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EATON VANCE GROWTH TRUST
For the Worldwide Health Sciences Portfolio
[logo]
Semi-Annual Shareholder Report
February 28, 1997
SPONSOR AND ADMINISTRATOR OF WORLDWIDE HEALTH
SCIENCES PORTFOLIO
Eaton Vance Management
24 Federal Street
Boston, MA 02110
ADVISER OF
WORLDWIDE HEALTH SCIENCES PORTFOLIO
Mehta and Isaly Asset Management, Inc.
41 Madison Avenue
New York, NY 10010-2202
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
TRANSFER AGENT
First Data Investors Services Group
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
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<TABLE>
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WORLDWIDE HEALTH SCIENCES PORTFOLIO
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1997
(UNAUDITED)
<CAPTION>
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COMMON STOCKS AND WARRANTS - 95.26%
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MARKET
VALUE PERCENTAGE OF
SECURITY SHARES (NOTE 1-A) NET ASSETS
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<S> <C> <C> <C>
MAJOR CAPITALIZATION - NORTH AMERICA - 11.52%
Centocor, Inc. (a) 90,000 $ 3,408,750 3.83%
Genzyme (a) 90,000 2,317,500 2.60
Pharmacia & Upjohn (a) 50,000 1,843,750 2.07
Warner-Lambert Co. 32,000 2,688,000 3.02
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10,258,000 11.52
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SPECIALTY CAPITALIZATION - NORTH AMERICA - 32.63%
Agouron Pharmaceuticals, Inc. (a) 30,000 2,640,000 2.96
Alexion Pharmaceuticals, Inc. (a) 150,000 1,706,250 1.92
Arris Pharmaceutical Corp. (a) 130,000 1,706,250 1.92
Aviron (a) 125,000 1,281,250 1.44
Cambridge Neuroscience, Inc. (a) 110,000 1,375,000 1.54
CytoTherapeutics, Inc. (a) 120,000 1,020,000 1.15
Immnunex Corp. (a) 25,000 706,250 0.79
Incyte Pharmaceuticals, Inc. (a) 30,000 1,590,000 1.78
Isis Pharmaceuticals, Inc. (a) 150,000 2,906,250 3.26
Millennium Pharmaceuticals (a) 92,500 1,549,375 1.74
Neurocrine BioScience (a) 100,000 1,150,000 1.29
Pharmacopeia, Inc. (a) 100,000 1,737,500 1.95
Premier Research Worldwide (a) 70,000 1,548,750 1.74
SangStat Medical Corp. (a) 100,000 3,200,000 3.59
Sequana Therapeutics, Inc. (a) 60,000 915,000 1.03
Tularik, Inc. (a) 80,000 800,000 0.90
Vertex Pharmaceuticals, Inc. (a) 70,000 3,237,500 3.63
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29,069,375 32.63
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MAJOR CAPITALIZATION - EUROPE - 15.32%
Altana 4,500 3,817,858 4.29
Ares-Serono 4,000 4,126,650 4.63
Novartis 5,000 5,701,003 6.40
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13,645,511 15.32
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SPECIALTY CAPITALIZATION - EUROPE - 11.31%
Cambridge Antibody Technology, Ltd. (a) (Note 5) 61,408 1,412,384 1.59
Cambridge Antibody Technology, Ltd. - Warrants (a) 3,100 31,000 0.03
Ciba Spec. Chemical - Rights (a) 5,000 316,806 0.35
Celltech (a) 225,000 2,382,851 2.68
Ethical Holdings ADR (a) 150,000 750,000 0.84
Swiss Serum Institute (a) 700 5,190,552 5.82
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10,083,593 11.31
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MAJOR CAPITALIZATION - FAR EAST - 15.70%
Banyu Pharmaceutical Co. 200,000 2,925,410 3.28
Eisai Co. Ltd. 156,000 2,930,064 3.29
Fujisawa Pharmaceutical 335,000 2,923,333 3.28
Sankyo Co. Ltd. 100,000 2,792,437 3.13
Takeda Chemical Industries 120,000 2,413,464 2.72
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13,984,708 15.70
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SPECIALTY CAPITALIZATION - FAR EAST - 8.78%
Amrad (a) 1,000,000 1,444,941 1.62
Biota Holdings Limited (a) 644,640 2,298,620 2.58
Biota Holdings Limited - Warrants (a) 78,738 190,231 0.21
Rohto Pharmaceutical 191,000 1,793,725 2.01
Teikoku Hormone Manufacturing 160,000 2,087,679 2.36
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7,815,196 8.78
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TOTAL INVESTMENTS (identified cost, $69,134,232) 84,856,383 95.26
OTHER ASSETS, LESS LIABILITIES 4,221,797 4.74
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NET ASSETS $89,078,180 100.00%
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(a) Non-income producing security.
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See notes to financial statements
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<TABLE>
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FINANCIAL STATEMENTS
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
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February 28, 1997 (Unaudited)
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<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (identified cost basis, $69,134,232) $84,856,383
Cash 5,936,387
Foreign currency, at value (identified cost, $654,434) 650,638
Dividends receivable 12,160
Deferred organization expenses 11,973
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Total assets $91,467,541
LIABILITIES:
Payable for investments purchased $2,377,080
Payable for open forward foreign currency contracts (Note 1H) 10,422
Payable to affiliate for Trustees' fees 1,190
Accrued expenses 669
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Total liabilities 2,389,361
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NET ASSETS applicable to investors' interest in Portfolio $89,078,180
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SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $73,350,237
Net unrealized appreciation of investments and foreign
currency (computed on the basis of identified cost) 15,727,943
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Total $89,078,180
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</TABLE>
See notes to financial statements
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<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
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For the six months ended February 28, 1997 (Unaudited)
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<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes, $5,157) $ 52,422
Expenses --
Investment adviser fee (Note 2) $ 294,731
Administration fee (Note 2) 80,887
Compensation of Trustees not members of the
Administrator's organization 2,971
Custodian fee (Note 1D) 21,013
Legal and accounting services 3,602
Amortization of organization expenses (Note 1E) 1,250
Miscellaneous 11,194
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Total expenses $ 415,648
Less reduction of custodian fee (Note 1D) 20,562
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Net expenses 395,086
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Net investment loss $ (342,664)
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) --
Investment transactions (identified cost basis) $1,655,953
Foreign currency transactions 23,867
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Net realized gain on investment transactions $1,679,820
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $6,668,950
Foreign currency transactions 5,792
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Net change in unrealized appreciation of investments 6,674,742
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Net realized and unrealized gain on investments $8,354,562
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Net increase in net assets from operations $8,011,898
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</TABLE>
See notes to financial statements
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<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
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SIX MONTHS ENDED
FEBRUARY 28, 1997
(UNAUDITED)
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<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment loss $ (342,664)
Net realized gain on investments and foreign currency transactions 1,679,820
Change in unrealized appreciation (depreciation) 6,674,742
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Net increase in net assets resulting from operations $ 8,011,898
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Capital transactions --
Contributions $ 98,319,216
Withdrawals (17,352,934)
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Net increase in net assets resulting from capital transactions $ 80,966,282
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Net increase in net assets $ 88,978,180
NET ASSETS:
At beginning of period 100,000
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At end of period $ 89,078,180
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<CAPTION>
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SUPPLEMENTARY DATA
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SIX MONTHS ENDED
FEBRUARY 28, 1997
(UNAUDITED)
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<S> <C>
RATIOS (to average daily net assets):
Expenses 1.28%+
Net expenses, after custodian fee reduction 1.22%+
Net investment loss (1.06)%+
PORTFOLIO TURNOVER 15%
NET ASSETS, end of period (000s omitted) $89,078
AVERAGE COMMISSION RATE (PER SHARE)(1) $0.0400
+ Annualized.
(1) Average commission rate paid is computed by dividing the total dollar amount of
commissions paid during the period by the total number of shares purchased and sold
during the period for which commissions were charged.
</TABLE>
See notes to financial statements
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NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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(1) SIGNIFICANT ACCOUNTING POLICIES
Worldwide Health Sciences Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. The Portfolio, which was organized as a trust under the
laws of the State of New York on March 26, 1996, seeks to provide long-term
growth of capital by investing primarily in common stocks, and securities
convertible into common stock, of domestic and foreign companies engaged in
medical research and the health care industry. The Declaration of Trust
permits the Trustees to issue interests in the Portfolio. Investment
operations began on September 1, 1996, with the acquisition of securities with
a value of $51,528,696, including unrealized appreciation of $9,053,201, in
exchange for interest in the Portfolio by one of the Portfolio's investors.
The following is a summary of significant accounting policies of the
Portfolio. The policies are in conformity with generally accepted accounting
principles.
A. INVESTMENT VALUATIONS -- Securities listed on a recognized stock exchange,
whether U.S. or foreign, are valued at the last reported sale price on that
exchange prior to the time when assets are valued or prior to the close of
trading on the New York Stock Exchange. In the event there are no sales, the
last available sale price will be used. If a security is traded on more than
one exchange, the security is valued at the last sale price on the exchange
where the stock is primarily traded. Securities for which market quotations
are not readily available and other assets are valued on a consistent basis at
fair value as determined in good faith by or under the supervision of the
Portfolio's officers in a manner specifically authorized by the Board of
Directors.
B. INCOME -- Dividend income is recorded on the ex-dividend date, except that
certain dividends from foreign securities are recorded on the ex-dividend date
or as soon thereafter as the Portfolio is informed of the dividend.
C. 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. Since
some of the Portfolio's investors are regulated investment companies that
invest all or substantially all of their assets in the Portfolio, the
Portfolio must satisfy the applicable source of income and diversification
requirements (under the Code) in order for its investors to satisfy them. The
Portfolio will allocate at least annually among its investors each investor's
distributive share of the Portfolio's net investment income, net realized
capital gains, and any other items of income, gain, loss, deduction or credit.
D. EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by the credits which are determined based on the average daily
cash balances the Portfolio maintains with IBT. Any significant credit balance
used to reduce the Portfolio's custodian fee is reflected as a reduction of
operating expenses on the Statement of Operations.
E. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
F. USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
G. FOREIGN CURRENCY TRANSLATION -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency rates are
recorded for financial statement purposes as net realized gains and losses on
investments. That portion of unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not separately
disclosed.
H. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counterparties to
meet the terms of their contracts and from movements in the value of a foreign
currency relative to the U.S. dollar. The Portfolio will enter into forward
contracts for hedging purposes as well as non-hedging purposes. The forward
foreign currency exchange contracts are adjusted by the daily exchange rate of
the underlying currency and any gains and losses are recorded for financial
statement purposes as unrealized until such time as the contracts have been
closed.
I. OTHER -- Investment transactions are accounted for on a trade date basis.
J. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
February 28, 1997 and for the six month period then ended have not been audited
by independent certified public accountants, but in the opinion of the
Portfolio's management, reflect all adjustments, consisting of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
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(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to the Advisory Agreement, Mehta and Isaly Asset Management, Inc.
("M&I"), formerly G/A Capital Management, Inc., serve as the investment adviser
of the Portfolio. Under this agreement M&I receive a monthly fee at the annual
rate of 1% of the Portfolio's first $30 million in average net assets, 0.90% of
the next $20 million in average net assets, and 0.75% of average net assets in
excess of $50 million. The fee rate declines for net assets of $500 million and
greater. Beginning September 1, 1997, M&I may receive a performance based
adjustment of up to 0.25% of the average daily net assets of the Portfolio based
upon the investment performance of the Portfolio compared to the Standard &
Poor's Index of 500 Common Stocks over specified periods. For the six months
ended February 28, 1997, the fee was equivalent to 0.91% (annualized) of the
Portfolio's average daily net assets and amounted to $294,731.
Under an Administration Agreement between the Portfolio and its
Administrator, Eaton Vance Management (EVM), EVM manages and administers the
affairs of the Portfolio. EVM earns a monthly fee in the amount of 1/48th of
1% (equal to 0.25% annually) of the average daily net assets of the Portfolio
up to $500,000,000, and at reduced rates as daily net assets exceed that
level. For the six months ended February 28, 1997, the administration fee was
0.25% of average net assets.
Except as to Trustees of the Portfolio who are not members of the Adviser or
EVM's organization, officers and Trustees receive remuneration for their
services to the Portfolio out of such investment adviser and administrative
fees. Certain of the officers and Trustees of the Portfolio are also officers
or directors/trustees of the above organizations. Trustees of the Portfolio
that are not affiliated with the Investment Adviser or Administrator may elect
to defer receipt of all or a portion of their annual fees in accordance with
the terms of the Trustees Deferred Compensation Plan. For the six months ended
February 28, 1997, no significant amounts have been deferred.
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(3) INVESTMENTS
Purchases and sales of investments other than U.S. Government securities and
short-term obligations aggregated $34,490,900 and $9,523,741, respectively.
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(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at February 28, 1997, as computed on a federal income tax basis, were as
follows:
Aggregate cost $69,134,232
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Gross unrealized appreciation $17,576,664
Gross unrealized depreciation (1,854,513
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Net unrealized appreciation $15,722,151
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(5) RESTRICTED SECURITIES
In February 1993, the Portfolio acquired 9,000 shares of common stock of
Cambridge Antibody Technology Limited ("CAT") at a cost of $297,000 by entering
into a Subscription Agreement between the Portfolio, CAT and Peptide Technology
Limited ("Peptech"). The Subscription Agreement granted to the Portfolio an
option to require Peptech, the major shareholder of CAT, to purchase up to 85%
of the CAT shares owned by the Portfolio on September 1, 1995 (the "Put
Option"), subject to certain conditions. The Put Option was exercised by the
Portfolio, but was canceled in December 1995 when the Portfolio received an
additional 4,734 shares of CAT from Peptech in exchange for the Portfolio's
withdrawal of the Put Options. In separate transactions that occurred in
December 1995, August 1996 and October 1996, the Portfolio acquired an
additional 47,674 shares of CAT, bringing the total number of shares owned by
the Portfolio to 61,408. The value of the CAT shares and warrants at February
28, 1997 is $1,443,384, representing 1.6% of the Portfolio's net assets.
Management has valued the common stock at $23 per share and $10 per warrant,
which reflects recent market activity. Valuation of the security is continually
monitored and is reviewed by the Board of Directors.
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(6) RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
Investing in securities issued by companies whose principal business activities
are outside the United States may involve significant risks not present in
domestic investments. For example, there is generally less publicly available
information about foreign companies, particularly those not subject to the
disclosure and reporting requirements of the U.S. securities laws. Foreign
issuers are generally not bound by uniform accounting, auditing, and financial
reporting requirements and standards of practice comparable to those applicable
to domestic issuers. Investments in foreign securities also involve the risk of
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the Portfolio, political or financial instability or diplomatic
and other developments which could affect such investments. Foreign stock
markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In general, there is less
overall governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the United States.
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(7) FINANCIAL INSTRUMENTS
The Portfolio regularly trades in financial instruments with off-balance sheet
risk in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options, forward foreign currency exchange contracts and 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 does 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 February 28,
1997 is as follows:
<TABLE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACT
PURCHASES
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<CAPTION>
DELIVER
SETTLEMENT (IN UNITED STATES NET UNREALIZED
DATE IN EXCHANGE FOR DOLLARS) DEPRECIATION
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<C> <C> <C> <C>
3/3/97 Swiss Franc 1,766,463 $1,209,740 $10,422
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(8) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a $120 million unsecured line of credit with a bank.
Borrowings will be made by the Portfolio or Fund solely to facilitate the
handling of unusual and/or unanticipated short-term cash requirements. Interest
is charged to each participating portfolio or fund based on its borrowings at
the bank's base rate or at an amount above either the banks' adjusted
certificate of deposit rate, Eurodollar rate or federal funds effective rate. In
addition, a fee computed at an annual rate of 0.15% on the daily unused portion
of the facility is allocated among the participating portfolios and funds at the
end of each quarter. The Portfolio did not have any significant borrowings or
allocated fees during the six months ended February 28, 1997.
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WORLDWIDE HEALTH OFFICERS INDEPENDENT TRUSTEES
SCIENCES PORTFOLIO JAMES B. HAWKES DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 Chairman, Newspapers of
SAMUEL D. ISALY New England, Inc.
Vice President and
Portfolio Manager SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
VIREN MEHTA Investment Banking, Harvard
Vice President University Graduate School of
Business Administration
WILLIAM CHISHOLM
Vice President NORTON H. REAMER
President and Director, United Asset
RAYMOND O'NEILL Management Corporation
Vice President
JOHN L. THORNDIKE
MICHEL NORMANDEAU Formerly Director, Fiduciary Company
Vice President Incorporated
JAMES L. O'CONNOR JACK L. TREYNOR
Treasurer Investment Adviser and
Consultant
THOMAS OTIS
Secretary
