TO SHAREHOLDERS
EV Marathon Growth Fund had a total return of 2.9 percent during the period from
inception on September 13, 1994 through February 28, 1995. That return was the
result of a rise in net asset value per share to $10.29 from $10.00 on
September 13, 1994, and does not include contingent deferred sales charges paid
by certain redeeming shareholders. For comparison, the S&P 500 Stock Index - an
unmanaged index of common stocks - had a total return of 5.8 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 sector's 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 Marathon 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,
/s/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 Marathon Growth Fund will be dominated by traditional
growth stocks.
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 results. 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 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 MARATHON GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment in Growth Portfolio (Portfolio), at value (Note 1A) $681,011
Receivable for Fund shares sold 42,429
Receivable from administrator (Note 6) 6,234
Deferred organization expenses (Note 1D) 34,602
--------
Total assets $764,276
LIABILITIES:
Payable for Fund shares redeemed $ 5,131
Payable to affiliates --Custodian fee 83
Accrued organizational expense 30,123
Accrued expenses 308
-------
Total liabilities 35,645
--------
NET ASSETS for 70,782 shares of beneficial interest outstanding $728,631
========
SOURCES OF NET ASSETS:
Proceeds from sales of shares, less cost of shares
redeemed $701,881
Accumulated net realized loss on investments (645)
Unrealized appreciation of investments 30,166
Accumulated net investment loss (2,771)
--------
Total net assets $728,631
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($728,631 / 70,782 shares of beneficial interest outstanding) $10.29
======
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the period from the start of business, September 13, 1994,
to February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 556
Dividend income allocated from Portfolio (net of
withholding tax expense of $1) 2,047
Expenses allocated from Portfolio (1,212)
-------
Total investment income $ 1,391
Expenses --
Custodian fee (Note 6) $ 583
Distribution fees (Note 4) 1,278
Printing and postage 3,550
Amortization of organization expenes (Note 1D) 3,393
Registration fees 75
Transfer agent fees 145
Miscellaneous 1,372
-------
Total expenses 10,396
Deduct -- Preliminary allocation of expenses by
administrator (Note 6) 6,234
-------
Net expenses 4,162
-------
Net investment loss $(2,771)
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized loss on investments (identified cost basis) $ (645)
Change in unrealized appreciation of investments 30,166
-------
Net realized and unrealized gain on investments 29,521
-------
Net increase in net assets resulting from operations $26,750
=======
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period from the start of business, September 13, 1994,
to February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment loss $ (2,771)
Net realized loss from Portfolio (645)
Unrealized appreciation from Portfolio 30,166
--------
Net increase in net assets from operations $ 26,750
Net increase in net assets from Fund share transactions (Note 2) 701,871
--------
Net increase in net assets $728,621
NET ASSETS:
At beginning of period 10
--------
At end of period $728,631
========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For the period from the start of business, September 13, 1994,
to February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (for a share outstanding throughout the period)
NET ASSET VALUE -- Beginning of period $10.000
-------
Income from investment operations:
Net investment loss $(0.037)
Net realized and unrealized gain on investments 0.327
-------
Total income from investment operations 0.290
-------
NET ASSET VALUE -- End of period $10.290
=======
TOTAL RETURN** 2.90 %
RATIOS/SUPPLEMENTAL DATA (to average daily net assets)*:
Expenses(1) 3.13 %+
Net investment income (1.61)%+
NET ASSETS, AT END OF PERIOD (000'S OMITTED) $ 729
*The expenses related to the operation of the Fund reflect a preliminary
allocation of expenses to the Administrator. Had such action not been taken,
net investment income per share and the ratios would have been as follows:
RATIOS (to average daily net assets)
Expenses(1) 6.76 %+
Net investment loss (5.24)%+
** 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.
+ Computed on an annualized basis.
(1) Includes the Fund's share of Growth Portfolio's allocated expenses.
Note: Certain of the per share amounts have been computed using average shares
outstanding.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Marathon 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. The Fund
invests 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 (0.55% 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 1 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.
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.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization, are being amortized on the straight-line basis over five
years beginning on the date the Fund commenced operations.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Distributions to shareholders are recorded on
the ex-dividend date and interest income is recorded on the accrual basis.
F. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of Fund
shares and other distribution costs are charged to operations. For tax purposes,
commissions paid were charged to paid-in capital prior to November 16, 1994 and
subsequently charged to operations. The change in the tax accounting practice
was prompted by a recent Internal Revenue Service ruling and has no effect on
either the Fund's current yield or total return (Note 5).
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.
H. 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.
- --------------------------------------------------------------------------------
(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 from the start of business September 13, 1994 to
February 28, 1995 were as follows:
SHARES AMOUNT
------- ---------
Sales 89,712 $ 889,812
Issued to shareholders
electing to receive
payment of distribution
in Fund shares -- --
Redemptions (18,930) (187,941)
------- ---------
Net increase 70,782 $ 701,871
======= =========
- --------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$847,384 and $197,296 respectively.
- --------------------------------------------------------------------------------
(4) DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
principal underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to
1/365th of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 5% of the
aggregate amount received by the Fund for shares sold plus, (ii) distribution
fees calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges of EVD, reduced by amounts
theretofore paid to EVD. The amount payable to EVD with respect to each day is
accrued on such day as a liability of the Fund and, accordingly, reduces the
Fund's net assets. The Fund paid $1,278 to EVD for the period ended February 28,
1995, representing 0.75% (annualized) of average daily net assets. At February
28, 1995, the amount of Uncovered Distribution Charges of EVD calculated under
the Plan was approximately $27,052.
In addition, the Plan authorizes the Fund to make payments of service fees to
the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have implemented the Plan by authorizing the Fund to make quarterly
payments of service fees to the Principal Underwriter and Authorized Firms in
amounts not expected to exceed 0.25% of the Fund's average daily net assets for
each fiscal year based on the value of Fund shares sold by such persons and
remaining outstanding for at least twelve months, and that payments of these
service fees shall commence with the quarter ending December 31, 1995. Service
fees are separate and distinct from the sales commissions and distribution fees
payable by the Fund to EVD, and, as such, are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution Charges of
EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
- ------------------------------------------------------------------------------
(5) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon the
lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by reinvestment of dividends or capital gain
distributions. The CDSC is imposed at declining rates that begin at 5% in the
first and second year of redemption after purchase, declining one percentage
point each subsequent year. No CDSC is levied on shares which have been sold to
EVM or its affiliates or to their respective employees or clients. CDSC charges
are paid to EVD to reduce the amount of Uncovered Distribution Charges
calculated under the Fund's Distribution Plan. CDSC charges received when no
Uncovered Distribution Charges exist will be retained by the Fund. EVD received
approximately $837 of CDSC paid by shareholders for the period ended February
28, 1995.
- ------------------------------------------------------------------------------
(6) 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. To enhance the net income of the Fund, $6,234 of
expenses related to the operation of the Fund were allocated, on a preliminary
basis, to EVM. Except as to Trustees of the Fund and the Portfolio who are not
members of EVM's or BMR's organizations, 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 their respective custodian
agreements, IBT receives a fee reduced by credits which are determined based on
the average cash balances of 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.
<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 MARATHON 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 MARATHON 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 MARATHON GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
M-GFSRC
EV MARATHON
GROWTH
FUND
SEMI-ANNUAL
SHAREHOLDER REPORT
FEBRUARY 28, 1995
