To Shareholders
We are pleased to welcome shareholders of EV Traditional Information Age
Fund with this first shareholder report. EV Traditional Information Age
Fund had a total return of 7.2% for the period from inception on
September 18,1995 through February 29, 1996. That performance was the
result of an increase in net asset value per share from $10.00 on
September 18, 1995 to $10.72 on February 29, 1996 and does not include
the Fund's 4.75% sales charge. By comparison, the S&P 500 - an unmanaged
index of U.S. common stocks - rose 11.2%, while the Morgan Stanley
Capital International Europe, Asia, Far East Index (EAFE) - an unmanaged
index of global common stocks - rose 5.0%* during the same period.
Information Age companies: Taking part in a world-wide revolution...
The past few years have featured unprecedented growth among information-
based companies, growth that parallels the expansion of the global
economy and new technologies. That is no mere coincidence. Domestic
companies that once marketed products and services solely within their
own national borders are now targeting a global marketplace, and
therefore require the services of advertising and media companies with a
global reach. Similarly, companies that once relied on single outlets
such as television or print media are now experimenting with new the
marketing frontiers of the Internet and virtual shopping. In short, the
Infomation Age is about choices: for business, and for consumers.
The Information Age: Changing the way we live and work...
We live in truly exciting times. Today's school children travel the
solar system with the help of virtual reality software in their
classroom. Consumers have a seemingly unlimited range of entertainment
options available at their fingertips. And telecommuting Silicon Valley
workers confer on complex engineering problems - without leaving their
homes. These developments were the stuff of science fiction only a
decade ago. Today, they are a reality.
The companies that create these products and services, deliver them to
our homes, and make the process easier and faster, are introducing
profound changes into our lives. With those developments will come
unique investment opportunities. Naturally, given the pace of change, no
one can predict the future and past trends cannot guarantee future results.
But we believe the future for information companies is bright. And we
expect that Information Age Portfolio will share in this new world of
opportunities.
[PHOTO OF JAMES B. HAWKES OMITTED]
Sincerely,
/S/James B. Hawkes
James B. Hawkes
President
April 20, 1996
Management Discussion: Duncan W. Richardson and the Hon. Jacob Rees-Mogg
An interview with Duncan W. Richardson, Vice President, Eaton Vance
Management, and the Hon. Jacob Rees-Mogg, of Lloyd George Investment
Management, Investment Advisers to the Information Age Portfolio.
Q: Duncan, give us an overview of how the Portfolio is structured.
[PHOTO OF DUNCAN RICHARDSON OMITTED. CAPTION BENEATH PHOTO READS:]
Duncan W. Richardson
Mr. Richardson: First and foremost, Information Age Portfolio is a
global growth fund. We've focused on companies around the world that we
believe will post above-average earnings growth. Because we take a
bottom-up, company-specific approach to investing, we don't necessarily
seek a specific regional allocation. But at February 29, around half of
the Portfolio was invested in foreign securities, while the other half
was invested in the U.S. In addition to the Portfolio's global
diversification, we have diversified on a sector basis within the broad
category of information-based companies. At February 29, around half of
the Portfolio's investments were in information creators, while 28% of
the Portfolio was invested in information distributors and the remainder
of the Portfolio focused on information processors.
Q: Jacob, in the U.S. we hear an endless stream of news about the
developments among these information-based companies. Is it much the
same in Europe and Asia?
[PHOTO OF HON. JACOB REES-MOGG OMITTED. CAPTION BENEATH PHOTO READS:]
HON. JACOB REES-MOGG
Mr. Rees-Mogg: It is indeed. The changes occuring in the information
industry are a world-wide phenomenon, and one of dizzying complexity.
While those changes clearly have the power to alter our way of life,
they also represent remarkable opportunities for these companies. These
opportunities have spawned a fierce competition as companies queue
up to meet global information needs. That's the case, not only in the
industrialized nations - such as the U.K., western Europe, and Japan -
but also in the emerging nations that will require a completely new
telecom infrastructure.
Q: What is driving global competition?
Mr. Rees-Mogg: There are several forces driving the movement. First,
information is an increasingly vital need for businesses. Techno-logical
advances are making access to that information easier, faster, and more
cost-effective. Second, the growing globalization of the world economy
means that the information industry is essentially a business without
borders. For example, your telephone is as likely to be manufactured in
Finland, or Sweden or Hong Kong as it is in the U.S. Finally, emerging
nations are growing at a breakneck pace. Because their existing
information facilities are still relatively primitive, they will, in the
space of a few short years, see advances that took the U.S. and the U.K.
nearly a century to achieve. Each of these trends is helping fuel the
growth in the global information companies and each will generate
wonderful opportunities for the best-positioned companies.
Q: Let's turn to the information-creators. What do these companies do?
Mr. Richardson: Information-creators develop the content distributed by
the new information technologies. They include companies involved in
entertainment, database creation, publishing, news dissemination, and
outsourcing. Many of these companies are attractive because they
generate strong cash flow. Many of the trends within the information
sector - such as deregulation and privatization - allow these companies
to address a larger, global audience. At the same time, these companies
benefit from the introduction of new technologies that make the
dissemination of information more cost-effective. That adds yet another
dimension of growth to these information-providers.
[GRAPHIC OMITTED, HEADER READS:]
The Brave New World of the Information Age
Graphic of a cable -- branches read:
Information-Technology-New Products & Services
Information Creators
Publishing
News Industry
Entertainment
Date Base Creators
Information Libraries
Information Processors
Electronics
Microprocessing
Computer Manufacturer
Computer Software
CD-Rom
Robotics
Semiconductors
Facsimile
Information Distributors
Cellular Phones
Online Services
Fiber Optics
Satellites
Internet Providers
Television
Telecommunications
Cable TV
Companies that...Create content and programming for use around the world...
Porecess information with the aid of the latest technological advances...
and Distribute information and entertainment vehicles to businesses and
consumers alike.
Q: Can you give some examples of some of the Portfolio's information -
creators?
Mr. Richardson: Certainly. One of the Portfolio's largest holdings is
Viacom Inc. Viacom is a diversified entertainment company with interests
in cable television, publishing, music and video retail chains,
television and radio stations, theme parks and movie theaters. The
company has sharply increased its cash flows in recent years due to
acquisitions and is moving aggressively to improve its balance sheet.
Viacom's entertainment content and its exposure to international markets
could make it one of the world's fastest-growing media companies.
Another large holding, McGraw-Hill Companies, Inc., is a leading
multimedia publisher serving global markets in education, business,
finance, and government. In addition to its well-regarded textbook
division, the company publishes Business Week magazine, operates the
Standard & Poor's financial service, and publishes a wide range of trade
magazines. McGraw also owns four network-affiliated television stations.
Q: And some information-creators in the foreign segment of the
Portfolio?
Mr. Rees-Mogg: The Portfolio's largest single investment is Reuters
Holding PLC, a U.K.-based company that transmits financial data, media
services, and textual information. Reuters' primary market niche is
within the business community and the company's largest profit base is
from financial data and transaction services. The company has witnessed
very rapid growth in its share of the massive foreign exchange market.
Elsewhere, Polygram is a prime example of the Portfolio's entertainment
stocks. The company ranks among the world's top three record companies.
Because the company is principally a copyright owner, it's especially
well-situated in the global market. There is a growing demand by
distributors around the world for a very limited supply of top-quality
entertain-ment products. That puts copyright holders like Polygram in a
very advantageous position.
Q: Let's turn next to the information-distributors. What do they do?
Mr. Richardson: Information-distributors are the companies involved in
the delivery of information ranging from entertainment to broadcast news
to telecommunications to computer data. The distributor segment includes
phone companies, satellite operators, cable television providers, online
computer services, and internet-related companies. These companies
service the consumer and business segments alike and are steadily
broadening their markets as new technology enables the more efficient
delivery of services that inform, educate, and entertain.
[GRAPHIC OF 3 PIE CHARTS OMMITED, HEADER READS:]
Information Age Portfolio: Asset Allocation
Based on market value as of February 29, 1996
By Information sector...
Information Porcessors 24.4%
Information Distributors 27.9%
Information Creators 47.7%
By Region/Country...
Australia 1.2%
Japan 9.7%
Asia/Pacific 11.4%
Europe 13.4%
U.K. 14.4%
U.S. 49.9%
By Industry (Common Stocks only)...
Other 4.2%
Electronics 4.4%
Semiconductors 5.3%
Hardware/Software 10.6%
Business Services 11.9%
Publishing 12.3%
Broadcasting 13.4%
Telephone services 16.2%
Entertainment 21.7%
Q: What companies do you own in the distributor segment?
Mr. Richardson: Phone and cable companies are some of the Portfolio's
largest investments among the information-distributors. In the U.S., the
recently passed telecom legislation was an important step on the road to
deregulating the telecom markets. In the near-term, well-positioned
regional Bell operating companies (RBOCs) and cable companies are likely
to be the prime beneficiaries of the legislation.
In the past, the highly-regulated local phone industry had relatively
little incentive to control costs. However, in a newly-regulated and
increasingly competitive world of phone services, the RBOCs stand to
benefit significantly from reduced cost structures and improved
efficiencies. Ameritech Corp. is one of the Portfolio's largest RBOC
holdings. Ameritech's core business consists of providing telephone,
cellular, and directory services to six Midwestern states. The company
is rapidly adding new services, including cable television and long
distance phone service. In addition, Ameritech has formed alliances with
entertain-ment companies, including the Disney Company, to develop
property for future cable distribution.
In the cable television and broadcasting area, Comcast Corp. and
Cablevision Systems Corp., for example, are both large operators in this
country. The telecom bill establishes a date-certain for full
deregulation of cable rates. With the deregulation that has already
occurred and the introduction of new services, we believe the prospects
for improving cash flow at these companies are very good.
[GRAPHIC OMMITED, HEADER READS:]
The demand for Info Age services is strong, even among emerging nations.
World's Top Ten Nations According to Per Capita Telecom Revenues
1. Surinam $1792
2. Greenland 1316
3. Switzerland 1000
4. Bermuda 891
5. Gabon 803
6. Singapore 733
7. Aruba 714
8. Denmark 602
9. Hong Kong 597
10. U.S. 589
Source: Financial Times
Q: Are the distribution companies overseas equally as growth-minded?
Mr. Rees-Mogg: The growth in the telecom and broadcasting industries
is no less explosive in the foreign markets. In developed nations, many
phone companies have traditionally been hampered by high regulatory
barriers. Gradually, however, industry reforms are making these markets
much more competitive. In addition, many telecom giants in Europe and
Asia are forming important strategic alliances. British
Telecommunications PLC (BT), for example, a large Portfolio holding, has
forged joint ventures with companies in Italy, Spain, and Germany. And,
at the very heart of BT's international strategy is its "Concert"
program, a co-venture with MCI of the U.S.
Another important trend in global telecom-munications is that
toward privatization. Most of the world's phone companies have operated
heretofore as state-run monopolies. With a more liberalized policy on
international traffic, these companies are facing up to the need to
privatize in order to meet the demands of international competition.
That is true especially in the emerging markets. Emerging economies in
Latin America, Central Europe and Asia have enormous needs for a telecom
infrastructure. Companies in these areas are poised for remarkable
growth.
In the foreign broadcasting segment, the Portfolio owns shares in
Television Broadcasts Ltd (TVB), which has a dominant market share in
the Hong Kong broadcasting market. The company has been active in
developing projects in Greater China and India. TVB has a major asset in
its expanding library of Chinese-language programs. That library is
likely to be an increasingly valuable business asset if the Chinese
economy achieves its long-range growth targets.
Some Recent Developments among Information Age companies:
(bullet) Microsoft Corp. - the U.S. software giant recently introduced a
prototype of future PCs that will connect to big-screen TVs. The new PCs
will manage video disks, stereos, phones, and other consumer electronic
equipment.
(bullet) News Corporation Ltd. - the Australia-based media
conglomerate's 40%-owned British Sky Broadcasting joined with
Bertelsmann* of Germany and Havas of France to develop digital pay TV.
With 37 million TV house-holds, Germany is the most valuable TV market
in Europe.
(bullet) SBC Communications - the Southwestern U.S. phone company
announced a merger with San Francisco-based Pacific Telesis.* This
first-ever union of "Baby Bells" will create a well-capitalized giant in
the lucrative West Coast phone market.
* These companies are not investments of the Portfolio.
Q: Finally, let's focus on the information-processors. What businesses
does this segment include?
Mr. Richardson: Companies in this sector develop the products that
facilitate the processing of data and information. In this sector,
technology plays a very important role. Technological advances in
computers, semiconductors, and software have made it possible to
transmit larger volumes of information at faster speeds. As the quality
of products has rapidly improved, the demand for the products of these
processor-companies has continued to grow in the U.S. and abroad.
Q: And what information-processor companies have you found attractive?
Mr. Richardson: At the very heart of the technological advances made in
recent years is the semiconductor, and Intel Corp. is far and away the
world's leading chip maker. Intel benefits not only from having
established the industry standard for microprocessors, but also from the
increasing usage of semiconductors in an expanding range of information
products. It is likely that in the future, the home computer will be the
focal point for video, data transmission, phone services, and security
systems. With each succeeding generation of technology, there is a
rising demand for the latest semiconductor technology. Intel's
president, Andrew Grove, has predicted that by 1998, 100 million
personal computers will be sold annually. As the market leader, Intel
should be singularly well-positioned.
Q: And what information-processors caught your eye abroad?
Mr. Rees-Mogg: KCE Electronics is a Thailand-based maker of printed
circuit boards for the personal computer market. While the company's
core business is extremely profitable, its real growth prospects are
tied to its venture with Avatar, a maker of removable hard disk drives.
The company has developed a new technology that increases both disk
speed and storage capacity. KCE enjoys a large lead in its technology
and is in talks with computer makers. Despite limited capacity, KCE may
overcome those constraints by licensing its technology to third party
manufacturers.
Q: What are the risks in these investments?
Mr. Richardson: There is certainly risk in any equity investment, and
these companies are no different. Many of these companies are foreign
companies and there is some risk of foreign currency fluctuation as well
as a shift in foreign political sentiments. And, of course, the rapid
pace of change within the information sector amplifies somewhat the risk
of obsolescence.
Q: Clearly, the Information Age universe is developing rapidly. What is
your outlook for the information sectors?
Mr. Richardson: In my view, the future is unlimited for information-
based companies. We've seen vast markets opened in recent years due to a
widening global economy and the progress of technology. But as
remarkable as that progress has been, we've really only scratched the
surface of the market potential. While there is naturally no guarantee
that these trends will continue, it's likely that tomorrow will bring us
a world that we can barely imagine today. We believe that our global
fundamental research capabilities provide us unusually good access to
these growth opportunities. And we expect that Information Age Portfolio
will participate in that growth.
An Information Age Glossary
Cellular: A communications system that transmits voice, data, or video
information over radio frequencies.
Internet: The global web of networks connecting computers around the
world and providing access to information from a variety of sources or
libraries.
On-line services: Part of the electronic commercial market, these two-
way services enable customers to interact with vendors such as banks or
retailers through use of a personal computer and a modem.
Privatization: The government sale of all or part of a national phone
company to private investors.
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
February 29, 1996 (Unaudited)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investment in Information Age Portfolio (Portfolio), at value (Note 1A)
(identified cost, $9,464,745) $9,854,619
Receivable for Fund shares sold 18,905
Deferred organization expenses (Note 1D) 45,539
Tax reclaim receivable 213
----------
Total assets $9,919,277
Liabilities:
Payable for Fund shares redeemed $6,974
Payable to affiliate --
Trustees' fees 57
Accrued organization expense 50,000
Accrued expenses 5,596
----------
Total liabilities 62,627
----------
Net Assets for 919,288 shares of beneficial interest outstanding $9,856,649
==========
Sources of Net Assets:
Paid-in capital $9,486,954
Accumulated net realized gain on investment transactions from Portfolio 143
Accumulated of net investment loss (20,322)
Unrealized appreciation of investments from Portfolio
(computed on the basis of identified cost) 389,874
----------
Total $9,856,649
Net Asset Value and Redemption Price (Note 3) Per Share
($9,856,649 (divided by) 919,288 shares of beneficial interest) $10.72
=====
Computation of Offering Price:
Offering price per share (100 (divided by) 95.25 of $10.72) $11.25
=====
On sales of $100,000 or more the offering price is reduced.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the period from the start of business, September 18, 1995, to February 29, 1996 (Unaudited)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income (Note 1B):
Dividend income allocated from Portfolio (net of foreign taxes of $1,269) $18,827
Interest income allocated from Portfolio 34,897
Expenses allocated from Portfolio (38,025)
--------
Total investment income $15,699
Expenses --
Management fee (Note 3) $6,540
Compensation of Trustees not members of the
Manager's organization (Note 3) 57
Custodian fees (Note 3) 416
Distribution fees (Note 5) 13,080
Transfer agent fees 2,642
Printing and postage 3,425
Legal and accounting services 210
Registration fees 3,700
Amortization of organization expenses (Note 1D) 4,461
Miscellaneous 1,490
--------
Total expenses 36,021
--------
Net investment loss ($20,322)
--------
Realized and Unrealized Gain (Loss) from Portfolio:
Net realized loss from Portfolio (identified cost basis) --
Investment transactions $8,093
Foreign currency and forward foreign currency contracts (7,950)
--------
Net realized gain $143
Unrealized appreciation of investments 389,874
Net realized and unrealized gain $390,017
--------
Net increase in net assets from operations $369,695
========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the period from the start of business, September 18, 1995 to February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------
<S> <C>
Increase (Decrease) in Net Assets:
From operations --
Net investment loss ($20,322)
Net realized gain from Portfolio 143
Unrealized appreciation from Portfolio 389,874
----------
Increase in net assets from operations $369,695
----------
Transactions in shares of beneficial interest (Note 4) --
Proceeds from sale of shares $9,869,679
Cost of shares redeemed (382,725)
----------
Increase in net assets from Fund share transactions $9,486,954
----------
Net increase in net assets $9,856,649
Net Assets:
At beginning of period --
----------
At end of period (including accumulated net investment loss of $20,322) $9,856,649
==========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
For the period from the start of business, September 18, 1995, to February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------
<S> <C>
Net asset value -- Beginning of period $10.000
Income from operations:
Net investment loss ($0.022)
Net realized and unrealized gain on investments $0.742
Total income from operations $0.720
Net asset value -- End of period $10.720
Total Return (1) 7.20%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $9,857
Ratio of net expenses to average net assets * 2.82%+
Ratio of net investment loss to average net assets (0.77%)+
Includes the Fund's share of Information Age Portfolio's allocated expenses.
Annualized.
+ Annualized
(1) Total investment 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 payable
date.
See notes to financial statements
</TABLE>
Notes to Financial Statements
(Unaudited)
(1) Significant Accounting Policies
EV Traditional Information Age 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 Information Age 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 (32.7% at
February 29, 1996). 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 Valuation - Valuation 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 net investment
income, and any net realized capital gains. Accordingly, no provision
for federal income or excise tax is necessary.
D. Deferred Organization Expenses - Costs incurred by the Fund in
connection with its organization, including registration costs, are
amortized on the straight-line basis over five years.
E. Interim Financial Information - The interim financial statements
relating to February 29, 1996 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) Distributions to Shareholders
It is the present policy of the Fund to make at least one distribution
annually (normally in December) of all or substantially all of the
investment income allocated to the Fund by the Portfolio, less the
Fund's direct and allocated expenses and at least one distribution
annually of all or substantially all of the net realized capital gains
(reduced by any available capital loss carryforwards from prior years)
allocated by the Portfolio to the Fund, if any.
Shareholders may reinvest all distributions in shares of the Fund
without a sales charge at the per share net asset value as of the close
of business on the record date.
The Fund distinguishes between distributions on a tax basis and a
financial reporting basis. Generally accepted accounting principles
require that only distributions in excess of tax basis earnings and
profits be reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in over
distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net
realized gains. Permanent differences between book and tax accounting
relating to distributions are reclassified to paid-in capital.
(3) Management Fee and Other Transactions with Affiliates
The management fee is earned by Eaton Vance Management (EVM) as
compensation for management and administration of the business affairs
of the Fund. The fee is based on a percentage of average daily net
assets. For the period from the start of business, September 18,1995, to
February 29, 1996 the fee was equivalent to 0.25% of the Fund's average
net assets for such period and amounted to $6,540. Except as to Trustees
of the Fund who are not members of EVM's organization, officers and
Trustees receive remuneration for their services to the Fund out of such
management fee. Eaton Vance Distributors, Inc., (EVD), a subsidiary of
EVM and the Fund's principal underwriter, received approximately
$000,000 as its portion of the sales charge on sales of Fund shares for
the period from the start of business, September 18,1995, to February
29, 1996. EVD also receives a contingent deferred sales charge (CDSC) on
shareholder redemptions made within 18 months of purchase, where the
initial investment in the Fund was $1 million or more. EVD received $000
in CDSC during the period. Investors Bank & Trust Company (IBT), an
affiliate of EVM, serves as custodian of the Fund and the Portfolio.
Prior to November 10, 1995, IBT was an affiliate of EVM. Pursuant to the
custodian agreements, IBT receives a fee reduced by credits which are
determined based on the average cash balances the Fund or the Porfolio
maintains with IBT. No significant credit balances were used to reduce
the Fund's custody fees. Certain officers and Trustees of the Fund and
the Portfolio are directors/trustees of the above organizations. In
addition, investment adviser, administrative fees, and custody fees are
paid by the Portfolio to EVM and its affiliates. See Note 2 of the
Portfolio's Notes to Financial Statements which are included elsewhere
in this report.
(4) 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 for the period from the start of
business, September 18, 1995 to February 29, 1996 were as follows:
Sales 955,739
Issued to shareholders electing to
receive payments of distributions
in Fund shares --
Redemptions 136,451
----------
Net increase 919,288
==========
(5) 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) a monthly distribution fee equal, on an annual basis, to the
aggregate of (a) 0.50% of that portion of the Fund's average daily net
assets for any fiscal year which is attributable to shares of the Fund
which have remained outstanding for less than one year and (b) 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 which have remained
outstanding for more than one year. During the period from the start of
business, September 18, 1995, to February 29, 1996 the Fund paid
distribution fees to EVD aggregating $13,080 representing 0.45% of
average daily net assets. The Plan also provides that the Fund will pay
a quarterly service fee to EVD in an amount equal, on an annual basis,
to 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 which have
remained outstanding for more than one year. Such payments are made for
personal services and/or the maintenance of shareholder accounts. The
Fund expects to begin accruing service fee payments during the quarter
ending September 30, 1996. EVD may pay up to the entire amount of the
service fee to Authorized Firms through which the Fund's shares are
distributed.
Certain officers and Trustees of the Fund are officers or directors of
EVD.
(6) Investment Transactions
Increases and decreases in the Fund's investment in the Portfolio
aggregated $9,850,775 and $401,657, respectively.
<TABLE>
<CAPTION>
Information Age Portfolio
Portfolio of Investments
February 29, 1996
(Unaudited)
- -------------------------------------------------------------------------------------
Common Stock -- 94.6%
- -------------------------------------------------------------------------------------
Name of Company Shares Value
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Broadcasting -- 12.7%
Benpress Holdings GDR+ 32,000 $232,000
Bimantra Citra+ 380,000 447,010
Cablevision Systems Corp. 5,000 290,625
Comcast Corp. 22,000 431,750
Evergreen Media Corp. Class A 15,000 496,875
General Motors Corp. Class H 5,000 286,250
Media General, Inc. Class A 6,000 224,250
Sistem TV Malaysia+ 51,000 165,097
Telecommunications International Class A 5,000 107,500
Television Broadcasts Ltd.+ 110,000 418,321
United States Satellite Broadcasting Co. 10,000 325,000
Westinghouse Electric 22,000 407,000
-----------
$3,831,678
-----------
Business, Computer, & Financial Services -- 11.3%
Automatic Data Processing, Inc. 8,000 $310,000
Ceridian Corp. 11,500 494,500
Desktop Data 16,000 488,000
First Data Corp. 4,000 277,000
Hitachi Maxell Ltd. ADR+ 24,000 447,659
Omnicom Group 15,000 613,125
Reuters Holding PLC+ 73,000 785,846
-----------
$3,416,130
-----------
Computer Hardware & Software -- 10.0%
Eastman Kodak Co. 8,000 $572,000
Inso Corp. 4,500 221,625
International Business Machines Corp. 3,000 367,875
INTUIT Inc. 6,000 400,500
LSI Logic 8,000 221,000
Microsoft Corp. 4,000 394,750
Misys PLC+ 23,000 250,134
NTT Data Communications Systems Corp.+ 90 265,511
Oracle Corp. 6,000 312,000
-----------
$3,005,395
-----------
Electronics -- 4.2%
KCE Electronics PLC+ 93,000 $505,395
Samsung Electronics GDR+ 4,000 368,000
Sharp Corp.+ 25,000 390,179
-----------
$1,263,574
-----------
Entertainment -- 20.5%
Carlton Communications+ 55,000 $352,360
Gaylord Entertainment 12,000 321,000
Grammy Entertainment PLC+ 50,000 476,002
Havas SA+ 5,500 415,741
Media of Medias PLC+ 50,000 353,035
New World Communications Group 11,000 206,250
News Corporation Ltd.+ 60,000 341,295
News International PLC+ 100,000 464,886
Nintendo Corp. Ltd.+ 5,000 337,838
Polygram+ 8,000 466,954
Seagrams Co. Ltd. 12,000 412,500
Shaw Brothers Ltd.+ 300,000 349,248
Sony Corp.+ 10,000 586,223
Thomas Nelson Inc. 30,000 468,750
US West Media Group 8,000 167,000
Viacom Inc. Class B 12,000 471,000
-----------
$6,190,082
-----------
Miscellaneous -- 3.2%
Fuji Photo Film ADR+ 13,000 $368,671
Secom Co. Ltd.+ 3,000 187,286
Xerox Corp. 3,000 390,750
-----------
$946,707
-----------
Online Service -- 0.5%
H&R Block 4,500 $159,188
-----------
Publishing -- 11.6%
Dorling Kindersley PLC+ 40,000 $317,685
Dow Jones & Co., Inc. 10,000 390,000
McGraw-Hill Companies, Inc. 5,500 480,563
Pearson PLC+ 60,000 628,860
United News & Media PLC+ 50,000 493,224
Springer Axel Verlag AG+ 800 541,884
Wolters Kluwer NV+ 6,000 645,710
-----------
$3,497,926
-----------
Semiconductors & Semi Equipment--5.0%
AMP Inc. 7,000 $298,375
Applied Materials, Inc. 8,000 286,000
Intel Corp. 7,000 411,687
Microchip Technology, Inc. 10,000 277,500
Singapore Press Holdings Ltd.+ 12,000 242,184
-----------
$1,515,746
-----------
Telephone Services -- 15.3%
Ameritech Corp. 7,000 $403,375
AT&T Corp. 8,000 509,000
British Telecommunications PLC+ 70,000 399,181
Frontier Corp. 16,000 480,000
Intelcom Group, Inc. 10,000 161,250
Nippon Telegraph & Telephone+ 20 152,265
NYNEX Corp. 6,500 334,750
SBC Communications 7,500 411,563
STET+ 180,000 550,363
Tele Denmark B+ 10,000 588,442
Telecom Italia Mobile SA+ 240,000 440,599
US West Inc. 6,000 196,500
-----------
$4,627,288
-----------
Telecommunications Equipment -- 0.3%
Nokia Corp.+ 3,000 $104,346
-----------
Total Common Stocks (identified cost, $27,438,915) $28,558,060
-----------
- -------------------------------------------------------------------------------------
Convertible Bond -- 0.1%
- -------------------------------------------------------------------------------------
Par Value
- -------------------------------------------------------------------------------------
Havas SA, 12.75, 1/1/03+ (identified cost, $44,743) $225,000 $44,424
-----------
- -------------------------------------------------------------------------------------
Short-Term Obligation -- 8.5%
- -------------------------------------------------------------------------------------
Face Amount
- -------------------------------------------------------------------------------------
FHLMC Discount Notes, 5.30s, 3/1/96, at amortized cost $2,565,000 $2,565,000
-----------
- -------------------------------------------------------------------------------------
Put Options Purchased -- 0.3%
- -------------------------------------------------------------------------------------
Name of Company Principal
Amount
of Contracts Value
- -------------------------------------------------------------------------------------
Option to Deliver/Receive, Strike Price, Expiration Date:
JPY/USD, 100.5, April 1996 1,000 $11,439
JPY/USD, 101.85, December 1996 1,000 67,452
-----------
Total Put Options Purchased (premiums paid, $66,804) $78,891
-----------
Total Investments (identified cost, $30,115,462) $31,246,375
Other Assets, Less Liabilities -- (3.5%) (1,068,758)
-----------
Net Assets -- 100% $30,177,617
===========
+Foreign Security
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
JPY -- Japanese Yen
USD -- United States Dollars
See notes to financial statements
</TABLE>
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
February 29, 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investments, at value (Note 1A) (identified cost, $30,115,462) $31,246,375
Cash 1,721
Cash denominated in foreign currencies (cost, $3,649) 3,652
Dividends receivable 24,993
Deferred organization expenses (Note 1C) 5,693
-----------
Total assets $31,282,434
Liabilities:
Payable for investments purchased $1,091,510
Payable to affiliate --
Trustees' fees 255
Accrued expenses 13,052
-----------
Total liabilities 1,104,817
-----------
Net Assets applicable to investors' interest in Portfolio $30,177,617
===========
Sources of Net Assets:
Net proceeds from capital contributions and withdrawals $29,046,626
Net unrealized appreciation of investments
(computed on the basis of identified cost) 1,130,991
-----------
Total $30,177,617
===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the period from the start of business, September 18, 1995, to February 29, 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Income --
Dividends (net of foreign taxes of $3,764) $55,448
Interest 98,054
----------
Total income $153,502
Expenses --
Investment adviser fee (Note 2) $56,494
Administration fee (Note 2) 18,684
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 255
Custodian fees (Note 2) 32,717
Legal and accounting services 2,421
Amortization of organization expenses (Note 1C) 557
Miscellaneous 91
----------
Total expenses 111,219
----------
Net investment income $42,283
----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) (identified cost basis) --
Investment transactions $13,127
Foreign currency (22,612)
----------
Net realized loss ($9,485)
Unrealized appreciation --
Investments (identified cost basis) $1,130,913
Foreign currency 78
----------
Net unrealized appreciation 1,130,991
----------
Net realized and unrealized gain on investments $1,121,506
----------
Net increase in net assets from operations $1,163,789
==========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the period from the start of business, September 18, 1995, to
February 29, 1996 (Unaudited)
- ---------------------------------------------------------------------------------
<S> <C>
Increase (Decrease) in Net Assets:
From operations --
Net investment income $42,283
Net realized loss on investment transactions (9,485)
Change in unrealized appreciation of investments 1,130,991
-----------
Increase in net assets from operations $1,163,789
-----------
Capital transactions --
Contributions $30,122,764
Withdrawals (1,208,936)
-----------
Increase in net assets resulting from capital transactions $28,913,828
-----------
Total increase in net assets $30,077,617
Net Assets:
At beginning of period 100,000
-----------
At end of period $30,177,617
===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Supplementary Data
For the period from the start of business, September 18, 1995, to February 29, 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------
<S> <C>
Ratios (As a percentage of average daily net assets):
Expenses 1.48%+
Net investment income 0.56%+
Portfolio Turnover 25%
Average commision rate paid * 3.19%
Net Assets, end of period (000 omitted) $30,178
+ Computed on an annualized basis.
* Average Commision rate paid is computed by dividing the total dollar amount of commissions paid
by the total number of shares purchased and sold during the fiscal year for which commissions
were charged.
See notes to financial statements
</TABLE>
Notes to Financial Statements
(Unaudited)
(1) Significant Accounting Policies
Information Age Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 as a diversified, open-end investment
company. The Portfolio which was organized as a trust under the laws of
the State of New York on September 1, 1992 seeks to provide long-term
capital growth by investing in a global and diversified portfolio of
securities of information age companies. The Declaration of Trust
permits the Trustees to issue interests in the Portfolio. The following
is a summary of the significant accounting policies of the Portfolio.
The policies are in conformity with generally accepted accounting
principles.
A. Investment Valuations - Marketable securities, including options,
that are listed on foreign or U.S. securities exchanges or in the NASDAQ
National Market System are valued at closing sale prices, on the
exchange where such securities are principally traded. Futures positions
on securities or currencies are generally valued at closing settlement
prices. Unlisted or listed securities for which closing sale prices are
not available are valued at the mean between the latest bid and asked
prices. Short-term debt securities with a remaining maturity of 60 days
or less are valued at amortized cost. Other fixed income and debt
securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of
valuations furnished by a pricing service. Investments for which
valuations or market quotations are unavailable are valued at fair value
using methods determined in good faith by or at the direction of
the Trustees.
B. Federal 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 on
its share of such income. 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
investor's distributive share of the Portfolio's net investment income,
net realized capital gains, and any other items of income, gain, loss,
deduction or credit. Withholding taxes on foreign dividends and capital
gains have been provided for in accordance with the Trust's
understanding of the applicable countries' tax rules and rates.
C. Deferred Organization Expenses - Costs incurred by the Portfolio in
connection with its organization, including registration costs, are
being amortized on the straight-line basis over five years.
D. Futures Contracts - Upon the entering of a financial futures
contract, the Portfolio is required to deposit ("initial margin") either
in cash or securities an amount equal to a certain percentage of the
purchase price indicated in the financial futures contract. Subsequent
payments are made or received by the Portfolio ("margin maintenance")
each day, dependent on daily fluctuations in the value of the underlying
security, and are recorded for book purposes as unrealized gains or
losses by the Portfolio. The Portfolio's investment in financial futures
contracts is designed only to hedge against anticipated future changes
in interest or currency exchange rates. Should interest or currency
exchange rates move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the financial futures contracts and may realize
a loss.
E. Foreign Currency Translation - Investment valuations, other assets,
and liabilities initially expressed in foreign currencies are converted
each business day into U.S. dollars based upon current exchange rates.
Purchases and sales of foreign investment securities and income and
expenses are converted into U.S. dollars based upon currency exchange
rates prevailing on the respective dates of such transactions.
Recognized gains or losses on investment transactions attributable to
foreign currency rates are recorded for financial statement purposes as
net realized gains and losses on investments. That portion of unrealized
gains and losses on investments that result from fluctuations in foreign
currency exchange rates are not separately disclosed.
F. Forward Foreign Currency Exchange
Contracts - The Portfolio may enter into forward foreign currency
exchange contracts for the purchase or sale of a specific foreign
currency at a fixed price on a future date. Risks may arise upon
entering these contracts from the potential inability of counterparties
to meet the terms of their contracts and from movements in the value of
a foreign currency relative to the U.S. dollar. The Portfolio will enter
into forward contracts for hedging purposes as well as non-hedging
purposes. The forward foreign currency exchange contracts are adjusted
by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purposes as unrealized until
such time as the contracts have been closed or offset.
G. Other - Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the
ex-dividend date. However, if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as the Portfolio is
informed of the ex-dividend date. Interest income is recorded on the
accrual basis.
H. Interim Financial Information - The interim financial statements
relating to February 29, 1996 and for the period then ended have not
been audited by independent certified public accountants, but in the
opinion of the Portfolio's management, reflect all adjustments,
consisting only of normal recurring adjustments, necessary for the fair
presentation of the financial statements.
(2) Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Boston Management and Research
(BMR) a wholly-owned subsidiary of Eaton Vance Management (EVM) and
Lloyd George Investment Management (Bermuda) Limited, an affiliate of
EVM, (the Advisers) as compensation for management and investment
advisory services rendered to the Portfolio. Under the advisory
agreement, the Advisers receive a monthly fee, divided equally between
them, of 0.0625% (0.75% annually) of the average daily net assets of the
Portfolio up to $500,000,000, and at reduced rates as daily net assets
exceed that level. For the period from the start of business, September
18, 1995 to February 29, 1996 the adviser fee was 0.75% of average net
assets. In addition, an administrative fee is earned by EVM for managing
and administering the business affairs of the Portfolio. Under the
administration agreement, EVM earns a monthly fee in the amount of
1/48th of 1% (equal to 0.25% annually) of the average daily net assets
of the Portfolio up to $500,000,000, and at reduced rates as daily net
assets exceed that level. For the period from the start of business,
September 18, 1995 to February 29, 1996, the administration fee was
0.25% of average net assets. Except as to Trustees of the Portfolio who
are not members of the Advisers or EVM's organization, officers and
Trustees receive remuneration for their services to the Portfolio out of
such investment adviser and administrative fees. Investors Bank & Trust
Company (IBT) serves as custodian of the Portfolio. Prior to November
10, 1995, IBT was an affiliate of EVM and BMR. Pursuant to the custodian
agreement, IBT receives a fee reduced by credits which are determined
based on the average daily cash balance the Portfolio maintains with
IBT. No significant credit balances were used to reduce the Porfolio's
custody fees. Certain of the officers and Trustees of the Portfolio are
officers or directors/trustees of the above organizations.
(3) Investment Transactions
Purchases and sales of investments, other than short-term obligations,
aggregated $31,185,752 and $3,648,417, respectively.
(4) Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) in value of the
investments owned at February 29, 1996, as computed on a federal income
tax basis, are as follows:
Aggregate cost $30,115,527
===========
Gross unrealized appreciation $1,790,271
Gross unrealized depreciation 659,358
-----------
Net unrealized appreciation $1,130,913
===========
(5) Risks Associated with Foreign Investments
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally
less publicly available information about foreign companies,
particularly those not subject to the disclosure and reporting
requirements of the U.S. securities laws. Foreign issuers are generally
not bound by uniform accounting, auditing, and financial reporting
requirements and standards of practice comparable to those applicable to
domestic issuers. Investments in foreign securities also involve the
risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the
removal of funds or other assets of the Portfolio, political or
financial instability or diplomatic and other developments which could
affect such investments. Foreign stock markets, while growing in volume
and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly
those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In general, there
is less overall governmental supervision and regulation of foreign
securities markets, broker-dealers, and issuers than in the United
States.
(6) Financial Instruments
The Portfolio regularly trades in financial instruments with off-balance
sheet risk in the normal course of its investing activities to assist in
managing exposure to various market risks. These financial instruments
include written options, forward foreign currency exchange contracts and
financial futures contracts and may involve, to a varying degree,
elements of risk in excess of the amounts recognized for financial
statement purposes.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments
and does not necessarily represent the amounts potentially subject to risk.
The measurement of the risks associated with these instruments is meaningful
only when all related and offsetting transactions are considered.
The Portfolio did not have any open obligations under these financial
instruments at February 29, 1996.
(7) 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 1U4 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.
EV Traditional
Information
Age Fund
Officers
M. Dozier Gardner
Vice President
William D. Burt
Vice President
Barclay Tittmann
Vice President
James L. O'Connor
Treasurer
Thomas Otis
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Harvard University Graduate School of Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Director, Fiduciary Incorporated Company
Jack L. Treynor
Investment Adviser and Consultant
Information
Age Portfolio
Officers
James B. Hawkes
President and Trustee
William Chisholm
Vice President
Michel Normandeau
Vice President
Raymond O'Neill
Vice President
Duncan W. Richardson
Vice President
Hon. Robert Lloyd George
Vice President
James L. O'Connor
Treasurer
Thomas Otis
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Harvard University Graduate School of Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Director, Fiduciary Incorporated Company
Jack L. Treynor
Investment Adviser and Consultant
