TO SHAREHOLDERS
EV Traditional Growth Fund had a total return of 1.1 percent during the
six-months ended February 28, 1995. That return reflects a decline in net asset
value per share to $7.28 from $7.96 on August 31, 1994, and the reinvestment of
$0.03 per share in dividends and $0.69 per share in capital gain distributions,
and does not include the effect of the Fund's 4.75 percent sales charge. For
comparison, the S&P 500 Stock Index an unmanaged index of common stocks had a
total return of 4.0 percent for the same period.
AMID A ROBUST ECONOMY IN 1994, GROWTH STOCKS LAGGED THE MARKET...
Investors in growth stocks have faced an increasingly challenging period in
recent years as the limelight shifted to cyclical stocks. Since the end of the
recession in 1991, cyclical stocks have been the clear market leaders.
Benefiting from cost-cutting, a leaner industrial sector, and a stronger overall
economy, cyclicals saw earnings surge higher from their recession levels and
captured the attention of investors. Meanwhile, many growth stocks, despite
their record of consistent earnings growth, generally lagged the overall market.
A look at history provides some valuable insight. According to Standard &
Poor's, over the past two decades, growth stock valuations have typically sold
at a 25-to-60 percent premium over value stocks. In the period since the
recession, however, growth stock valuations have remained at only a modest
premium to the overall market. Having languished during the robust economic
recovery, many growth stocks are selling at very modest valuations relative to
their historical levels.
WITH A SLOWING ECONOMY, GROWTH STOCKS MAY RETURN TO FAVOR...
We expect that corporate earnings should continue to post positive results in
1995. However, it's likely that the industrial sectors profit growth will slow
somewhat, leaving growth stocks as a sound alternative for investors. The sharp
rise in interest rates has taken the edge off inflation as the Federal Reserve
intended. However, by some measures, it has also slowed the economy, and that
could result in a more favorable environment for growth stocks. If the economy,
as expected by many economists, slows to a 2-to-3 percent growth rate later this
year, investors may very well shift their focus back to the growth sector for
superior earnings growth.
Naturally, past performance is no guarantee of future trends. But history
suggests that growth stocks should over time revert to their historical market
premiums. The growth stock approach has historically been a sound investment
formula for investors. EV Traditional Growth Fund through its investment in the
Growth Portfolio will continue to focus on companies with the ability to attain
superior earnings growth and provide the potential for good long-term investment
results.
Sincerely,
[Photograph of /s/ James B. Hawkes
James B. Hawkes] James B. Hawkes
President
April 20, 1995
<PAGE>
MANAGEMENT DISCUSSION
An interview with Peter F. Kiely, Vice President and Portfolio Manager of Growth
Portfolio.
Q. PETER, HOW WOULD YOU EVALUATE RECENT MARKET TRENDS?
A. Clearly, in the robust economy of the past two years, cyclical stocks have
assumed market leadership as they benefited from increased economic activity
and the many restructurings and cost reductions within the industrial
sector.
Meanwhile, within the growth stock segment of the market, many growth
companies have continued to register consistent earnings progress, although
selectivity has been the key for investors. More recently, in this six-month
period, cyclicals have given ground somewhat, while growth stocks appear to
have gathered additional momentum.
Q. WHAT ARE YOU LOOKING FOR IN A POTENTIAL INVESTMENT?
A. My prevailing preference is for growth stocks, defined as companies that we
expect to show faster-than-average growth over time with respect to earnings
and cash flow. Naturally, I place a good deal of emphasis on earnings
growth, profitability, unit sales growth, and financial strength, each of
which is a fairly consistent hallmark of a good growth company At any given
time, I may consider cyclical stocks, turnaround situations, or value stocks
if I believe they will contribute to the Fund. Frankly, at times there is a
fine line between what is defined as growth and what is defined as value,
but generally, EV Traditional Growth Fund will be dominated by traditional
growth stocks.
- --------------------------------
PHOTO OF PETER F. KIELY
- --------------------------------
Q. HOW HAVE YOU POSITIONED THE PORTFOLIO IN THIS CLIMATE?
A. Because I follow a bottom-up, stock-by-stock approach to investing, there
are generally no sweeping economic themes within the Portfolio. The Fund's
holdings therefore tend to represent a wide range of industries. Among the
larger sectors represented in the Portfolio are finance, consumer
non-durables, basic industries, and business products.
Q. COULD YOU PROFILE SOME OF THE FUND'S STRONGER PERFORMERS DURING THIS PERIOD?
A. Certainly. Within the financial sector, MGIC Investment Corp was a strong
performer, up about 24 percent. MGIC is the nation's largest provider of
private mortgage insurance, which enables many first-time buyers to purchase
a home with less than a 20 percent down payment. Benefiting from pent-up
housing demand and favorable demographic trends, MGIC has grown earnings
nearly 20 percent annually in recent years. Of course, past performance does
not guarantee future earnings growth.
Elsewhere, Novell and Intel, two leading technology companies, each fared
well during the period, rising 34 percent and 21 percent, respectively.
Industry is increasingly pursuing technology as a means to greater
efficiency. Novel maintains a dominant share of the market for network
operating systems, while Intel's advanced microprocessors are much in demand
by the personal computer industry.
Q. DOES THE PORTFOLIO HAVE A LARGE EXPOSURE TO FOREIGN MARKETS?
A. Foreign companies themselves represented only about 9 percent of the
Portfolio at February 28. However, many of the Portfolio's holdings have a
product exposure to growing foreign markets. For example, American
International Group, the Portfolio's largest holding, offers insurance
products in 130 countries, with foreign operations accounting for the vast
majority of the company's life insurance income. Similarly, Coca Cola Co.
produces the most popular beverage in the world and continues to expand its
brand dominance globally, with especially high growth rates in emerging
markets.
Q. WE'VE TALKED ABOUT WHAT LEADS YOU TO BUY A STOCK. WHAT ABOUT YOUR SELL
DISCIPLINE?
A. I monitor the progress of a stock relative to our earnings expectations,
constantly updating earnings estimates with our analysts. If a stock becomes
fully-valued in our view, I may sell it in favor of another stock with more
attractive potential. Signs of sales weakness, changing industry trends, or
a change in the competitive environment are other factors that may prompt a
sale.
Q. IN YOUR VIEW, WHAT'S COMPELLING ABOUT GROWTH STOCKS AT THIS TIME?
A. Historically, as the economy moderates, market leadership has tended to
shift from cyclical issues to growth stocks. The rationale is simple:
investors are drawn to stocks with superior earnings momentum. Naturally,
past performance is no guarantee of future results, but if the economy
weakens significantly, interest rates should decline at some point, creating
a climate that typically favors the growth stock segment of the market. Over
time, superior earnings growth tends to be rewarded.
FOCUSING ON COMPANIES WITH
SUPERIOR EARNINGS GROWTH...
THE PORTFOLIO'S 10 LARGEST HOLDINGS*:
Company Business
American International Group..................................Insurance
Reuters Holdings..............................................Business products
MGIC Investment...............................................Financial
Tele-Communications, Inc......................................Broadcasting
Anadarko Petroleum............................................Oil services
Home Depot Inc................................................Retail
Sofamor Danek.................................................Healthcare
Astra AB A....................................................Drugs
Loctite.......................................................Chemicals
Illinois Tool Works...........................................Basic industries
*By market value as of 2/28/95.
<PAGE>
EV TRADITIONAL GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investment in Growth Portfolio (Portfolio), at value (Note
1A, Note 1E) $121,338,787
Receivable for Fund shares sold 62,373
Deferred organization expenses (Note 1D) 10,171
------------
Total assets $121,411,331
LIABILITIES:
Payable for Fund shares redeemed $99,570
Payable to affiliates -- Custodian fee 476
Accrued service fees (Note 4) 15,921
Accrued expenses 14,477
-------
Total liabilities 130,444
------------
NET ASSETS for 16,648,072 shares of beneficial
interest outstanding $121,280,887
============
SOURCES OF NET ASSETS:
Proceeds from sales of shares (including shares
issued to shareholders electing to receive
payment of distributions in shares), less cost of
shares redeemed $111,132,687
Distributions in excess of net realized gain on
investment transactions (1,678,135)
Unrealized appreciation of investments 11,371,934
Undistributed net investment income 454,401
------------
Total net assets $121,280,887
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE --
($121,280,887 / 16,648,072 shares) $7.28
=====
COMPUTATION OF OFFERING PRICE:
Offering price per share (100/95.25 of $7.28) $7.64
=====
On sales of $100,000 or more, the offering price is reduced.
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the Six Months Ended February 28, 1995 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividends allocated from Portfolio
(net of withholding tax of $90) $ 762,515
Interest allocated from Portfolio 192,159
Expenses allocated from Portfolio (435,937)
------------
Total investment income $ 518,737
Expenses --
Custodian fee (Note 3) $ 4,676
Service fees (Note 4) 44,554
Transfer and dividend disbursing agent fees 47,508
Printing and postage 14,369
Legal and accounting services 2,427
Registration fees 11,528
Amortization of organization expense (Note 1D) 1,140
Miscellaneous 24,227
------------
Total expenses 150,429
------------
Net investment income $ 368,308
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized loss on investments (identified
cost basis) $(1,500,867)
Change in unrealized appreciation of
investments 2,332,220
------------
Net realized and unrealized gain on
investments $ 831,353
------------
Net increase in net assets resulting from operations $ 1,199,661
============
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED
FEBRUARY 28, YEAR ENDED
1995 AUGUST 31,
(UNAUDITED) 1994
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 368,308 $ 816,415
Net realized gain (loss) on investment
transactions (1,500,867) 10,792,104
Increase (decrease) in unrealized
appreciation of investments 2,332,220 (12,299,922)
------------ ------------
Net increase (decrease) in net assets
from operations $ 1,199,661 $ (691,403)
Distributions to shareholders --
From net investment income (490,875) (1,048,189)
From net realized gain on investments (9,204,345) (170,972)
In excess of net realized gain on
investments (1,678,135) --
Net increase (decrease) from Fund share
transactions (Note 2) 1,185,224 (11,084,451)
------------ ------------
Net decrease in net assets $ (8,988,470) $(12,995,015)
------------ ------------
NET ASSETS:
At beginning of year 130,269,357 143,264,372
------------ ------------
At end of year $121,280,887 $130,269,357
============ ============
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
1995 -----------------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE --
Beginning of year $ 7.960 $ 8.070 $ 8.520 $ 8.450 $ 7.750 $ 8.560
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income $ 0.022 $ 0.052 $ 0.030 $ 0.046 $ 0.101 $ 0.109
Net realized and unrealized
gain (loss) on investments 0.018 (0.092) 0.660 0.544 1.499 (0.319)
------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations $ 0.040 $(0.040) $ 0.690 $ 0.590 $ 1.600 $(0.210)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.030) $(0.060) $ -- $(0.040) $(0.080) $(0.110)
In excess of net realized
gain on investments (0.106) -- -- -- -- --
From net realized gains
on investments (0.584) (0.010) (1.140) (0.480) (0.820) (0.490)
------- ------- ------- ------- ------- -------
Total distributions $(0.720) $(0.070) $(1.140) $(0.520) $(0.900) $(0.600)
------- ------- ------- ------- ------- -------
NET ASSET VALUE -- End of year $ 7.280 $ 7.960 $ 8.070 $ 8.520 $ 8.450 $ 7.750
======= ======= ======= ======= ======= =======
TOTAL RETURN<F3> 1.05% (0.75)% 7.63% 7.22% 23.24% (2.65)%
RATIOS/SUPPLEMENTAL DATA
(to average daily net assets):
Net assets, end of year
(000's omitted) $121,281 $130,269 $143,264 $143,695 $143,090 $80,582
Expenses<F1> 0.97%<F4> 0.95% 0.89% 0.87% 0.92% 0.96%
Net investment income 0.61%<F4> 0.61% 0.56% 0.53% 1.35% 1.38%
PORTFOLIO TURNOVER<F2> 89% 84% 68% 73% 66%
<FN>
<F1>Includes the Fund's share of Growth Portfolio's allocated expenses for the six months ended February 28, 1995 and the period
from August 2, 1994, to August 31, 1994.
<F2>Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments directly in
securities. The portfolio turnover for the period since the Fund transferred substantially all of its investable assets to the
Portfolio is shown in the Portfolio's financial statements which are included elsewhere in this report.
<F3>Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on
the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value
on the record date.
<F4> Annualized.
</TABLE>
<PAGE>
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Traditional Growth Fund (the "Fund"), is a diversified series of Eaton Vance
Growth Trust (the "Trust"). The Trust is an entity of the type commonly known as
a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as an open-end, management investment company. On
August 2, 1994, the Fund transferred substantially all of its investable assets
in interests in Growth Portfolio (the "Portfolio"), a New York Trust, having the
same investment objective 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 (98.8% at February 28, 1995). 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
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. INVESTMENT VALUATIONS -- Valuations 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 consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund. Prior to the Fund's investment in the Portfolio, the Fund
held its investments directly.
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 all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal income
or excise tax is necessary.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on the
straight-line basis over five years.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income and dividends to shareholders
are recorded on the ex-dividend date and interest income is recorded on the
accrual basis.
F. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
February 28, 1995 and for the period then ended have not been audited by
independent certified public accountants, 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.
G. DISTRIBUTIONS -- Generally accepted accounting principles require that
differences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
- ------------------------------------------------------------------------------
(2) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
SIX MONTHS ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
Sales 4,160,505 $ 31,575,635 16,016,377 $ 126,721,042
Issued to
shareholders
electing to
receive
payment of
distribution
in Fund shares 1,395,476 9,604,381 110,217 872,830
Redemptions (5,271,750) (39,994,792) (17,522,433) (138,678,323)
---------- ------------- ---------- -------------
Net increase
(decrease) 284,231 $ 1,185,224 (1,395,839) $ (11,084,451)
========== ============= ========== =============
- ------------------------------------------------------------------------------
(3) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves only 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. Except as to Trustees of the Fund and the Portfolio
who are not members of EVM's or BMR's organization, officers and Trustees
receive remuneration for their services to the Fund out of such investment
adviser fee. Investors Bank & Trust Company (IBT), an affiliate of EVM, serves
as custodian of the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based on
the average cash balances the Fund or the Portfolio maintains with IBT. Certain
of the officers and Trustees of the Fund and Portfolio are officers and
directors/trustees of the above organizations.
- ------------------------------------------------------------------------------
(4) SERVICE PLAN
The Trustees of the Trust on behalf of the Fund have adopted a Service Plan on
July 7, 1993 designed to meet the requirements of Rule 12b-1 under the
Investment Company Act of 1940 and the service fee requirements of the revised
sales charge rule of The National Association of Securities Dealers Inc. The
Service Plan replaced the Fund's distribution plan which became effective on
June 12, 1989. The Service Plan provides that the Fund may make service fee
payments to the Principal Underwriter, Eaton Vance Distributors, Inc., a
subsidiary of Eaton Vance Management, Authorized Firms or other persons in
amounts not exceeding .25% of the Fund's average daily net assets for any fiscal
year. The Trustees have implemented the Service Plan by authorizing the Fund to
make quarterly service fee payments to the Principal Underwriter and Authorized
Firms in amounts not expected to exceed .25% of that portion of the Fund's
average daily net assets for any fiscal year which is attributable to shares of
the Fund sold on or after June 12, 1989 by such persons and remaining
outstanding for at least twelve months. Such payments are made for personal
services and/or the maintenance of shareholder accounts. Provision for service
fee payments amounted to $44,554 for the six months ended February 28, 1985.
- ------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended February 28, 1995 aggregated $31,667,405 and $43,214,556,
respectively.
- ------------------------------------------------------------------------------
(6) DISTRIBUTION
On February 21, 1995, the Trustees declared a dividend from net investment
income of $0.02 per share payable on March 31, 1995 to the shareholders of
record at the close of business on March 1, 1995.
<PAGE>
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCKS - 96.2%
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
ADVERTISING - 1.3%
Omnicom Group, Inc. 30,000 $ 1,593,750
The parent company of DDB Needham ------------
Worldwide and BBDO Worldwide, two full
service advertising agency networks.
AUTOMOTIVE - 2.0%
Bandag Inc. 42,000 $ 2,520,000
Dominates the domestic tire retread ------------
market, selling through 600 franchised
dealers, and has a growing presence in
foreign markets.
BANKS - 2.2%
Citicorp 60,000 $ 2,700,000
Operates the largest money center bank in ------------
the U.S. with a substantial worldwide
presence.
BEVERAGES - 4.3%
Coca-Cola Co. 60,000 $ 3,300,000
Manufactures soft drink concentrates and
syrups that make Coca Cola and other
brands including Minute Maid orange
juice.
PepsiCo, Inc. 50,000 1,956,250
Global soft drink producer with
businesses in snack foods and fast food
restaurants.
------------
$ 5,256,250
------------
BROADCASTING - 3.2%
Tele-Communications, Inc. Class A* 175,000 $ 3,992,187
The largest operator of cable television ------------
systems in the U.S.
BUSINESS PRODUCTS AND SERVICES - 5.3%
Reuters Holdings PLC ADR 110,000 $ 4,661,250
Worldwide provider of proprietary
financial data and information.
WMX Technologies, Inc. 70,000 1,846,250
World's largest provider of collection,
disposal and remediation services for
solid and hazardous waste.
------------
$ 6,507,500
------------
CHEMICALS - 6.3%
Corning Inc. 50,000 $ 1,606,250
A diversified manufacturer of
sophisticated communications (fiber
optics), ceramics (pollution control
devices) and glass (TV screens, automobile
headlights, cookwear and dishes)
products and provider of medical
laboratory services.
Great Lakes Chemical Corp. 40,000 2,405,000
Specialty chemical manufacturer of a wide
range of products including flame
retardants, water treatments, fuel
additives.
Loctite Corp. 80,000 3,680,000
Manufacturer of adhesives for consumer
and industrial markets.
------------
$ 7,691,250
------------
COMPUTER EQUIPMENT AND SERVICES - 7.9%
Automatic Data Processing, Inc. 50,000 $ 3,075,000
The leading independent computing and
payroll processing services firm in the
U.S.
General Motors Corp. Class E 60,000 2,302,500
Stock represents participation in the
Electronic Data Systems Division of
General Motors. EDS designs, installs and
operates data processing and
communications systems for GM and other
customers.
Microsoft Corp. 25,000 1,575,000
Dominant developer of microcomputer
software for business and personal use.
Novell Inc.* 130,000 2,721,875
Vendor of local area network operating
systems that allow computers of any size
and make to work together.
------------
$ 9,674,375
------------
DRUGS & HEALTH CARE SERVICES - 8.3%
Astra AB A Free Shares 150,000 $ 3,775,965
Swedish based international
pharmaceutical firm with drugs for the
control of ulcers and asthma.
Sofamor Danek Group, Inc.* 182,000 3,799,250
The dominant supplier of spinal implant
devices used in surgical treatment of
spinal diseases and deformities.
U.S. Healthcare, Inc. 60,000 2,580,000
Operator of health maintenance
organizations serving the Mid-Atlantic,
Greater New York and New England regions.
------------
$ 10,155,215
------------
ELECTRONIC INSTRUMENTATION - 2.2%
Millipore Corp. 50,000 $ 2,656,250
Products use membrane separations ------------
technology to analyze and purify fluids
for a variety of high tech industries.
FINANCIAL SERVICES - 6.7%
Federal National Mortgage Association 30,000 $ 2,313,750
U.S. Government sponsored mortgage lender
and provider of secondary mortgage
market.
Franklin Resources Inc. 50,000 1,937,500
Provides investment management and
related services to a family of equity
and fixed income mutual funds.
MGIC Investment Corp. Wisc. 105,000 4,003,125
The leading provider of private mortgage
insurance coverage to U.S. banks and
other mortgage suppliers.
------------
$ 8,254,375
------------
FOOD - 0.8%
Archer Daniels Midland Co. 50,000 $ 950,000
Major factor in soybean processing, corn ------------
refining and flour milling.
HOTELS AND RESTAURANTS - 2.3%
Carnival Corp. 120,000 $ 2,850,000
Operator of large cruise ships plying the ------------
Caribbean, Mediterranean, South Pacific
and Alaska.
HOUSEHOLD PRODUCTS - 2.6%
Gillette Co. 40,000 $ 3,165,000
A global company with internationally ------------
recognized brands in razors and blades,
small appliances, cosmetics, dental and
other consumer products.
INSURANCE - 7.5%
American International Group, Inc. 45,000 $ 4,668,750
One of the world's leading insurance
companies, operating in 130 countries.
Progressive Corp., Inc. 50,000 1,943,750
Underwriter of non-standard automobile
and other specialty personal lines of
insurance.
UNUM Corp. 60,000 2,550,000
A writer of group long term disability
insurance.
------------
$ 9,162,500
------------
MACHINERY - 2.9%
Illinois Tool Works Inc. 80,000 $ 3,590,000
Manufacturer of industrial components and ------------
other specialty products and equipment.
METALS & MINING - 3.9%
Freeport McMoRan Copper & Gold, Inc. 135,000 $ 2,835,000
Operator of third largest copper mine in
the world with world's largest gold
reserves.
J & L Specialty Steel, Inc. 100,000 1,925,000
A low cost producer in the domestic
stainless steel industry.
------------
$ 4,760,000
------------
OIL - 5.2%
Anadarko Petroleum Corp. 90,000 $ 3,948,750
Leading independent natural gas and crude
oil production company.
Phillips Petroleum Co. 75,000 2,503,125
Engaged in crude oil and natural gas
exploration and production worldwide and
petroleum refining and marketing
primarily in the U.S.
------------
$ 6,451,875
------------
PAPER & FOREST PRODUCTS - 2.6%
Willamette Industries, Inc. 60,000 $ 3,225,000
Integrated forest products company ------------
selling solid wood products,
containerboard and corrugated boxes and
white business papers and computer forms.
PUBLISHING - 4.3%
Harcourt General, Inc. 75,000 $ 2,784,375
Diversified company with major interests
in publishing and the Neiman Marcus Group
of retail companies.
McGraw Hill Inc. 35,000 2,467,500
Supplies informational products and
services for businesses, education and
industry through a broad range of media.
------------
$ 5,251,875
------------
RETAILING - 4.7%
Gap (The) Inc. 60,000 $ 1,950,000
A nationwide retailer of moderately
priced casual and activewear clothing
plus separate chains for Gap Kids, Banana
Republic and more recently, Old Navy
Clothing Company.
Home Depot, Inc. 85,000 3,814,375
A chain of do-it-yourself warehouse style
stores.
------------
$ 5,764,375
------------
SEMICONDUCTORS - 5.8%
Advanced Micro Devices, Inc. 75,000 $ 2,278,125
A producer of a broad line of
semiconductors including microprocessors
for telecommunications, office
automation, and networking applications.
Intel Corp. 36,000 2,871,000
A manufacturer of semiconductors and
other microcomputer components and
systems which comprise the heart of the
personal computer.
Motorola Inc. 35,000 2,012,500
A leading supplier of semiconductors and
two-way radios, paging equipment, and
cellular mobile telephone systems.
------------
$ 7,161,625
------------
TELEPHONE UTILITIES - 3.9%
Alltel Corp. 90,000 $ 2,576,250
Operates local telephone systems serving
1.6 million customers, an information
procession business for financial,
telecommunications and healthcare
companies and cellular operations in 19
states.
Telephone & Data Systems, Inc. 50,000 2,281,250
A provider of local telephone service, as
well as cellular and paging services.
------------
$ 4,857,500
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $106,766,615) $118,190,902
------------
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 3.7%
- --------------------------------------------------------------------------------
FACE AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
CXC Inc., 6.10s, 3/1/95 $3,216 $ 3,216,000
Chevron Oil Finance Co., 5.82s, 3/1/95 1,267 1,267,000
------------
TOTAL SHORT-TERM OBLIGATIONS, AT
AMORTIZED COST $ 4,483,000
------------
TOTAL INVESTMENTS
(IDENTIFIED COST, $111,249,615) $122,673,902
OTHER ASSETS, LESS LIABILITIES - 0.1% 140,645
------------
NET ASSETS - 100% $122,814,547
============
*Non-income producing security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$111,249,615) $ 122,673,902
Cash 753
Dividends receivable 130,775
Deferred organization expenses (Note 1C) 14,490
-------------
Total assets $ 122,819,920
LIABILITIES:
Custodian fee payable $4,045
Accrued expenses 1,328
------
Total liabilities 5,373
-------------
NET ASSETS applicable to investor's interest in Portfolio $(122,814,547)
=============
SOURCES OF NET ASSETS:
Net proceeds capital contributions and withdrawals $ 111,390,260
Unrealized appreciation of investments (computed on
the basis of identified cost) 11,424,287
-------------
Total $ 122,814,547
=============
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the six months ended February 28, 1995 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividend (net of withholding tax of $91) $ 765,387
Interest 192,921
----------
Total income $ 958,308
Expenses --
Investment adviser fee (Note 2) $ 384,275
Custodian fee (Note 2) 37,310
Trustee fees 2,083
Legal and audit fees 9,229
Amortization of organization expense (Note 1C) 1,512
Miscellaneous 3,127
-----------
Total expenses 437,536
----------
Net investment income $ 520,772
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis) $(1,504,169)
Increase in unrealized appreciation of
investments 2,384,573
-----------
Net realized (loss) and unrealized gain on
investments 880,404
----------
Net increase in net assets from operations $1,401,176
==========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994*
---------------- ----------------
INCREASE IN NET ASSETS:
From operations --
Net investment income $ 520,772 $ 69,589
Net realized gain (loss) on
investment transactions (1,504,169) 1,063,482
Increase in unrealized
appreciation of investments 2,384,573 2,595,384
---------------- ----------------
Increase in net assets from
operations $ 1,401,176 $ 3,728,455
---------------- ----------------
Capital transactions --
Contributions 33,292,216 140,348,725
Withdrawals (43,414,714) (12,641,351)
---------------- ----------------
Increase (decrease) in net
assets resulting from capital
transactions $ (10,122,498) $127,707,374
---------------- ----------------
Total increase (decrease) in
net assets $ (8,721,322) $131,435,829
---------------- ----------------
NET ASSETS:
At beginning of period 131,535,869 100,040
---------------- ----------------
At end of period $ 122,814,547 $ 131,535,869
================ ================
*For the period from the start of business, August 2, 1994, to August 31, 1994.
The accompanying notes are an integral part of the financial statements
<PAGE>
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994*
---------------- ----------------
RATIOS (As a percentage of average net assets):
Expenses 0.72%+ 0.73%+
Net investment income 0.85%+ 0.66%+
PORTFOLIO TURNOVER 32% 4%
+Annualized.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1995
(UNAUDITED)
(1) SIGNIFICANT ACCOUNTING POLICIES
Growth Portfolio (the Portfolio) is registered under the Investment Company Act
of 1940 as a diversified open-end investment company which was organized as a
trust under the laws of the State of New York on August 2, 1994. The Declaration
of Trust permits the Trustees to issue interests in the Portfolio. Investment
operations began on August 2, 1994, with the acquisition of investments with a
value of $127,122,709, including unrealized appreciation of $6,444,330 in
exchange for an 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 -- Investments listed on securities exchanges or in the
NASDAQ National Market are valued at closing sale prices. Listed or unlisted
investments for which closing sale prices are not available are valued at the
mean between the latest bid and asked prices. Short-term obligations are valued
at amortized cost, which approximates value. Foreign securities held by the Fund
are valued in U.S. dollars at the current exchange rate.
B. INCOME TAXES -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally must
satisfy the applicable source of income and diversification requirements (under
the Internal Revenue Code) in order for its investors to satisfy them. The
Portfolio will allocate at least annually among its investors each investors'
distributive share of the Portfolio's net taxable (if any) and tax-exempt
investment income, net realized capital gains, and any other items of income,
gain, loss, deduction or credit. Interest income received by the Portfolio on
investments in municipal bonds, which is excludable from gross income under the
Internal Revenue Code, will retain its status as income exempt from Federal
income tax when allocated to the Portfolio's investors. The portion of such
interest, if any, earned on private activity bonds issued after August 7, 1986
may be considered a tax preference item for investors.
C. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line basis
over five years.
D. LEGAL FEES -- Legal fees and other related expenses incurred as part of
negotiations of the terms and requirements of capital infusions, or that are
expected to result in the restructuring of or a plan of reorganization for an
investment are added to the cost of the investment.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income and distributions to
shareholders are recorded on the ex-dividend date and interest income is
recorded on the accrual basis.
- --------------------------------------------------------------------------------
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to the Portfolio. The fee
is based upon a percentage of average daily net assets. For the six months ended
February 28, 1995, the fee was equivalent to 0.625% (annualized) of the
Portfolio's average net assets for such period and amounted to $384,275. Except
as to Trustees of the Portfolio who are not members of EVM's or BMR's
organization, officers and Trustees receive remuneration for their services to
the Fund out of such investment adviser fee. Investors Bank & Trust Company
(IBT), an affiliate of EVM and BMR, serves as custodian of the Fund. Pursuant to
the custodian agreement, IBT receives a fee reduced by credits which are
determined based on the average daily cash balances the Portfolio maintains with
IBT. Certain of the officers and Trustees of the Portfolio are officers and
directors/trustees of the above organizations.
- --------------------------------------------------------------------------------
(3) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short term obligations,
aggregated $36,944,589 and $39,114,037, respectively.
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS The cost and unrealized
appreciation/depreciation in value of the investments owned at February 28,
1995, as computed on a federal income tax basis, are as follows:
Aggregate cost $111,249,615
============
Gross unrealized appreciation $ 15,198,431
Gross unrealized depreciation (3,774,144)
------------
Net unrealized appreciation $ 11,424,287
============
- --------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $120 million unsecured line of credit agreement with
a bank. The line of credit consists of $20 million committed facility and a $100
million discretionary facility. Borrowings will be made by the Portfolio solely
to facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each portfolio based on its borrowings at
an amount above either the bank's adjusted certificate of deposit rate, a
variable adjusted certificate of deposit rate, or a federal funds effective
rate. In addition, a fee computed at an annual rate of 1/4 of 1% on the $20
million committed facility and on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds and portfolios
at the end of each quarter. The Portfolio did not have any significant
borrowings or allocated fees during the period. At February 28, 1995, the Fund
did not have an outstanding balance pursuant to the line of credit.
<PAGE>
INVESTMENT MANAGEMENT
EV TRADITIONAL OFFICERS INDEPENDENT TRUSTEES
GROWTH FUND JAMES B. HAWKES DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 Chairman, Newspapers of
LANDON T. CLAY New England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
M. DOZIER GARDNER Jacob H. Schiff Professor of
Vice President Investment Banking, Harvard
University Graduate School of
PETER F. KIELY Business Administration
Vice President, Trustee
NORTON H. REAMER
JAMES L. O'CONNOR President and Director, United
Treasurer Asset Management Corporation
THOMAS OTIS JOHN L. THORNDIKE
Secretary Vice President and Director,
Fiduciary Trust Company
WILLIAM J. AUSTIN, JR.
Assistant Treasurer JACK L. TREYNOR
Investment Adviser
JANET E. SANDERS and Consultant
Assistant Treasurer
and
Assistant Secretary
A. JOHN MURPHY
Assistant Secretary
-------------------------------------------
GROWTH OFFICERS INDEPENDENT TRUSTEES
PORTFOLIO
24 Federal Street JAMES B. HAWKES DONALD R. DWIGHT
Boston, MA 02110 President, Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of
LANDON T. CLAY New England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
M. DOZIER GARDNER Jacob H. Schiff Professor of
Vice President Investment Banking, Harvard
University Graduate School of
PETER F. KIELY Business Administration
Vice President,
Trustee and NORTON H. REAMER
Portfolio Manager President and Director, United
Asset Management Corporation
JAMES L. O'CONNOR
Treasurer JOHN L. THORNDIKE
Vice President and Director,
THOMAS OTIS Fiduciary Trust Company
Secretary
JACK L. TREYNOR
WILLIAM J. AUSTIN, JR. Investment Adviser
Assistant Treasurer and Consultant
JANET E. SANDERS
Assistant Treasurer
and
Assistant Secretary
A. JOHN MURPHY
Assistant Secretary
<PAGE>
INVESTMENT ADVISER OF
GROWTH PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV TRADITIONAL GROWTH FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EV TRADITIONAL GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
T-GFSRC
EV TRADITIONAL [Logo]
GROWTH
FUND
SEMI-ANNUAL
SHAREHOLDER REPORT
FEBRUARY 28, 1995
