<PAGE>
To Shareholders
EV Traditional Growth Fund had a total return of 16.0% during the year ended
August 31, 1995. That return was the result of a rise in net asset value per
share to $8.33 on August 31, 1995, from $7.96 on August 31, 1994, and the
reinvestment of $0.05 per share in dividend income and $0.69 per share in
capital gain distributions. It does not include the Fund's maximum 4.75% sales
charge. For comparison, the S&P 500 Stock Index - an unmanaged index of common
stocks - had a total return of 21.4% for the same period.
IF CYCLICAL EARNINGS HAVE PEAKED, INVESTORS MAY TURN ONCE AGAIN TO TRADITIONAL
GROWTH STOCKS...
While posting strongly positive performance in 1995, growth stocks have
nonetheless continued to underperform cyclical stocks for the past several
years. Naturally, a strong economy has tended to favor cyclical issues. In
addition, the downsizing and restructuring of recent years has enabled large
industrial companies to markedly improve their profit picture. That has provided
a difficult competitive environment for investors in growth stocks. Recently,
however, there have been signs that the picture for growth stocks may brighten.
AFTER A YEAR OF RATE HIKES, THE FEDERAL RESERVE MAY BE POISED TO LOWER RATES...
Throughout the expansion, the Federal Reserve has continued to fight inflation,
and those efforts appear to have paid off handsomely. Higher rates, growing
global competition and ample labor supply have kept inflation in the 2% range.
With inflation posing no immediate threat to economic growth, the Fed started
lowering interest rates in early July and has since expressed a bias for still
lower rates in the future. A declining interest rate environment has
traditionally been beneficial for the growth stock sector, usually resulting in
a significant expansion of price earnings multiples.
AN AGING RECOVERY MAY MEAN WEAKER CORPORATE PROFITS, BUT OPPORTUNITIES IN GROWTH
STOCKS...
Since the end of World War II, economic expansions in the U.S. have averaged 49
months in duration. The current expansion, dating to March 1991, has now lasted
55 months. Amid concerns that the aging recovery may result in weaker profits
for large cap cyclical companies, the growth sector is drawing increasing
interest from investors for its consistent earnings growth with less reliance on
the economic cycle. Naturally, it is impossible to predict accurately the
direction of the economy, and historical performance is no guarantee of future
trends.
Still, a focus on high-quality growth stocks has served investors well in the
past. We believe EV Traditional Growth Fund will remain well positioned to
benefit from a potential market focus on growth stocks and to produce
continuing, sound long-term performance.
- ------------------------- Sincerely,
[Photo of James B. Hawkes] /s/ James B. Hawkes
James B. Hawkes
President
- ------------------------- October 20, 1995
<PAGE>
Management Discussion
An interview with Peter F. Kiely, Vice President
and Portfolio Manager of Growth Portfolio.
Q. PETER, THE FUND HAS HAD STRONGLY POSITIVE RETURNS IN THIS FISCAL YEAR. HOW
HAVE YOU STRUCTURED THE PORTFOLIO?
A. As I've reminded shareholders in the past, I tend not to structure the
Portfolio around a given economic outlook, unless there is an especially
compelling reason to do so. The flavor of the Portfolio remains very
company-specific, and once again, the Portfolio's holdings therefore tend to
represent a wide range of industries. Financial stocks remain the largest
single sector weighting, and these stocks have fared well as interest rates
have leveled out. Business products and services constitute another large
component of the Portfolio. Innovations in technology are driving many of the
restructurings in business today, and many more innovative products appear on
the horizon. The Portfolio also owns a number of stocks in the media and
leisure segments. The consolidation of the industry suggests that these
companies are growing more integrated and will provide a wider array of media
and broadcast services.
Q. FINANCIAL STOCKS HAVE BEEN A LARGE PART OF THE PORTFOLIO. WHAT DID YOU FIND
ATTRACTIVE ABOUT THE SECTOR?
A. In my view, the financial sector offers significant value at a time when
there appears to be anecdotal signs of weakening in the economy. There are
suggestions the Fed may lower rates in the near future. While those factors
constitute a favorable climate for financial stocks, the primary reason we
have owned the financial companies is that they have good growth
characterisitcs and good profitability. The fundamentals of the insurance
industry, for example, have improved significantly. American International
Group and General RE are prominent Portfolio investments.
[Photo of Peter F. Kiely]
Q. WHERE WAS THE PORTFOLIO UNDERWEIGHTED?
A. The Portfolio was underweighted in capital goods and retail stocks. These
companies tend to be relatively sensitive to the vagaries of the economy, and
therefore tend not to have classic growth characteristics. There are concerns
that corporate earnings may be weakening, and, therefore, capital goods
providers may experience less demand over the next few quarters. In the
retail area, consumers have overextended their credit limits, leaving little
room for much more discretionary spending.
Q. WHAT WERE SOME OF THE FUND'S STRONGER PERFORMERS DURING THE YEAR?
A. Interestingly, the Fund's stronger performers during the year represented a
wide spectrum of the economy. Intel, the leading semiconductor company that
has thrived amid the surge in personal computer sales, rose nearly 87%.
Triton Energy rose 53% on the strength of their discovery of vast reserves of
oil and natural gas in Colombia and off the coast of Thailand. And Microsoft,
the leading manufacturer of operating system software, increased 49% as the
company introduced its Windows 95 product.
Q. FOREIGN COMPANIES CONSTITUTE ABOUT 10% OF THE PORTFOLIO. HAVE YOU MADE A
DELIBERATE EFFORT TO EXPAND ABROAD?
A. Actually, no. We've simply found that some of these foreign companies have
very strong earnings prospects and should benefit from the economic growth in
emerging markets. For example, in the telecom sector, Nokia, of Finland, and
L.M. Ericsson, of Sweden, are two major players in the emerging phone
markets. A very small percentage of people in the emerging markets have
access to phones and these companies are well-positioned to provide equipment
and services. Reuters, of the U.K., is a diversified information services
company with a promising range of new products in the financial trading and
news gathering areas. Astra AB is a Swedish drug company that ranks among the
fastest growing pharmaceutical companies in the world.
Q. IN YOUR VIEW, PETER, WHAT IS THE OUTLOOK FOR GROWTH STOCKS IN THE YEAR AHEAD?
A. Following the strong summer rally, the market has turned increasingly choppy
in the past month or so. I think that's a function of a growing uncertainty
over the strength of the economy and the future trend in earnings. In my
view, that provides an ideal opportunity for growth stocks.
Companies with consistent earnings growth are likely to find favor with
investors in periods of uncertainty. While past trends don't guarantee future
results, companies with growing earnings have historically rewarded investors
over the long haul. I believe growth stocks should continue to provide good
opportunities for patient investors.
- -------------------------------------------------------------------------------
A CONTINUING EMPHASIS ON
ABOVE-AVERAGE EARNINGS GROWTH...
THE PORTFOLIO'S 10 LARGEST HOLDINGS*:
Company Business
Astra AB A .......................... Drugs
American International Group ........ Insurance
Anadarko Petroleum .................. Oil & natural gas
Triton Energy ....................... Oil & natural gas
General RE Corp. .................... Reinsurance
Reuters Holding PLC ................. Business services
Omnicom Group ....................... Advertising
Intel Corp. ......................... Semiconductors
CBS, Inc. ........................... Broadcasting
Millipore Corp. ..................... Separation Tech.
- -------------------------------------------------------------------------------
*The holdings above represent 32% of the Portfolio's investments by market value
on August 31, 1995.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
EV TRADITIONAL GROWTH FUND AND THE S & P 500
From August 31, 1985 through August 31, 1995
AVERAGE ANNUAL 1 5 10
RETURNS Year Year Year
Incl. Max. Sales Charge 10.4% 9.3% 11.0%
Excl. Max. Sales Charge 16.0% 10.4% 11.6%
Date T. Growth Nav. T. Growth Off. S&P 500
8/85+ 10000 9519 10000
9/85 9605 9143 9757
10/85 10126 9639 10171
11/85 10853 10331 10833
12/85 11185 10647 11429
1/86 11280 10737 11456
2/86 12070 11489 12275
3/86 12485 11884 13034
4/86 12612 12005 12850
5/86 13154 12521 13495
6/86 13139 12506 13799
7/86 12214 11626 12989
8/86 12963 12339 13914
9/86 11695 11132 12840
10/86 12178 11592 13543
11/86 12231 11643 13834
12/86 12231 11643 13557
1/87 13948 13277 15343
2/87 15003 14281 15910
3/87 15327 14589 16448
4/87 15147 14418 16259
5/87 15435 14692 16357
6/87 15794 15034 17268
7/87 16656 15855 18101
8/87 17375 16539 18734
9/87 17108 16285 18408
10/87 13218 12582 14402
11/87 12342 11748 13173
12/87 13541 12889 14259
1/88 13728 13068 14835
2/88 14353 13662 15456
3/88 14102 13424 15070
4/88 14290 13603 15212
5/88 14228 13543 15261
6/88 14918 14200 16069
7/88 14730 14021 15982
8/88 14081 13404 15356
9/88 14503 13805 16120
10/88 14735 14026 16538
11/88 14419 13725 16226
12/88 14695 13988 16611
1/89 15760 15002 17792
2/89 15521 14774 17277
3/89 15893 15129 17786
4/89 16659 15857 18677
5/89 17183 16356 19334
6/89 17052 16232 19353
7/89 18320 17439 21063
8/89 18714 17813 21390
9/89 18894 17985 21422
10/89 18662 17764 20883
11/89 18871 17963 21228
12/89 19153 18232 21858
1/90 17844 16985 20354
2/90 18124 17252 20528
3/90 18594 17700 21197
4/90 18077 17207 20627
5/90 20146 19176 22525
6/90 20263 19288 22525
7/90 19887 18930 22407
8/90 18218 17342 20294
9/90 17032 16213 19444
10/90 16484 15690 19314
11/90 17685 16834 20471
12/90 18108 17236 21178
1/91 18821 17916 22057
2/91 20434 19451 23541
3/91 20832 19829 24243
4/91 20858 19855 24251
5/91 21921 20866 25186
6/91 20672 19678 24190
7/91 21868 20816 25275
8/91 22453 21372 25771
9/91 22187 21119 25482
10/91 23121 22008 25784
11/91 22347 21271 24652
12/91 25290 24073 27602
1/92 25093 23886 27053
2/92 25149 23939 27312
3/92 24273 23105 26908
4/92 23934 22782 27658
5/92 23962 22809 27685
6/92 23595 22459 27420
7/92 24329 23159 28500
8/92 24075 22917 27816
9/92 24415 23240 28284
10/92 24699 23510 28344
11/92 26289 25024 29202
12/92 26612 25331 29702
1/93 26452 25179 29911
2/93 25557 24328 30225
3/93 26232 24970 30995
4/93 24498 23319 30207
5/93 25012 23808 30894
6/93 24787 23594 31142
7/93 24370 23197 30976
8/93 25911 24664 32043
9/93 26168 24909 31944
10/93 26394 25124 32563
11/93 25492 24265 32143
12/93 25943 24695 32682
1/94 27137 25831 33745
2/94 26524 25248 32731
3/94 24679 23492 31453
4/94 24809 23615 31816
5/94 25100 23892 32211
6/94 23999 22844 31588
7/94 24938 23738 32583
8/94 25780 24540 33808
9/94 25163 23952 33132
10/94 25716 24478 33824
11/94 24740 23550 32487
12/94 24799 23606 33126
1/95 24942 23742 33930
2/95 26051 24798 35154
3/95 26841 25550 36341
4/95 26985 25686 37358
5/95 27666 26335 38714
6/95 28564 27189 39799
7/95 29389 27975 41064
8/95 29891 28453 41051
Past performance is not indicative of future result. Investment returns and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
Investment operations commenced on 8/1/52.
+Index information is available only at month-end; therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations.
FUND PERFORMANCE
In accordance with guidelines issued by the Securities and Exchange Commission,
we are including a performance chart that compares your Fund's total return with
that of a broad-based investment index. The lines on the chart represent the
total returns of $10,000 hypothetical investments in EV Traditional Growth Fund,
and the unmanaged S&P 500 Stock Index.
TOTAL RETURN FIGURES
The solid red line on the chart represents the Fund's performance at net asset
value. The total return figure reflects Fund expenses, and transaction costs.
The solid black line represents the Fund's performance including the Fund's 4.75
percent maximum current sales charge. The dotted line represents the performance
of the S&P 500 Stock Index, a broad-based, widely recognized unmanaged index of
common stocks. The Index's total return does not reflect any commissions or
expenses that would be incurred if an investor individually purchased or sold
the securities represented in the Index.
<PAGE>
EV TRADITIONAL GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
August 31, 1995
- ------------------------------------------------------------------------------
ASSETS:
Investment in Growth Portfolio (Portfolio), at
value (Note 1A) $131,243,407
Receivable for Fund shares sold 297
Deferred organization expenses (Note 1D) 9,012
------------
Total assets $131,252,716
LIABILITIES:
Payable for Fund shares redeemed $249,040
Payable to affiliates --
Trustees' fees 1,450
Custodian fee 758
Accrued expenses 35,371
--------
Total liabilities 286,619
------------
NET ASSETS for 15,724,672 shares of beneficial interest
outstanding $130,966,097
============
SOURCES OF NET ASSETS:
Paid-in capital $103,837,980
Accumulated net realized gain on investments 1,283,750
Net unrealized appreciation of investments from
Portfolio 25,695,715
Undistributed net investment income 148,652
------------
Total net assets $130,966,097
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE --
($130,966,097 / 15,724,672 shares of beneficial interest) $8.33
=====
COMPUTATION OF OFFERING PRICE:
Offering price per share (100/95.25 of $8.33) $8.75
=====
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 Year Ended August 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividends allocated from Portfolio (net of
withholding tax of $28,802) $ 1,436,983
Interest allocated from Portfolio 309,276
Expenses allocated from Portfolio (907,024)
-----------
Total investment income $ 839,235
Expenses --
Compensation of Trustees not members of the
Investment Adviser's organization (Note 3) $ 1,852
Custodian fee (Note 3) 12,082
Service fees (Note 4) 85,343
Transfer and dividend disbursing agent fees 97,089
Printing and postage 61,158
Registration fees 21,826
Legal and accounting services 13,567
Amortization of organization expenses
(Note 1D) 2,300
Miscellaneous 18,199
-----------
Total expenses 313,416
-----------
Net investment income $ 525,819
REALIZED AND UNREALIZED GAIN FROM PORTFOLIO:
Net realized gain on investment transactions
(identified cost basis) $ 1,314,198
Change in unrealized appreciation of investments 16,656,001
-----------
Net realized and unrealized gain on
investments $17,970,199
-----------
Net increase in net assets resulting from operations $18,496,018
===========
<PAGE>
- ------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
---------------------------
1995 1994
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 525,819 $ 816,415
Net realized gain on investment transactions 1,314,198 10,792,104
Change in unrealized appreciation
(depreciation) of investments 16,656,001 (12,299,922)
------------ ------------
Net increase (decrease) in net assets from
operations $ 18,496,018 $ (691,403)
------------ ------------
Distributions to shareholders --
From net investment income $ (525,819) $ (1,048,189)
In excess of net investment income (300,695) --
From net realized gain on investments (1,314,198) (170,972)
In excess of net realized gain on
investments (9,568,291) --
------------ ------------
Total distributions $(11,709,003) $ (1,219,161)
------------ ------------
Decrease in net assets resulting from Fund
share transactions (Note 2) $ (6,090,275) $(11,084,451)
------------ ------------
Net increase (decrease) in net assets $ 696,740 $(12,995,015)
------------ ------------
NET ASSETS:
At beginning of year 130,269,357 143,264,372
------------ ------------
At end of year $130,966,097 $130,269,357
============ ============
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS (for a share
outstanding throughout the year)
NET ASSET VALUE -- Beginning of year $ 7.960 $ 8.070 $ 8.520 $ 8.450 $ 7.750
------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income $ 0.024 $ 0.052 $ 0.030 $ 0.046 $ 0.101
Net realized and unrealized
gain (loss) on investments 1.086 (0.092) 0.660 0.544 1.499
------- ------- ------- ------- -------
Total income (loss) from
investment operations $ 1.110 $(0.040) $ 0.690 $ 0.590 $ 1.600
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.032) $(0.060) $ -- $(0.040) $(0.080)
In excess of net investment
income (0.018) -- -- -- --
From net realized gains on
investments (0.083) (0.010) (1.140) (0.480) (0.820)
In excess of net realized
gains on investments (0.607) -- -- -- --
------- ------- ------- ------- -------
Total distributions $(0.740) $(0.070) $(1.140) $(0.520) $(0.900)
------- ------- ------- ------- -------
NET ASSET VALUE -- End of year $ 8.330 $ 7.960 $ 8.070 $ 8.520 $ 8.450
======= ======= ======= ======= =======
TOTAL RETURN<F3> 15.95% (0.75)% 7.63% 7.22% 23.24%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's
omitted) $130,966 $130,269 $143,264 $143,695 $143,090
Ratio of net expenses to average
daily net assets<F1> 0.98% 0.95% 0.89% 0.87% 0.92%
Ratio of net investment income
to average daily net assets 0.42% 0.61% 0.56% 0.53% 1.35%
PORTFOLIO TURNOVER<F2> -- 89% 84% 68% 73%
<FN>
<F1> Includes the Fund's share of Growth Portfolio's allocated expenses, for the year ended August 31, 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.
</FN>
The accompanying notes are an integral part of the financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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 the 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 (97.94% at August 31, 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 determined in accordance with generally accepted accounting
principles. 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, options and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$10,724,772 as capital gain dividends for its taxable year ended August 31,
1994.
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. 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 in excess of accumulated
net realized gains.
<PAGE>
- ------------------------------------------------------------------------------
(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:
YEAR ENDED AUGUST 31,
-----------------------------------------------------
1995 1994
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- -------------
Sales 5,794,759 $ 43,816,293 16,016,377 $126,721,042
Issued to shareholders
electing to receive
payment of distribution
in Fund shares 1,428,098 9,842,305 110,217 872,830
Redemptions (7,862,026) (59,748,873) (17,522,433) (138,678,323)
---------- ----------- ----------- ------------
Net decrease (639,169) $ (6,090,275) (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 0.25% 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 0.25% 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 $85,343 for the year ended August 31, 1995.
- ------------------------------------------------------------------------------
(5) Investment Transactions
Increases and decreases in the Fund's investment in the Portfolio aggregated
$43,976,958 and $63,078,835, respectively.
- ------------------------------------------------------------------------------
(6) DISTRIBUTION
On August 7, 1995, the Trustees declared a dividend from net investment income
of $0.01 per share payable on September 29, 1995 to the shareholders of record
at the close of business on September 1, 1995.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND TRUSTEES OF
EV TRADITIONAL GROWTH FUND,
A SERIES OF EATON VANCE GROWTH TRUST:
We have audited the accompanying statement of assets and liabilities of EV
Traditional Growth Fund, a series of Eaton Vance Growth Trust, as of August 31,
1995, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period
ended August 31, 1995. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities held as of August
31, 1995 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Fund, a series
of Eaton Vance Growth Trust, as of August 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period ended August 31, 1995, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
SEPTEMBER 29, 1995
<PAGE>
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1995
- --------------------------------------------------------------------------
COMMON STOCKS - 98.6%
- --------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------
ADVERTISING - 2.8%
Omnicom Group, Inc. 60,000 $ 3,765,000
The parent company of DDB Needham ------------
Worldwide and BBDO Worldwide, two full
service advertising agency networks.
BEVERAGES - 2.4%
PepsiCo, Inc. 70,000 $ 3,167,500
Global soft drink producer with ------------
businesses in snack foods and fast food
restaurants.
BROADCASTING & ENTERTAINMENT - 7.5%
CBS Inc. 45,000 $ 3,588,750
Operator of CBS television and radio
networks and owner of 5 TV and 21 radio
stations.
Liberty Media Group Class A* 43,750 1,162,109
Stock represents participation in
programming assets of
TeleCommunications, Inc., including
sports, general entertainment and
electronic retailing, as well as
investments in cable television systems.
Seagram Co. Ltd. 80,000 2,960,000
A leading global producer and marketer
of liquor which acquired 80% of MCA,
Inc., a major factor in the
entertainment industry.
Tele-Communications, Inc. Class A* 130,000 2,396,875
The largest operator of cable television
systems in the U.S.
------------
$ 10,107,734
------------
BUSINESS PRODUCTS AND SERVICES - 6.5%
Danka Business Systems PLC ADR 50,000 $ 1,512,500
Independent distributor of automated
equipment, principally photocopiers, and
related service contracts.
Reuters Holdings PLC 80,000 4,190,000
Worldwide provider of proprietary
financial data and information.
Xerox Corp. 25,000 3,018,750
The dominant producer of high end
document processing machines.
------------
$ 8,721,250
------------
CHEMICALS - 3.9%
Great Lakes Chemical Corp. 40,000 $ 2,645,000
Specialty chemical manufacturer of a
wide range of products including flame
retardants, water treatments and fuel
additives.
Loctite Corp. 55,000 2,640,000
Manufacturer of adhesives for consumer
and industrial markets.
------------
$ 5,285,000
------------
<PAGE>
COMPUTER EQUIPMENT AND SERVICES - 7.8%
Automatic Data Processing, Inc. 40,000 $ 2,600,000
The leading independent computing and
payroll processing services firm in the
U.S.
Block (H. & R.) Inc. 50,000 1,950,000
Provider of individual tax preparation
services and computer services, led by
CompuServe's consumer online services,
both in the US and abroad.
Compaq Computer Corp.* 60,000 2,865,000
The leading worldwide manufacturer of
desktop and portable computers and PC
servers.
General Motors Corp. Class E 65,000 3,030,625
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.
------------
$ 10,445,625
------------
DRUGS & HEALTH CARE SERVICES - 6.9%
Astra AB A Free Shares* 175,000 $ 5,801,793
Swedish based international
pharmaceutical firm with drugs for the
control of ulcers and asthma.
Sofamor Danek Group, Inc.* 140,000 3,465,000
The dominant supplier of spinal implant
devices used in surgical treatment of
spinal diseases and deformities.
------------
$ 9,266,793
------------
ELECTRONIC INSTRUMENTATION - 2.6%
Millipore Corp. 100,000 $ 3,487,500
Products use membrane separations ------------
technology to analyze and purify fluids
for a variety of high tech industries.
FINANCIAL SERVICES - 8.6%
Federal National Mortgage Association 30,000 $ 2,861,250
U.S. Government sponsored mortgage
lender and provider of secondary
mortgage market.
Franklin Resources Inc. 50,000 2,750,000
Provides investment management and
related services to a family of equity
and fixed income mutual funds.
MBNA Corp. 80,000 2,840,000
Dominant issuer of MasterCard/Visa
credit cards to affinity groups.
MGIC Investment Corp. Wisc. 55,000 3,080,000
The leading provider of private mortgage
insurance coverage to U.S. banks and
other mortgage suppliers.
------------
$ 11,531,250
------------
HOTELS AND RESTAURANTS - 2.0%
Circus Circus Enterprises, Inc.* 80,000 $ 2,620,000
Major operator of theme related gaming ------------
facilities including 10 casino-hotels in
Nevada.
HOUSEHOLD PRODUCTS - 2.2%
Gillette Co. 70,000 $ 2,922,500
A global company with internationally ------------
recognized brands in razors and blades,
small appliances, cosmetics, dental and
other consumer products.
INSURANCE - 10.3%
Allstate Corp. 60,000 $ 2,032,500
Leading underwriter of automotive and
homeowners insurance as well as a life
insurance carrier.
American International Group, Inc. 60,000 4,837,500
One of the world's leading insurance
companies, operating in 130 countries.
General Re Corp. 29,000 4,310,125
Dominant reinsurance company in the US
which has recently substantially
increased its business by acquiring a
European reinsurer.
Progressive Corp., Inc. 60,000 2,662,500
Underwriter of non-standard automobile
and other specialty personal lines of
insurance.
------------
$ 13,842,625
------------
MACHINERY - 2.1%
Illinois Tool Works Inc. 45,000 $ 2,756,250
Manufacturer of industrial components ------------
and other specialty products and
equipment.
METALS & MINING - 4.3%
Freeport McMoRan Copper & Gold, Inc. 100,000 $ 2,337,500
Operator of third largest copper mine in
the world with world's largest gold
reserves.
Nucor Corp. 70,000 3,430,000
Fourth largest US steel company and
largest US minimill.
------------
$ 5,767,500
------------
OIL - 7.1%
Anadarko Petroleum Corp. 100,000 $ 4,775,000
Leading independent natural gas and
crude oil production company.
Triton Energy Corp. 90,000 4,770,000
Independent oil and gas producer with
major developments in Columbia and
Thailand.
------------
$ 9,545,000
------------
PAPER & FOREST PRODUCTS - 2.0%
Rayonier Inc. 70,000 $ 2,686,250
Major producer of cellulose pulp, used ------------
to make textiles and plastic, logs and
wood products and owner of extensive
timberland acreage in the US and New
Zealand.
PHOTOGRAPHY - 1.7%
Eastman Kodak Co. 40,000 $ 2,305,000
Largest producer of photographic ------------
products in the world.
PUBLISHING - 2.1%
McGraw Hill Inc. 35,000 $ 2,756,250
Supplies informational products and ------------
services for businesses, education and
industry through a broad range of media.
RETAILING - 1.9%
Home Depot, Inc. 65,000 $ 2,591,875
A chain of do-it-yourself warehouse ------------
style stores.
SEMICONDUCTORS - 8.8%
Intel Corp. 60,000 $ 3,682,500
A manufacturer of semiconductors and
other microcomputer components and
systems which comprise the heart of the
personal computer.
MEMC Electronic Materials, Inc.* 70,000 2,152,500
Worldwide producer of silicon wafers
used in the production of
semiconductors.
Motorola Inc. 42,000 3,139,500
A leading supplier of semiconductors and
two-way radios, paging equipment, and
cellular mobile telephone systems.
National Semiconductor Corp.* 100,000 2,825,000
Leading manufacturer of a broad line of
semiconductors for applications in
communications, computer systems,
automotive and industrial products.
------------
$ 11,799,500
------------
TELECOMMUNICATIONS EQUIPMENT - 4.8%
Ericsson LM Telephone Co. Class B 100,000 $ 2,137,500
Dominant producer in the cellular
infrastructure market with a growing
share of the handset market, based in
Sweden.
General Instrument Corp.* 70,000 2,555,000
Major supplier of broadband (cable)
communications systems and equipment
including satellite TV equipment.
Nokia Corp. 25,000 1,734,375
Finland based telecommunications company
with global presence in cellular
infrastructure equipment and hand sets.
------------
$ 6,426,875
------------
MISCELLANEOUS - 0.3% $ 379,750
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $106,160,346) $132,177,027
------------
- --------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 2.1%
- --------------------------------------------------------------------------
FACE AMOUNT
(000 OMITTED) VALUE
- --------------------------------------------------------------------------
Melville Corp., 5.84s, 9/1/95 2,772 $ 2,772,000
------------
TOTAL SHORT-TERM OBLIGATION, AT
AMORTIZED COST $ 2,772,000
------------
TOTAL INVESTMENTS
(IDENTIFIED COST, $108,932,346) $134,949,027
OTHER ASSETS, LESS LIABILITIES - (0.7%) $ (946,427)
------------
NET ASSETS - 100% $134,002,600
============
*Non-income producing security.
The accompanying notes are an integral part
of the financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
August 31, 1995
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$108,932,346) $134,949,027
Cash 18,906
Receivable for investments sold 938,769
Dividends receivable 103,945
Deferred organization expenses (Note 1C) 12,834
------------
Total assets $136,023,481
LIABILITIES:
Payable for investments purchased $2,006,727
Payable to affiliates --
Trustees' fee 3,250
Custodian fee 4,088
Accrued expenses 6,816
----------
Total liabilities 2,020,881
------------
NET ASSETS applicable to investors' interest in Portfolio $134,002,600
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $107,985,919
Unrealized appreciation of investments (computed
on the basis of identified cost) 26,016,681
------------
Total $134,002,600
============
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the year ended August 31, 1995
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividends (net of withholding tax of $29,332) $ 1,451,591
Interest 312,131
-----------
Total income $ 1,763,722
Expenses --
Investment adviser fee (Note 2) $ 786,194
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 9,399
Custodian fee (Note 2) 80,036
Legal and accounting services 33,079
Amortization of organization expenses (Note 1C) 3,218
Miscellaneous 5,092
-----------
Total expenses 917,018
-----------
Net investment income $ 846,704
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis) $ 1,358,348
Change in unrealized appreciation of investments 16,976,967
-----------
Net realized and unrealized gain on
investments $18,335,315
-----------
Net increase in net assets from operations $19,182,019
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
FOR THE YEAR ENDED AUGUST 31,
-----------------------------
1995 1994*
------------ ------------
INCREASE IN NET ASSETS:
From operations --
Net investment income $ 846,704 $ 69,589
Net realized gain on investment transactions 1,358,348 1,063,482
Change in unrealized appreciation
of investments 16,976,967 2,595,384
------------ ------------
Increase in net assets from operations $ 19,182,019 $ 3,728,455
------------ ------------
Capital transactions --
Contributions $ 48,765,499 $140,348,725
Withdrawals (65,480,787) (12,641,351)
------------ ------------
Increase (decrease) in net assets
resulting from capital transactions $(16,715,288) $127,707,374
------------ ------------
Total increase in net assets $ 2,466,731 $131,435,829
NET ASSETS:
At beginning of year 131,535,869 100,040
------------ ------------
At end of year $134,002,600 $131,535,869
============ ============
*For the period from the start of business, August 2, 1994, to August 31, 1994.
- ------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
---------------------
1995 1994*
-------- --------
RATIOS (As a percentage of average daily net assets):
Expenses 0.73% 0.73%+
Net investment income 0.67% 0.66%+
PORTFOLIO TURNOVER 84% 4%
+ Computed on an annualized basis.
* 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>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1995
- --------------------------------------------------------------------------------
(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.
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 year ended
August 31, 1995, the fee was equivalent to 0.625% of the Portfolio's average net
assets for such period and amounted to $786,194. 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. Trustees of the Portfolio that are not affiliated with
the Investment Adviser 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 year ended August 31, 1995 no significant amounts have been
deferred.
- --------------------------------------------------------------------------------
(3) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term obligations,
aggregated $101,814,016 and $107,452,323, respectively.
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at August 31, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $108,932,346
============
Gross unrealized appreciation $ 26,902,721
Gross unrealized depreciation (886,040)
------------
Net unrealized appreciation $ 26,016,681
============
- --------------------------------------------------------------------------------
(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 a $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 August 31, 1995, the Fund did
not have an outstanding balance pursuant to the line of credit.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND INVESTORS OF
GROWTH PORTFOLIO:
We have audited the accompanying statement of assets and liabilities of Growth
Portfolio, including the portfolio of investments, as of August 31, 1995, the
related statements of operations for the year then ended, and the changes in net
assets and supplementary data for the year then ended and for the period from
August 2, 1994 (start of business) to August 31, 1994. These financial
statements and supplementary data are the responsibility of the Portfolio's
management. Our responsibility is to express an opinion on these financial
statements and supplementary data based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and supplementary data are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of August 31, 1995 by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and supplementary data referred to
above present fairly, in all material respects, the financial position of Growth
Portfolio as of August 31, 1995, the results of its operations, for the year
then ended, and the changes in its net assets and supplementary data for the
year then ended and for the period from August 2, 1994 (start of business) to
August 31, 1994, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
SEPTEMBER 29, 1995
<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 LANDON T. CLAY Chairman, Newspapers of
Vice President, Trustee New England, Inc.
M. DOZIER GARDNER SAMUEL L. HAYES, III
Vice President Jacob H. Schiff Professor of
WILLIAM D. BURT Investment Banking,
Vice President Harvard University Graduate
BARCLAY TITTMAN School of Business
Vice President Administration
JAMES L. O'CONNOR NORTON H. REAMER
Treasurer President and Director, United
THOMAS OTIS Asset Management Corporation
Secretary JOHN L. THORNDIKE
Vice President and Director,
Fiduciary Company Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
--------------------------------------------------------
GROWTH OFFICERS INDEPENDENT TRUSTEES
PORTFOLIO JAMES B. HAWKES DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 LANDON T. CLAY Chairman, Newspapers of
Vice President, Trustee New England, Inc.
M. DOZIER GARDNER SAMUEL L. HAYES, III
Vice President Jacob H. Schiff Professor of
PETER F. KIELY Investment Banking,
Vice President and Harvard University Graduate
Portfolio Manager School of Business
JAMES L. O'CONNOR Administration
Treasurer NORTON H. REAMER
THOMAS OTIS President and Director, United
Secretary Asset Management Corporation
JOHN L. THORNDIKE
Vice President and Director,
Fiduciary Company Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
<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
GROWTH
FUND
ANNUAL
SHAREHOLDER REPORT
AUGUST 31, 1995