0.18% and 0.10% of average daily net assets for the six months ended June 30, 2018 and the year ended December 31, 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) | 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. |
12 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2018
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 14.450 | $ | 13.840 | $ | 13.080 | $ | 16.190 | $ | 18.840 | $ | 14.720 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.005 | ) | $ | (0.022 | ) | $ | (0.027 | ) | $ | (0.043 | ) | $ | (0.040 | ) | $ | (0.036 | ) | ||||||
Net realized and unrealized gain (loss) | 1.155 | 2.081 | 2.555 | (0.230 | ) | 0.650 | 5.233 | |||||||||||||||||
Total income (loss) from operations | $ | 1.150 | $ | 2.059 | $ | 2.528 | $ | (0.273 | ) | $ | 0.610 | $ | 5.197 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (0.008 | ) | |||||||||||
From net realized gain | — | (1.449 | ) | (1.768 | ) | (2.837 | ) | (3.260 | ) | (1.069 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.449 | ) | $ | (1.768 | ) | $ | (2.837 | ) | $ | (3.260 | ) | $ | (1.077 | ) | |||||||
Net asset value — End of period | $ | 15.600 | $ | 14.450 | $ | 13.840 | $ | 13.080 | $ | 16.190 | $ | 18.840 | ||||||||||||
Total Return(2) | 7.96 | %(3) | 15.17 | %(4) | 19.70 | % | (2.57 | )% | 3.99 | %(5) | 35.63 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 46,610 | $ | 45,587 | $ | 34,888 | $ | 52,335 | $ | 74,510 | $ | 171,120 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(6) | 1.10 | %(7) | 1.16 | %(4) | 1.27 | % | 1.18 | % | 1.13 | % | 1.12 | % | ||||||||||||
Net investment loss | (0.06 | )%(7) | (0.15 | )% | (0.21 | )% | (0.27 | )% | (0.22 | )% | (0.21 | )% | ||||||||||||
Portfolio Turnover | 17 | % (3) | 50 | % | 76 | % | 71 | % | 66 | % | 44 | % |
(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 0.18% and 0.10% of average daily net assets for the six months ended June 30, 2018 and the year ended December 31, 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) | 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. |
13 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2018
Financial Highlights — continued
Class R | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 12.670 | $ | 12.350 | $ | 11.900 | $ | 15.050 | $ | 17.820 | $ | 14.040 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.036 | ) | $ | (0.084 | ) | $ | (0.078 | ) | $ | (0.113 | ) | $ | (0.111 | ) | $ | (0.110 | ) | ||||||
Net realized and unrealized gain (loss) | 1.006 | 1.853 | 2.296 | (0.200 | ) | 0.601 | 4.967 | |||||||||||||||||
Total income (loss) from operations | $ | 0.970 | $ | 1.769 | $ | 2.218 | $ | (0.313 | ) | $ | 0.490 | $ | 4.857 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (0.008 | ) | |||||||||||
From net realized gain | — | (1.449 | ) | (1.768 | ) | (2.837 | ) | (3.260 | ) | (1.069 | ) | |||||||||||||
Total distributions | $ | — | $ | (1.449 | ) | $ | (1.768 | ) | $ | (2.837 | ) | $ | (3.260 | ) | $ | (1.077 | ) | |||||||
Net asset value — End of period | $ | 13.640 | $ | 12.670 | $ | 12.350 | $ | 11.900 | $ | 15.050 | $ | 17.820 | ||||||||||||
Total Return(2) | 7.66 | %(3) | 14.64 | %(4) | 19.04 | % | (3.05 | )% | 3.54 | %(5) | 34.93 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 815 | $ | 722 | $ | 567 | $ | 289 | $ | 305 | $ | 205 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(6) | 1.60 | %(7) | 1.66 | %(4) | 1.77 | % | 1.68 | % | 1.63 | % | 1.61 | % | ||||||||||||
Net investment loss | (0.56 | )%(7) | (0.66 | )% | (0.64 | )% | (0.77 | )% | (0.63 | )% | (0.66 | )% | ||||||||||||
Portfolio Turnover | 17 | %(3) | 50 | % | 76 | % | 71 | % | 66 | % | 44 | % |
(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 0.18% and 0.10% of average daily net assets for the six months ended June 30, 2018 and the year ended December 31, 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) | 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. |
14 | See Notes to Financial Statements. |
Eaton Vance
Small-Cap Fund
June 30, 2018
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, 2018, 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.
15 |
Eaton Vance
Small-Cap Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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 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, 2018 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, 2017, the Fund had a net capital loss of $56,809 attributable to security transactions incurred after October 31, 2017 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, 2018.
The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2018, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 56,922,730 | ||
Gross unrealized appreciation | $ | 23,294,894 | ||
Gross unrealized depreciation | (364,592 | ) | ||
Net unrealized appreciation | $ | 22,930,302 |
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, 2018, the Fund’s investment adviser fee amounted to $297,589 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, 2018, the administration fee amounted to $59,518.
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, 2019. Thereafter, the reimbursement may be changed or terminated at any time. Pursuant to this agreement, EVM was allocated $72,466 of the Fund’s operating expenses for the six months ended June 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, 2018, EVM earned $13,335 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 $2,497 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2018. 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).
16 |
Eaton Vance
Small-Cap Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
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, 2018, 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, 2018 amounted to $30,262 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 Plans, 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, 2018, the Fund paid or accrued to EVD $34,006 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, 2018, the Fund paid or accrued to EVD $941 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, 2018 amounted to $11,335 and $941 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) 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. Class C shares are subject to a 1% CDSC if redeemed within one year of purchase. For the six months ended June 30, 2018, the Fund was informed that EVD received approximately $400 of CDSCs paid by Class C 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 $13,808,812 and $20,600,650, respectively, for the six months ended June 30, 2018.
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, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 121,394 | 338,548 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 187,923 | ||||||
Redemptions | (268,844 | ) | (1,077,773 | ) | ||||
Merger from Class B shares | — | 65,809 | ||||||
Exchange from Class B shares | — | 8,496 | ||||||
Net decrease | (147,450 | ) | (476,997 | ) |
17 |
Eaton Vance
Small-Cap Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
Class B | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017(1) | ||||||
Sales | — | 2,995 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | — | ||||||
Redemptions | — | (9,372 | ) | |||||
Merger to Class A shares | — | (71,490 | ) | |||||
Exchange to Class A shares | — | (9,223 | ) | |||||
Net increase (decrease) | — | (87,090 | ) | |||||
Class C | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 69,762 | 256,377 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 100,048 | ||||||
Redemptions | (184,866 | ) | (400,759 | ) | ||||
Net decrease | (115,104 | ) | (44,334 | ) | ||||
Class I | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 229,138 | 1,049,947 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 283,726 | ||||||
Redemptions | (396,396 | ) | (699,288 | ) | ||||
Net increase (decrease) | (167,258 | ) | 634,385 | |||||
Class R | Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, 2017 | ||||||
Sales | 11,349 | 18,555 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 5,836 | ||||||
Redemptions | (8,536 | ) | (13,358 | ) | ||||
Net increase | 2,813 | 11,033 |
(1) | Offering of Class B shares was discontinued during the year ended December 31, 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 October 30, 2018. 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, 2018.
18 |
Eaton Vance
Small-Cap Fund
June 30, 2018
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, 2018, 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 | $ | 79,503,568 | * | $ | — | $ | — | $ | 79,503,568 | |||||||
Short-Term Investments | — | 349,464 | — | 349,464 | ||||||||||||
Total Investments | $ | 79,503,568 | $ | 349,464 | $ | — | $ | 79,853,032 |
* | The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments. |
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, 2018 is not presented. At June 30, 2018, 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, 2018
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 24, 2018, 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 2018. 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 fund’s investment strategies and policies; |
• | 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 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, 2018
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, 2018, with respect to one or more funds, the Board met seven 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 nine 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. 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, 2018
Board of Trustees’ Contract Approval — continued
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, 2017 for the Fund. In this regard, the Board noted that the performance of the Fund was higher than the median performance of the Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was lower than its primary benchmark index for the three-year period. 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, 2017, 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 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 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, 2018
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
Richard F. Froio
Chief Compliance Officer
Trustees of Eaton Vance Small-Cap Fund
William H. Park
Chairperson
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 |
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 Advisers International Ltd., 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.
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 6.30.18
Eaton Vance
Special Equities Fund
Semiannual Report
June 30, 2018
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, 2018
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, 2018
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 | 7.09 | % | 16.03 | % | 11.21 | % | 5.81 | % | ||||||||||||||
Class A with 5.75% Maximum Sales Charge | — | — | 0.95 | 9.36 | 9.91 | 5.19 | ||||||||||||||||||
Class C at NAV | 11/17/1994 | 04/22/1968 | 6.72 | 15.16 | 10.39 | 5.03 | ||||||||||||||||||
Class C with 1% Maximum Sales Charge | — | — | 5.72 | 14.16 | 10.39 | 5.03 | ||||||||||||||||||
Class I at NAV | 07/29/2011 | 04/22/1968 | 7.25 | 16.32 | 11.49 | 6.00 | ||||||||||||||||||
Russell 2500™ Index | — | — | 5.46 | % | 16.24 | % | 12.28 | % | 10.73 | % | ||||||||||||||
% Total Annual Operating Expense Ratios3 | Class A | Class C | Class I | |||||||||||||||||||||
Gross | 1.37 | % | 2.12 | % | 1.12 | % | ||||||||||||||||||
Net | 1.35 | 2.10 | 1.10 |
Fund Profile
Sector Allocation (% of net assets)4
Top 10 Holdings (% of net assets)4
Dolby Laboratories, Inc., Class A | 2.4 | % | ||
Performance Food Group Co. | 2.4 | |||
RealPage, Inc. | 2.4 | |||
ACI Worldwide, Inc. | 2.3 | |||
ServiceMaster Global Holdings, Inc. | 2.2 | |||
Grand Canyon Education, Inc. | 2.2 | |||
Hexcel Corp. | 2.0 | |||
Black Knight, Inc. | 1.9 | |||
Altair Engineering, Inc., Class A | 1.8 | |||
Diamondback Energy, Inc. | 1.8 | |||
Total | 21.4 | % |
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, 2018
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 4/30/19. 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 | Excludes cash and cash equivalents. |
Fund profile subject to change due to active management. |
3 |
Eaton Vance
Special Equities Fund
June 30, 2018
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, 2018 – June 30, 2018).
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 (1/1/18) | Ending Account Value (6/30/18) | Expenses Paid During Period* (1/1/18 – 6/30/18) | Annualized Expense Ratio | |||||||||||||
Actual | ||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,070.90 | $ | 6.93 | ** | 1.35 | % | |||||||
Class C | $ | 1,000.00 | $ | 1,067.20 | $ | 10.76 | ** | 2.10 | % | |||||||
Class I | $ | 1,000.00 | $ | 1,072.50 | $ | 5.65 | ** | 1.10 | % | |||||||
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 | % |
* | 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, 2017. |
** | Absent an allocation of certain expenses to an affiliate, expenses would be higher. |
4 |
Eaton Vance
Special Equities Fund
June 30, 2018
Portfolio of Investments (Unaudited)
Common Stocks — 97.7% |
| |||||||
Security | Shares | Value | ||||||
Aerospace & Defense — 2.7% | ||||||||
Hexcel Corp. | 14,351 | $ | 952,619 | |||||
Mercury Systems, Inc.(1) | 8,916 | 339,343 | ||||||
$ | 1,291,962 | |||||||
Banks — 7.4% | ||||||||
Ameris Bancorp | 5,651 | $ | 301,481 | |||||
Columbia Banking System, Inc. | 5,480 | 224,132 | ||||||
First Republic Bank | 4,913 | 475,529 | ||||||
Sterling Bancorp | 29,013 | 681,806 | ||||||
Stock Yards Bancorp, Inc. | 11,375 | 433,956 | ||||||
Texas Capital Bancshares, Inc.(1) | 7,905 | 723,308 | ||||||
Western Alliance Bancorp(1) | 5,590 | 316,450 | ||||||
Wintrust Financial Corp. | 4,527 | 394,075 | ||||||
$ | 3,550,737 | |||||||
Biotechnology — 1.1% | ||||||||
Ligand Pharmaceuticals, Inc.(1) | 2,560 | $ | 530,355 | |||||
$ | 530,355 | |||||||
Capital Markets — 2.3% | ||||||||
Cohen & Steers, Inc. | 19,204 | $ | 800,999 | |||||
Lazard, Ltd., Class A | 6,358 | 310,970 | ||||||
$ | 1,111,969 | |||||||
Chemicals — 3.4% | ||||||||
Balchem Corp. | 8,302 | $ | 814,758 | |||||
NewMarket Corp. | 1,260 | 509,670 | ||||||
Valvoline, Inc. | 14,930 | 322,040 | ||||||
$ | 1,646,468 | |||||||
Commercial Services & Supplies — 4.5% | ||||||||
Brink’s Co. (The) | 8,291 | $ | 661,207 | |||||
Deluxe Corp. | 9,895 | 655,148 | ||||||
Multi-Color Corp. | 12,890 | 833,339 | ||||||
$ | 2,149,694 | |||||||
Communications Equipment — 0.3% | ||||||||
NETGEAR, Inc.(1) | 2,668 | $ | 166,750 | |||||
$ | 166,750 |
Security | Shares | Value | ||||||
Diversified Consumer Services — 5.5% | ||||||||
Bright Horizons Family Solutions, Inc.(1) | 4,709 | $ | 482,767 | |||||
Grand Canyon Education, Inc.(1) | 9,578 | 1,069,000 | ||||||
ServiceMaster Global Holdings, Inc.(1) | 18,215 | 1,083,246 | ||||||
$ | 2,635,013 | |||||||
Electric Utilities — 2.3% | ||||||||
ALLETE, Inc. | 3,875 | $ | 299,964 | |||||
Alliant Energy Corp. | 9,839 | 416,386 | ||||||
Pinnacle West Capital Corp. | 4,637 | 373,557 | ||||||
$ | 1,089,907 | |||||||
Electrical Equipment — 2.9% | ||||||||
AMETEK, Inc. | 11,245 | $ | 811,439 | |||||
EnerSys | 7,682 | 573,385 | ||||||
$ | 1,384,824 | |||||||
Electronic Equipment, Instruments & Components — 3.3% | ||||||||
Dolby Laboratories, Inc., Class A | 19,026 | $ | 1,173,714 | |||||
FLIR Systems, Inc. | 7,995 | 415,500 | ||||||
$ | 1,589,214 | |||||||
Energy Equipment & Services — 0.8% | ||||||||
Oceaneering International, Inc. | 14,220 | $ | 362,041 | |||||
$ | 362,041 | |||||||
Equity Real Estate Investment Trusts (REITs) — 9.1% | ||||||||
Acadia Realty Trust | 9,890 | $ | 270,689 | |||||
CubeSmart | 23,327 | 751,596 | ||||||
DCT Industrial Trust, Inc. | 10,970 | 732,028 | ||||||
Douglas Emmett, Inc. | 7,540 | 302,957 | ||||||
Education Realty Trust, Inc. | 13,815 | 573,322 | ||||||
Essex Property Trust, Inc. | 2,096 | 501,091 | ||||||
Federal Realty Investment Trust | 2,469 | 312,452 | ||||||
National Retail Properties, Inc. | 9,925 | 436,303 | ||||||
Paramount Group, Inc. | 32,609 | 502,179 | ||||||
$ | 4,382,617 | |||||||
Food & Staples Retailing — 2.4% | ||||||||
Performance Food Group Co.(1) | 31,743 | $ | 1,164,968 | |||||
$ | 1,164,968 | |||||||
Food Products — 0.8% | ||||||||
Lancaster Colony Corp. | 2,620 | $ | 362,660 | |||||
$ | 362,660 |
5 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Gas Utilities — 1.0% | ||||||||
ONE Gas, Inc. | 6,595 | $ | 492,910 | |||||
$ | 492,910 | |||||||
Health Care Equipment & Supplies — 6.9% | ||||||||
Cooper Cos., Inc. (The) | 1,050 | $ | 247,223 | |||||
ICU Medical, Inc.(1) | 2,188 | 642,506 | ||||||
Integra LifeSciences Holdings Corp.(1) | 8,454 | 544,522 | ||||||
Masimo Corp.(1) | 3,860 | 376,929 | ||||||
Teleflex, Inc. | 2,469 | 662,210 | ||||||
West Pharmaceutical Services, Inc. | 6,434 | 638,832 | ||||||
Wright Medical Group NV(1) | 8,650 | 224,554 | ||||||
$ | 3,336,776 | |||||||
Health Care Providers & Services — 2.1% | ||||||||
Amedisys, Inc.(1) | 9,885 | $ | 844,772 | |||||
Chemed Corp. | 515 | 165,732 | ||||||
$ | 1,010,504 | |||||||
Health Care Technology — 1.4% | ||||||||
Cotiviti Holdings, Inc.(1) | 15,055 | $ | 664,377 | |||||
$ | 664,377 | |||||||
Hotels, Restaurants & Leisure — 1.0% | ||||||||
Texas Roadhouse, Inc. | 7,385 | $ | 483,791 | |||||
$ | 483,791 | |||||||
Household Products — 1.3% | ||||||||
Central Garden & Pet Co., Class A(1) | 15,317 | $ | 619,879 | |||||
$ | 619,879 | |||||||
Insurance — 3.4% | ||||||||
First American Financial Corp. | 10,231 | $ | 529,147 | |||||
Horace Mann Educators Corp. | 14,640 | 652,944 | ||||||
RLI Corp. | 7,142 | 472,729 | ||||||
$ | 1,654,820 | |||||||
IT Services — 5.5% | ||||||||
Black Knight, Inc.(1) | 17,087 | $ | 915,009 | |||||
Conduent, Inc.(1) | 21,595 | 392,381 | ||||||
CSG Systems International, Inc. | 13,844 | 565,804 | ||||||
Euronet Worldwide, Inc.(1) | 9,361 | 784,171 | ||||||
$ | 2,657,365 |
Security | Shares | Value | ||||||
Machinery — 1.7% | ||||||||
Milacron Holdings Corp.(1) | 25,063 | $ | 474,443 | |||||
RBC Bearings, Inc.(1) | 2,506 | 322,798 | ||||||
$ | 797,241 | |||||||
Marine — 1.2% | ||||||||
Kirby Corp.(1) | 6,923 | $ | 578,763 | |||||
$ | 578,763 | |||||||
Multi-Utilities — 1.0% | ||||||||
CMS Energy Corp. | 10,295 | $ | 486,748 | |||||
$ | 486,748 | |||||||
Oil, Gas & Consumable Fuels — 3.4% | ||||||||
Diamondback Energy, Inc. | 6,565 | $ | 863,757 | |||||
Jagged Peak Energy, Inc.(1) | 9,794 | 127,518 | ||||||
PDC Energy, Inc.(1) | 10,600 | 640,770 | ||||||
$ | 1,632,045 | |||||||
Pharmaceuticals — 2.2% | ||||||||
Catalent, Inc.(1) | 10,474 | $ | 438,756 | |||||
Jazz Pharmaceuticals PLC(1) | 3,670 | 632,341 | ||||||
$ | 1,071,097 | |||||||
Road & Rail — 2.1% | ||||||||
Kansas City Southern | 6,115 | $ | 647,945 | |||||
Landstar System, Inc. | 3,365 | 367,458 | ||||||
$ | 1,015,403 | |||||||
Software — 8.8% | ||||||||
ACI Worldwide, Inc.(1) | 45,793 | $ | 1,129,713 | |||||
Altair Engineering, Inc., Class A(1) | 25,552 | 873,367 | ||||||
Blackbaud, Inc. | 7,070 | 724,322 | ||||||
CDK Global, Inc. | 3,760 | 244,588 | ||||||
Ceridian HCM Holding, Inc.(1) | 4,156 | 137,938 | ||||||
RealPage, Inc.(1) | 20,838 | 1,148,174 | ||||||
$ | 4,258,102 | |||||||
Specialty Retail — 1.0% | ||||||||
Lithia Motors, Inc., Class A | 1,385 | $ | 130,980 | |||||
Tractor Supply Co. | 4,445 | 339,998 | ||||||
$ | 470,978 |
6 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2018
Portfolio of Investments (Unaudited) — continued
Security | Shares | Value | ||||||
Textiles, Apparel & Luxury Goods — 2.8% | ||||||||
Carter’s, Inc. | 3,485 | $ | 377,739 | |||||
Columbia Sportswear Co. | 4,045 | 369,996 | ||||||
Steven Madden, Ltd. | 11,038 | 586,118 | ||||||
$ | 1,333,853 | |||||||
Thrifts & Mortgage Finance — 0.5% | ||||||||
Essent Group, Ltd.(1) | 7,169 | $ | 256,794 | |||||
$ | 256,794 | |||||||
Trading Companies & Distributors — 1.6% | ||||||||
Applied Industrial Technologies, Inc. | 11,219 | $ | 787,013 | |||||
$ | 787,013 | |||||||
Total Common Stocks | $ | 47,027,638 | ||||||
Short-Term Investments — 1.8% | ||||||||
Description | Units | Value | ||||||
Eaton Vance Cash Reserves Fund, LLC, 2.09%(2) | 859,068 | $ | 859,068 | |||||
Total Short-Term Investments | $ | 859,068 | ||||||
Total Investments — 99.5% | $ | 47,886,706 | ||||||
Other Assets, Less Liabilities — 0.5% | $ | 259,927 | ||||||
Net Assets — 100.0% | $ | 48,146,633 |
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, 2018. |
7 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2018
Statement of Assets and Liabilities (Unaudited)
Assets | June 30, 2018 | |||
Unaffiliated investments, at value (identified cost, $35,520,810) | $ | 47,027,638 | ||
Affiliated investment, at value (identified cost, $859,085) | 859,068 | |||
Dividends receivable | 37,118 | |||
Dividends receivable from affiliated investment | 1,119 | |||
Receivable for investments sold | 236,073 | |||
Receivable for Fund shares sold | 113,820 | |||
Total assets | $ | 48,274,836 | ||
Liabilities |
| |||
Payable for Fund shares redeemed | $ | 43,673 | ||
Payable to affiliates: | ||||
Investment adviser fee | 25,319 | |||
Distribution and service fees | 8,888 | |||
Trustees’ fees | 605 | |||
Other | 2,172 | |||
Accrued expenses | 47,546 | |||
Total liabilities | $ | 128,203 | ||
Net Assets | $ | 48,146,633 | ||
Sources of Net Assets |
| |||
Paid-in capital | $ | 34,887,282 | ||
Accumulated net investment loss | (43,692 | ) | ||
Accumulated net realized gain | 1,796,232 | |||
Net unrealized appreciation | 11,506,811 | |||
Net Assets | $ | 48,146,633 | ||
Class A Shares |
| |||
Net Assets | $ | 33,812,871 | ||
Shares Outstanding | 1,390,647 | |||
Net Asset Value and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 24.31 | ||
Maximum Offering Price Per Share | ||||
(100 ÷ 94.25 of net asset value per share) | $ | 25.79 | ||
Class C Shares |
| |||
Net Assets | $ | 2,361,128 | ||
Shares Outstanding | 109,352 | |||
Net Asset Value and Offering Price Per Share* | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 21.59 | ||
Class I Shares |
| |||
Net Assets | $ | 11,972,634 | ||
Shares Outstanding | 481,710 | |||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
(net assets ÷ shares of beneficial interest outstanding) | $ | 24.85 |
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, 2018
Statement of Operations (Unaudited)
Investment Income | Six Months Ended June 30, 2018 | |||
Dividends | $ | 247,536 | ||
Dividends from affiliated investment | 8,617 | |||
Total investment income | $ | 256,153 | ||
Expenses |
| |||
Investment adviser fee | $ | 146,350 | ||
Distribution and service fees | ||||
Class A | 40,575 | |||
Class C | 10,948 | |||
Trustees’ fees and expenses | 1,035 | |||
Custodian fee | 17,548 | |||
Transfer and dividend disbursing agent fees | 42,120 | |||
Legal and accounting services | 20,372 | |||
Printing and postage | 7,898 | |||
Registration fees | 21,960 | |||
Miscellaneous | 7,203 | |||
Total expenses | $ | 316,009 | ||
Deduct — | ||||
Allocation of expenses to affiliates | $ | 9,230 | ||
Total expense reductions | $ | 9,230 | ||
Net expenses | $ | 306,779 | ||
Net investment loss | $ | (50,626 | ) | |
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) — | ||||
Investment transactions | $ | 2,080,670 | ||
Investment transactions — affiliated investment | 88 | |||
Net realized gain | $ | 2,080,758 | ||
Change in unrealized appreciation (depreciation) — | ||||
Investments | $ | 1,216,905 | ||
Investments — affiliated investment | 52 | |||
Net change in unrealized appreciation (depreciation) | $ | 1,216,957 | ||
Net realized and unrealized gain | $ | 3,297,715 | ||
Net increase in net assets from operations | $ | 3,247,089 |
9 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2018
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | ||||||
From operations — | ||||||||
Net investment loss | $ | (50,626 | ) | $ | (133,829 | ) | ||
Net realized gain | 2,080,758 | 2,719,251 | ||||||
Net change in unrealized appreciation (depreciation) | 1,216,957 | 3,736,549 | ||||||
Net increase in net assets from operations | $ | 3,247,089 | $ | 6,321,971 | ||||
Distributions to shareholders — | ||||||||
From net realized gain | ||||||||
Class A | $ | — | $ | (2,250,679 | ) | |||
Class C | — | (170,691 | ) | |||||
Class I | — | (748,940 | ) | |||||
Total distributions to shareholders | $ | — | $ | (3,170,310 | ) | |||
Transactions in shares of beneficial interest — | ||||||||
Proceeds from sale of shares | ||||||||
Class A | $ | 458,256 | $ | 3,689,532 | ||||
Class C | 160,474 | 309,569 | ||||||
Class I | 1,072,344 | 7,001,138 | ||||||
Net asset value of shares issued to shareholders in payment of distributions declared | ||||||||
Class A | — | 1,888,108 | ||||||
Class C | — | 167,311 | ||||||
Class I | — | 570,718 | ||||||
Cost of shares redeemed | ||||||||
Class A | (1,308,008 | ) | (7,524,476 | ) | ||||
Class C | (183,195 | ) | (685,772 | ) | ||||
Class I | (1,156,583 | ) | (2,986,506 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | $ | (956,712 | ) | $ | 2,429,622 | |||
Net increase in net assets | $ | 2,290,377 | $ | 5,581,283 | ||||
Net Assets |
| |||||||
At beginning of period | $ | 45,856,256 | $ | 40,274,973 | ||||
At end of period | $ | 48,146,633 | $ | 45,856,256 | ||||
Accumulated undistributed net investment income (loss) included in net assets |
| |||||||
At end of period | $ | (43,692 | ) | $ | 6,934 |
10 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2018
Financial Highlights
Class A | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 22.700 | $ | 21.100 | $ | 19.550 | $ | 22.460 | $ | 22.070 | $ | 16.260 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.028 | ) | $ | (0.070 | ) | $ | (0.058 | ) | $ | (0.111 | ) | $ | (0.113 | ) | $ | (0.087 | ) | ||||||
Net realized and unrealized gain (loss) | 1.638 | 3.281 | 3.025 | (0.539 | ) | 0.503 | 6.017 | |||||||||||||||||
Total income (loss) from operations | $ | 1.610 | $ | 3.211 | $ | 2.967 | $ | (0.650 | ) | $ | 0.390 | $ | 5.930 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (0.120 | ) | |||||||||||
From net realized gain | — | (1.611 | ) | (1.417 | ) | (2.260 | ) | — | — | |||||||||||||||
Total distributions | $ | — | $ | (1.611 | ) | $ | (1.417 | ) | $ | (2.260 | ) | $ | — | $ | (0.120 | ) | ||||||||
Net asset value — End of period | $ | 24.310 | $ | 22.700 | $ | 21.100 | $ | 19.550 | $ | 22.460 | $ | 22.070 | ||||||||||||
Total Return(2) | 7.09 | %(3)(4) | 15.38 | %(4) | 15.44 | % | (2.99 | )% | 1.77 | % | 36.54 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 33,813 | $ | 32,397 | $ | 32,005 | $ | 30,930 | $ | 35,786 | $ | 42,046 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(5) | 1.35 | %(4)(6) | 1.36 | %(4) | 1.41 | % | 1.32 | % | 1.31 | % | 1.31 | % | ||||||||||||
Net investment loss | (0.25 | )%(6) | (0.32 | )% | (0.29 | )% | (0.48 | )% | (0.52 | )% | (0.45 | )% | ||||||||||||
Portfolio Turnover | 18 | %(3) | 65 | % | 67 | % | 83 | % | 55 | % | 61 | % |
(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 0.04% and 0.01% of average daily net assets for the six months ended June 30, 2018 and year ended December 31, 2017, respectively). Absent this reimbursement, total return would be lower. |
(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
Special Equities Fund
June 30, 2018
Financial Highlights — continued
Class C | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 20.230 | $ | 19.110 | $ | 17.960 | $ | 20.970 | $ | 20.760 | $ | 15.390 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment loss(1) | $ | (0.103 | ) | $ | (0.215 | ) | $ | (0.191 | ) | $ | (0.262 | ) | $ | (0.260 | ) | $ | (0.216 | ) | ||||||
Net realized and unrealized gain (loss) | 1.463 | 2.946 | 2.758 | (0.488 | ) | 0.470 | 5.683 | |||||||||||||||||
Total income (loss) from operations | $ | 1.360 | $ | 2.731 | $ | 2.567 | $ | (0.750 | ) | $ | 0.210 | $ | 5.467 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (0.097 | ) | |||||||||||
From net realized gain | — | (1.611 | ) | (1.417 | ) | (2.260 | ) | — | — | |||||||||||||||
Total distributions | $ | — | $ | (1.611 | ) | $ | (1.417 | ) | $ | (2.260 | ) | $ | — | $ | (0.097 | ) | ||||||||
Net asset value — End of period | $ | 21.590 | $ | 20.230 | $ | 19.110 | $ | 17.960 | $ | 20.970 | $ | 20.760 | ||||||||||||
Total Return(2) | 6.72 | %(3)(4) | 14.46 | %(4) | 14.57 | % | (3.68 | )% | 1.01 | % | 35.59 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 2,361 | $ | 2,243 | $ | 2,316 | $ | 2,925 | $ | 2,913 | $ | 3,280 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(5) | 2.10 | %(4)(6) | 2.11 | %(4) | 2.16 | % | 2.06 | % | 2.06 | % | 2.06 | % | ||||||||||||
Net investment loss | (1.00 | )%(6) | (1.07 | )% | (1.05 | )% | (1.22 | )% | (1.26 | )% | (1.20 | )% | ||||||||||||
Portfolio Turnover | 18 | %(3) | 65 | % | 67 | % | 83 | % | 55 | % | 61 | % |
(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 0.04% and 0.01% of average daily net assets for the six months ended June 30, 2018 and year ended December 31, 2017, respectively). Absent this reimbursement, total return would be lower. |
(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. |
12 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2018
Financial Highlights — continued
Class I | ||||||||||||||||||||||||
Six Months Ended June 30, 2018 (Unaudited) | Year Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net asset value — Beginning of period | $ | 23.170 | $ | 21.460 | $ | 19.820 | $ | 22.670 | $ | 22.220 | $ | 16.320 | ||||||||||||
Income (Loss) From Operations | ||||||||||||||||||||||||
Net investment income (loss)(1) | $ | 0.001 | $ | (0.010 | ) | $ | (0.009 | ) | $ | (0.047 | ) | $ | (0.056 | ) | $ | (0.029 | ) | |||||||
Net realized and unrealized gain (loss) | 1.679 | 3.331 | 3.066 | (0.543 | ) | 0.506 | 6.044 | |||||||||||||||||
Total income (loss) from operations | $ | 1.680 | $ | 3.321 | $ | 3.057 | $ | (0.590 | ) | $ | 0.450 | $ | 6.015 | |||||||||||
Less Distributions | ||||||||||||||||||||||||
From net investment income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (0.115 | ) | |||||||||||
From net realized gain | — | (1.611 | ) | (1.417 | ) | (2.260 | ) | — | — | |||||||||||||||
Total distributions | $ | — | $ | (1.611 | ) | $ | (1.417 | ) | $ | (2.260 | ) | $ | — | $ | (0.115 | ) | ||||||||
Net asset value — End of period | $ | 24.850 | $ | 23.170 | $ | 21.460 | $ | 19.820 | $ | 22.670 | $ | 22.220 | ||||||||||||
Total Return(2) | 7.25 | %(3)(4) | 15.63 | %(4) | 15.69 | % | (2.70 | )% | 2.03 | % | 36.93 | % | ||||||||||||
Ratios/Supplemental Data |
| |||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 11,973 | $ | 11,216 | $ | 5,954 | $ | 9,087 | $ | 19,636 | $ | 18,404 | ||||||||||||
Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||
Expenses(5) | 1.10 | %(4)(6) | 1.11 | %(4) | 1.16 | % | 1.07 | % | 1.06 | % | 1.06 | % | ||||||||||||
Net investment income (loss) | 0.00 | %(6)(7) | (0.04 | )% | (0.05 | )% | (0.20 | )% | (0.25 | )% | (0.15 | )% | ||||||||||||
Portfolio Turnover | 18 | %(3) | 65 | % | 67 | % | 83 | % | 55 | % | 61 | % |
(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 0.04% and 0.01% of average daily net assets for the six months ended June 30, 2018 and year ended December 31, 2017, respectively). Absent this reimbursement, total return would be lower. |
(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. |
(7) | Amount is less than 0.005%. |
13 | See Notes to Financial Statements. |
Eaton Vance
Special Equities Fund
June 30, 2018
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, 2018, 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
14 |
Eaton Vance
Special Equities Fund
June 30, 2018
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, 2018 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, 2017, the Fund had a net capital loss of $271,189 attributable to security transactions incurred after October 31, 2017 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, 2018.
The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2018, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 36,386,298 | ||
Gross unrealized appreciation | $ | 11,817,211 | ||
Gross unrealized depreciation | (316,803 | ) | ||
Net unrealized appreciation | $ | 11,500,408 |
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, 2018, the Fund’s investment adviser fee amounted to $146,350. 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.
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, 2019. Thereafter, the reimbursement may be changed or terminated at any time. Pursuant to this agreement, EVM was allocated $9,230 of the Fund’s operating expenses for the six months ended June 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, 2018, EVM earned $16,328 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 $531 as its portion of the sales charge on sales of Class A shares for the six months ended June 30, 2018. EVD also received distribution and service fees from Class A and Class C shares (see Note 4).
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, 2018, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of the above organizations.
15 |
Eaton Vance
Special Equities Fund
June 30, 2018
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, 2018 amounted to $40,575 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, 2018, the Fund paid or accrued to EVD $8,211 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, 2018 amounted to $2,737 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, 2018, the Fund was informed that EVD received no CDSCs paid by Class A and Class C shareholders.
6 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $8,326,746 and $9,954,981, respectively, for the six months ended June 30, 2018.
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, 2018 | Year Ended December 31, 2017 | ||||||
Sales | 19,821 | 167,494 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 84,043 | ||||||
Redemptions | (56,577 | ) | (340,791 | ) | ||||
Net decrease | (36,756 | ) | (89,254 | ) | ||||
Class C | Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | ||||||
Sales | 7,447 | 15,591 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 8,340 | ||||||
Redemptions | (8,975 | ) | (34,265 | ) | ||||
Net decrease | (1,528 | ) | (10,334 | ) |
16 |
Eaton Vance
Special Equities Fund
June 30, 2018
Notes to Financial Statements (Unaudited) — continued
Class I | Six Months Ended June 30, 2018 | Year Ended December 31, 2017 | ||||||
Sales | 45,930 | 313,156 | ||||||
Issued to shareholders electing to receive payments of distributions in Fund shares | — | 24,916 | ||||||
Redemptions | (48,257 | ) | (131,500 | ) | ||||
Net increase (decrease) | (2,327 | ) | 206,572 |
At June 30, 2018, 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 18.7% 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 October 30, 2018. 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, 2018.
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, 2018, 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 | $ | 47,027,638 | * | $ | — | $ | — | $ | 47,027,638 | |||||||
Short-Term Investments | — | 859,068 | — | 859,068 | ||||||||||||
Total Investments | $ | 47,027,638 | $ | 859,068 | $ | — | $ | 47,886,706 |
* | The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments. |
At June 30, 2018, there were no investments transferred between Level 1 and Level 2 during the six months then ended.
17 |
Eaton Vance
Special Equities Fund
June 30, 2018
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 24, 2018, 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 2018. 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 fund’s investment strategies and policies; |
• | 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 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; |
18 |
Eaton Vance
Special Equities Fund
June 30, 2018
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, 2018, with respect to one or more funds, the Board met seven 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 nine 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. 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.
19 |
Eaton Vance
Special Equities Fund
June 30, 2018
Board of Trustees’ Contract Approval — continued
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, 2017 for the Fund. In this regard, the Board noted that the performance of the Fund was lower than the median performance of the Fund’s peer group and lower than the median performance of the Fund’s custom peer group for the three-year period. The Board also noted that the performance of the Fund was lower than its primary benchmark index for the three-year period. 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, 2017, 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.
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 2017 profits with respect to the Fund, the implementation of breakpoints in the advisory fee schedule is not warranted at this time.
20 |
Eaton Vance
Special Equities Fund
June 30, 2018
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
Richard F. Froio
Chief Compliance Officer
Trustees of Eaton Vance Special Equities Fund
William H. Park
Chairperson
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 |
21 |
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 Advisers International Ltd., 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.
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.
22 |
This Page Intentionally Left Blank
This Page Intentionally Left Blank
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 6.30.18
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
Not required in this filing.
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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Not applicable.
Item 13. 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 21, 2018 |
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 21, 2018 |
By: | /s/ Payson F. Swaffield | |
Payson F. Swaffield | ||
President | ||
Date: | August 21, 2018 |