<PAGE>
TO SHAREHOLDERS
I am pleased to report that EV Marathon Growth Fund had a total return of 14.8%
for the fiscal year ended August 31, 1996. This return - which does not reflect
the maximum contingent deferred sales charge of 5% - was the result of an
increase in net asset value to $13.32 per share on August 31, 1996 from $11.68
per share on August 31, 1995, and the reinvestment of $0.075 in capital gains
distributions. The Fund outperformed by 3.9% the Lipper Growth Fund Index* - an
unmanaged index of 30 growth stock mutual funds - which had a total return of
10.9% during the same period.
THE U.S. ECONOMY HAS REMAINED STRONG THUS FAR IN 1996...
After slowing somewhat at the end of 1995, the U.S. economy has shown remarkable
strength this year. Growth in gross domestic product - the official indicator of
economic growth calculated by the U.S. Commerce Department - declined from a
4.2% annual rate in the third quarter of 1995 to 0.9% in the fourth quarter.
Aided by a decline in short-term interest rates at the beginning of this year,
GDP growth rose to 2.0% in the first quarter and then shot up to 4.8% in the
second quarter. The economy showed continued signs of good health in August,
when the U.S. Labor Department reported that the 12-month "core rate" of
inflation - as measured by the consumer price index excluding food and energy -
had decreased to 2.6%, and that the unemployment rate had hit a 7-year low of
5.1%.
IN RESPONSE, STOCK MARKET INVESTORS HAVE REMAINED BULLISH...
To the surprise of most analysts and economists, the current bull market - which
celebrates its six-year anniversary in October, 1996 - is still intact. Many of
the worrisome excesses seen in the market earlier in the year, including
sky-high valuations of Internet stocks and an oversaturation of initial public
offerings (IPOs), were worked out when the market corrected in July. Supported
by a resumption in large inflows into equity mutual funds, the market has since
recovered the lost ground and moved to new highs.
WITH THE MARKET AT AN ALL-TIME HIGH, A PROFESSIONALLY MANAGED MUTUAL FUND MAKES
SENSE...
Despite its continued surge, the stock market will undoubtedly experience some
volatility going forward. As the market heads into uncharted waters, the case
for investing in a professionally managed, diversified portfolio of
well-established growth companies, such as this Fund, remains strong.
- ------------------- Sincerely,
[Photo of /s/ James B. Hawkes
James B. Hawkes]
James B. Hawkes
- ------------------- President
September 26, 1996
- -------------------------------------------------------------------------------
Fund shares are not guaranteed by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- -------------------------------------------------------------------------------
*It is not possible to invest directly in this index.
<PAGE>
MANAGEMENT DISCUSSION
An interview with Thomas E. Faust Jr., Vice President and Manager of Growth
Portfolio.
Q. TOM, TO WHAT DO YOU ATTRIBUTE THIS PORTFOLIO'S SOLID RETURNS OVER THE
PAST YEAR?
A. The category of large, well-established growth companies in which the
Portfolio typically invests has performed well this year. In addition, the
Portfolio has benefitted from a number of very successful individual
investments.
Q. WHAT IS THE PORTFOLIO'S INVESTMENT STYLE?
A. The Portfolio is constructed primarily on a stock-by-stock basis, investing
in a diversified group of stocks that have been identified as attractive
through a process of in-depth and independent fundamental research. The
primary emphasis is on individual stock analysis and selection. In building
the Portfolio, stocks judged to represent unusually favorable near-term
opportunities are combined with a core group of stocks held for their
longer-term potential.
Q. HOW WOULD YOU DESCRIBE YOUR APPROACH TO IDENTIFYING ATTRACTIVE STOCKS?
A. We look for three characteristics in a stock: first, that the company is
well positioned in an established business with attractive financial
characteristics and growth prospects; second, that the stock is favorably
valued in relation to its future earnings and cash flow potential; and
third, that there is an identified catalyst for future outperformance.
Stocks with these characteristics are attractive in terms of their upside
potential as well as their protection against the downside. At the time of
purchase, an investment case is developed which incorporates the elements of
business attractiveness, valuation, and performance catalyst. The investment
case establishes a benchmark against which a stock holding can be
monitored. In general, so long as the investment case remains intact and the
valuation remains reasonable, our instinct is to hold the stock. Conversely,
if the investment case has changed or has not developed in the way we
expected, our instinct is to sell the stock and seek opportunities
elsewhere.
- ------------------------------
[Photo of Thomas E. Faust Jr.]
- ------------------------------
THOMAS E. FAUST JR.
- -------------------
Q. HOW DOES THIS FUND COMPARE TO OTHERS IN ITS PEER GROUP IN TERMS OF MARKET
CAPITALIZATION?
A. The Fund is characterized as large-capitalization growth. This is not to
say that we will only invest in companies over a specified market
capitalization. Our goal is to invest primarily in well-established
companies that are market leaders in their industry.
Q. WHAT IS YOUR MARKET OUTLOOK?
A. In general, we do not spend much time trying to guess where the market is
going. This has proven to be very difficult and is not something that
I believe we do well. What I think we can do well is identify and invest in
stocks that can perform over time, irrespective of the short-term gyrations
of the market. That is where we focus our attention - on individual
companies and stocks. Having said that, Imust admit to being somewhat
cautious about the U.S. market at this time, primarily because of valuation
concerns. In managing the Portfolio, we have acted on this concern by
selling certain stocks that we felt had moved to excessive valuations and
reinvesting the proceeds in more modestly valued stocks.
Q. CAN YOU DISCUSS SOME RECENT SUCCESS STORIES?
A. Certainly. One interesting example is Boston Scientific. The company's
founders had the vision that catheters would become widely used for surgical
and other medical purposes, a less invasive technique than traditional
surgery. Through a series of seven acquisitions over the last year and a
half, Boston Scientific went from a well-respected niche player to the
dominant company in every business in which they compete. This company has
all of the characteristics of our classic investment model: it is a market
leader in a fast growing business; it is financially strong and
well-managed; and it is reasonably priced compared to other companies in the
industry with similar growth prospects. The catalyst is that as they
integrate their acquisitions, their earnings should grow consistently.
A second example is Circuit City. The investment case for this company is
that while the growth of their retail electronics business is slowing -
primarily due to the slowdown in personal computer sales - they have another
business, Carmax, which has huge potential. This subsidiary is essentially a
used-car "superstore," which offers customers no haggling, quality cars,
reasonable prices, and vast selection.
Q. WHAT IS THE CASE FOR INVESTING IN THIS FUND?
A. This Fund is well-suited for a wide range of investors and investment
vehicles, including retirement plans, such as a 401(k). Over long periods of
time, the best performing stocks have typically been rapidly growing,
market-leading companies such as those in which the Fund invests. We believe
that the Fund's approach to stock selection and the quality of its
investment research can result in superior investment performance over time.
That is our goal.
-------------------------------------------------------------------------
THE PORTFOLIO'S 10 LARGEST HOLDINGS*:
Company Business
Astra AB ...................................... Drugs
Sofamor Danek Group, Inc. ..................... Medical products
Intel Corporation ............................. Semiconductors
Deere & Co. ................................... Machinery
Allstate Corp. ................................ Insurance
MEMC Electronic Materials Inc. ................ Semiconductors
Xerox Corp. ................................... Business products
American Int'l Group, Inc. .................... Insurance
Federal Nat'l Mortgage Assoc .................. Financial
Triton Energy Ltd. ............................ Energy
*The holdings above represented 30.7% of the Portfolio's investments by
market value as of 8/31/96. The table may not be representative of current
or future holdings of the Portfolio.
-------------------------------------------------------------------------
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
EV MARATHON GROWTH FUND AND THE STANDARD & POOR'S 500 INDEX
From September 30, 1994, through August 31, 1996
- ---------------------------------------------------------------
AVERAGE 1 Life Value of
ANNUAL RETURNS Year of Fund* Investment at 8/31
- ---------------------------------------------------------------
With CDSC 9.8% 13.8% $13,039
- ---------------------------------------------------------------
Without CDSC 14.8% 16.0% $13,539
- ---------------------------------------------------------------
EV MARATHON GROWTH FUND VS.
S&P 500 INDEX
Date Fund @ NAV Fund w/CDSC Index
9/30/94 $10,000 NA $10,000
10/31/94 $10,364 NA $10,209
11/30/94 $9,970 NA $9,805
12/31/94 $9,939 NA $9,998
1/31/95 $9,990 NA $10,241
2/28/95 $10,394 NA $10,610
3/31/95 $10,687 NA $10,969
4/30/95 $10,758 NA $11,275
5/31/95 $11,010 NA $11,685
6/30/95 $11,364 NA $12,012
7/31/95 $11,616 NA $12,394
8/31/95 $11,798 NA $12,390
9/30/95 $12,051 NA $12,964
10/31/95 $11,838 NA $12,900
11/30/95 $12,293 NA $13,429
12/31/95 $12,634 NA $13,742
1/31/96 $12,939 NA $14,190
2/28/96 $13,254 NA $14,289
3/31/96 $13,345 NA $14,479
4/30/96 $13,711 NA $14,673
5/31/96 $14,077 NA $15,009
6/30/96 $13,843 NA $15,127
7/31/96 $13,020 NA $14,435
8/31/96 $13,539 $13,039 $14,707
Past performance is not indicative of future results. Investment returns and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
*Investment operations commenced on 9/13/94.
+Index information is available only at month-end; therefore, the line
comparison begins at the next month-end following the commencement of the Fund's
investment operations. It is not possible to invest directly in the S&P 500
Index.
FUND PERFORMANCE
In accordance with guidelines issued by the Securities and Exchange Commission,
we are including a performance chart that compares your Fund's total return with
that of a broad-based investment index. The lines on the chart represent the
total returns of a hypothetical $10,000 investment in EV Marathon Growth Fund,
and the unmanaged S&P 500 Stock Index.
THE TOTAL RETURN FIGURES
The colored line on the chart represents the Fund's performance at net asset
value. The Fund's total return figure reflects Fund expenses and transaction
costs. The second dollar figure for the Fund reflects the Fund's maximum
applicable deferred sales charge (CDSC), deducted at redemption as follows: 5% -
1st year; 5% - 2nd year; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th
year.
The black line represents the performance of the S&P 500 Stock Index, a
broad-based, widely recognized unmanaged index of 500 common stocks. The Index's
total return does not reflect any commissions or expenses that would be incurred
if an investor individually purchased or sold the securities represented in the
Index.
<PAGE>
-----------------------
EV MARATHON GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
August 31, 1996
- ------------------------------------------------------------------------------
ASSETS:
Investment in Growth Portfolio (Portfolio),
at value (Note 1A) $7,455,919
Receivable for Fund shares sold 18,948
Receivable from Administrator (Note 6) 65,405
Deferred organization expenses (Note 1E) 22,151
----------
Total assets $7,562,423
LIABILITIES:
Payable for Fund shares redeemed $46,830
Payable to affiliate --
Trustees' fees 23
Accrued expenses 6,378
-------
Total liabilities 53,231
----------
NET ASSETS for 563,920 shares of beneficial
interest outstanding $7,509,192
==========
SOURCES OF NET ASSETS:
Paid-in capital $6,841,117
Accumulated net realized gain on investment
transactions 149,580
Net unrealized appreciation of investments from
Portfolio 518,495
----------
Total net assets $7,509,192
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($7,509,192 / 563,920 shares of beneficial interest
outstanding) $13.32
======
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the year ended August 31, 1996
- ------------------------------------------------------------------------------
Investment Income (Note 1B):
Dividend income allocated from Portfolio (net of
foreign taxes, $1,246) $ 58,148
Interest income allocated from Portfolio 10,076
Expenses allocated from Portfolio (34,709)
--------
Total investment income $ 33,515
Expenses --
Custodian fees $ 2,837
Distribution and service fees (Note 4) 39,575
Transfer and dividend disbursing agent fees 5,082
Printing and postage 14,021
Legal and accounting services 12,058
Registration fees 20,031
Amortization of organization expenses (Note 1E) 7,531
Miscellaneous 3,659
--------
Total expenses 104,794
Deduct allocation of expenses by administrator
(Note 6) 65,405
--------
Net expenses 39,389
--------
Net investment loss $ (5,874)
REALIZED AND UNREALIZED GAIN FROM PORTFOLIO:
Net realized gain on investment transactions
(identified cost basis) $133,650
Change in unrealized appreciation of investments 323,262
--------
Net realized and unrealized gain on investments 456,912
--------
Net increase in net assets resulting from operations $451,038
========
The accompanying notes are an integral part of the financial statements.
<PAGE>
- ------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
------------------------
1996 1995*
----------- -----------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment loss $ (5,874) $ (14,147)
Net realized gain from Portfolio 133,650 18,499
Change in unrealized appreciation from Portfolio 323,262 195,233
---------- ----------
Net increase in net assets resulting from
operations $ 451,038 $ 199,585
---------- ----------
Distributions to shareholders --
From net realized gain on investments $ (21,890) $ --
---------- ----------
Net increase in net assets from Fund share
transactions (Note 2) $4,840,384 $2,040,065
---------- ----------
Net increase in net assets $5,269,532 $2,239,650
NET ASSETS:
At beginning of year 2,239,660 10
---------- ----------
At end of year $7,509,192 $2,239,660
========== ==========
*For the period from the start of business, September 13, 1994, to August 31,
1995.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Financial Highlights
- ------------------------------------------------------------------------------
Year Ended August 31,
---------------------
1996 1995++
---- ----
FINANCIAL HIGHLIGHTS (for a share outstanding
throughout the period)
NET ASSET VALUE -- Beginning of year $11.680 $10.000
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss $(0.010) $(0.074)
Net realized and unrealized gain on investments 1.725 1.754
------- -------
Total income from investment operations $ 1.715 $ 1.680
------- -------
LESS DISTRIBUTIONS:
From net realized gain on investments (0.075) --
------- -------
Net asset value -- End of year $13.320 $11.680
======= =======
TOTAL RETURN** 14.75% 16.80%
RATIOS/SUPPLEMENTAL DATA (As a percentage of
average daily net assets)*:
Expenses(1) 1.52% 2.82% +
Net investment loss (0.12%) (1.59%)+
Net assets, at end of year (000's omitted) $ 7,509 $ 2,240
*The expenses related to the operation of
the Fund reflect an 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:
NET INVESTMENT LOSS PER SHARE $(0.126) $(0.167)
======= =======
RATIOS (to average daily net assets)
Expenses(1) 2.87% 8.01% +
Net investment loss (1.47%) (6.79%)+
(1) Includes the Fund's share of Growth Portfolio's allocated expenses.
+ Computed on an annualized basis.
++ For the period from the start of business, September 13, 1994, to
August 31, 1995.
** 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.
The accompanying notes are an integral part of the financial statements.
<PAGE>
-----------------------
NOTES TO FINANCIAL STATEMENTS
(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 in vestment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio (5.1% at August 31,
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 VALUATIONS -- Valuations of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.
B. INCOME -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund determined in accordance with generally accepted
accounting principles.
C. EXPENSE REDUCTION -- The Fund has entered into an arrangement with its
custodian agent whereby interest earned on uninvested cash balances are used
to offset custody fees. All significant reductions are reported as a reduction
of expenses in the Statement of Operations. Prior to November 10, 1995,
Investors Bank & Trust Company (IBT) was an affiliate of Eaton Vance
Management. IBT serves as custodian to the Fund and the Portfolio.
D. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments, options and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary.
Pursuant to Section 852 of the IRC, the Fund designates $21,890 as a long term
capital gain distribution for its taxable year ended August 31, 1996.
E. 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.
F. 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.
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 in excess of accumulated net
realized gains. Accordingly, reclassifications may periodically be made among
certain capital accounts without impacting the net asset value.
H. USE OF ESTIMATES -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results
could differ from those estimates.
- ------------------------------------------------------------------------------
(2) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995*
----------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ---------- -------- ----------
Sales 651,594 $8,394,185 296,114 $3,162,410
Issued to shareholders
electing to receive payment
of distribution in Fund
shares 1,676 20,140 -- --
Redemptions (281,036) (3,573,941) (104,429) (1,122,345)
-------- ---------- -------- ----------
Net increase 372,234 $4,840,384 191,685 $2,040,065
======== ========== ======== ==========
*For the period from the start of business September 13, 1994 to August 31,
1995.
- ------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$8,426,305 and $3,656,065, 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 $36,379 to EVD
for the year ended August 31, 1996, representing 0.75% (annualized) of average
daily net assets. At August 31, 1996, the amount of Uncovered Distribution
Charges of EVD calculated under the Plan was approximately $172,156.
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. 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.
During the year ended August 31, 1996, the Fund provided for $3,196 under
the Plan to the Principal Underwriter and Authorized Firms.
- ------------------------------------------------------------------------------
(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 $22,219
of CDSC paid by shareholders for the year ended August 31, 1996.
- ------------------------------------------------------------------------------
(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, $65,405 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. Certain of the officers and Trustees of the Fund and Portfolio are
officers and directors/trustees of the above organizations.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND TRUSTEES OF
EV MARATHON GROWTH FUND:
We have audited the accompanying statement of assets and liabilities of EV
Marathon Growth Fund, a series of Eaton Vance Growth Trust, as of August 31,
1996, and the related statement of operations for the year then ended, and the
statement of changes in net assets and the financial highlights for the year
then ended and for the period from September 13, 1994 (start of business) to
August 31, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
held as of August 31, 1996 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of EV
Marathon Growth Fund, a series of Eaton Vance Growth Trust, as of August 31,
1996, the results of its operations for the year then ended, and the changes
in its net assets and the financial highlights for the year then ended and for
the period from September 13, 1994 (start of business) to August 31, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
SEPTEMBER 30, 1996
<PAGE>
-----------------------
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1996
- -------------------------------------------------------------------------------
COMMON STOCKS - 93.5%
- -------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
BANKS - 1.1%
Banco Latinoamericano 30,000 $ 1,601,250
This specialized multinational bank, ------------
based in Panama City, primarily provides
short-term, trade related financing to
stockholder banks from 22 member
countries in Latin America and the
Caribbean.
BEVERAGES - 2.2%
PepsiCo, Inc. 115,000 $ 3,306,250
Global soft drink producer with ------------
businesses in snack foods and fast food
restaurants.
BUSINESS PRODUCTS AND SERVICES - 8.0%
International Business Machines Corp. 25,000 $ 2,859,375
The world's largest supplier of
hardware, software and support services
in the information processing industry.
Reuters Holdings PLC 50,000 3,493,750
Worldwide provider of proprietary
financial data and information.
Sealed Air Corp.* 33,900 1,283,963
Global manufacturer of a broad line of
protective and specialty packaging materials
and systems.
Xerox Corp. 75,000 4,115,625
The dominant producer of high end
document processing machines.
------------
$ 11,752,713
------------
CHEMICALS - 1.4%
Praxair, Inc. 50,000 $ 2,056,250
The largest producer of industrial gases ------------
in North and South America.
COMPUTER EQUIPMENT AND SERVICES - 6.8%
Automatic Data Processing, Inc. 80,000 $ 3,330,000
The leading independent computing and
payroll processing services firm in the
U.S.
Electronic Data Systems Corp. 65,000 3,542,500
Designs, installs and operates data
processing and communications systems.
Hewlett Packard Co. 70,000 3,062,500
One of the world's most successful high
tech companies. Products include
servers, computers, and workstations for
home and business.
------------
$ 9,935,000
------------
CONSUMER PRODUCTS & SERVICES - 3.5%
Corning, Inc. 85,000 $ 3,166,250
Manufactures specialty glass. Its
consumer products division makes Corelle
dinnerware, Corning Ware cookware, Pyrex
glassware, Serengeti sunglasses, and
Steuben crystal.
Hershey Foods Corp. 22,200 1,934,175
The market leader in U.S. candy
business, produces Hershey Kisses,
Reese's peanut butter cups and York
peppermint patties. It also makes
chocolate related baking products.
------------
$ 5,100,425
------------
DRUGS & HEALTH CARE SERVICES - 15.9%
American Home Products 40,000 $ 2,370,000
Leading manufacturer of prescription
drugs, medical supplies and diagnostics,
as well as agricultural herbicides,
consumer medications and branded food
products.
Astra AB A Free Shares 150,000 6,348,915
Swedish based international
pharmaceutical firm with drugs for the
control of ulcers and asthma.
Boston Scientific Corp.* 80,000 3,670,000
Medical device manufacturer focusing
primarily on disposable products in less
invasive surgery procedures.
Elan Corp. PLC ADR*+ 95,000 2,980,625
Develops drug delivery systems designed
to improve and control the absorption
and utilization of pharmaceutical
compounds.
Pfizer, Inc. 40,000 2,840,000
A large international ethical
pharmaceutical manufacturer with
important positions in hospital products
and animal health.
Sofamor Danek Group, Inc.* 170,000 4,887,500
The dominant supplier of spinal implant
devices used in surgical treatment of
spinal diseases and deformities.
Vencor, Inc.* 9,000 282,375
Managers of acute long-term care
hospitals.
------------
$ 23,379,415
------------
ELECTRONIC INSTRUMENTATION - 1.0%
Millipore Corp. 40,000 $ 1,530,000
Products use membrane separations ------------
technology to analyze and purify fluids
for a variety of high tech industries.
FINANCIAL SERVICES - 9.4%
Advanta Corp. 30,000 $ 1,335,000
Originates and services consumer loans,
primarily through direct marketing of
Visa and MasterCharge credit cards.
Federal National Mortgage Association 120,000 3,720,000
U.S. Government sponsored mortgage
lender and provider of secondary
mortgage market.
Franklin Resources, Inc. 50,000 2,975,000
Provides investment management and
related services to a family of equity
and fixed income mutual funds.
MBNA Corp. 75,000 2,278,125
Dominant issuer of MasterCard/Visa
credit cards to affinity groups.
MGIC Investment Corp. Wisc. 55,000 3,485,625
The leading provider of private mortgage
insurance coverage to U.S. banks and
other mortgage suppliers.
------------
$ 13,793,750
------------
INSURANCE - 9.6%
Allstate Corp. 95,000 $ 4,239,375
Leading underwriter of automotive and
homeowners insurance as well as a life
insurance carrier.
American International Group, Inc. 40,000 3,800,000
One of the world's leading insurance
companies, operating in 130 countries.
Mutual Risk Management Ltd. 80,000 2,520,000
Provides risk management services to
clients seeking an alternative to
traditional commercial insurance,
particularly for workers' compensation.
Progressive Corp., Inc. 65,000 3,534,375
Underwriter of non-standard automobile
and other specialty personal lines of
insurance.
------------
$ 14,093,750
------------
MACHINERY - 3.3%
Deere & Co. 120,000 $ 4,770,000
The largest agricultural equipment ------------
company and also producer of earthmoving
and forestry machinery.
METALS & MINING - 5.8%
Freeport McMoRan Copper & Gold, Inc. 100,000 $ 2,812,500
Operator of third largest copper mine in
the world with world's largest gold
reserves.
J & L Specialty Steel, Inc. 190,000 2,588,750
Manufactures flat rolled stainless
steel. The company's products are used
in a variety of industrial, commercial
and consumer products including chemcial
and refining equipment, cargo containers
and beer kegs.
Potash Corp. of Saskatchewan 40,000 $ 3,040,000
The global leader of potash production
and number three in phosphates, two of
the three components of fertilizer
nutrients.
------------
$ 8,441,250
------------
OIL AND GAS - 4.7%
Anadarko Petroleum Corp. 60,000 $ 3,165,000
Leading independent natural gas and
crude oil production company.
Triton Energy Ltd.* 80,000 3,670,000
Independent oil and gas producer with
major developments in Colombia and
Thailand.
------------
$ 6,835,000
------------
PHOTOGRAPHY - 2.5%
Eastman Kodak Co. 50,000 $ 3,625,000
Largest producer of photographic ------------
products in the world.
PUBLISHING - 2.3%
McGraw Hill, Inc. 70,000 $ 2,870,000
Supplies informational products and
services for businesses, education and
industry through a broad range of media.
Providence Journal Co. Class A* 26,000 503,750
Owns television stations and publishes
newspapers.
------------
$ 3,373,750
------------
RETAILING - 8.2%
Circuit City Stores, Inc. 100,000 $ 3,150,000
The nation's largest retailer of major
appliances and brand name consumer
electronics, including PCs, laptops,
printers, cameras, toasters, blenders,
and stereos.
Home Depot, Inc. 50,000 2,656,250
A chain of do-it-yourself warehouse
style stores.
Lowes Companies 80,000 2,890,000
Operator of discount stores that cater
to home building and the home
improvement market.
Melville Corp. 80,000 3,380,000
Owns CVS drugstores. It also provides
pharmacy services and managed-care drug
programs through PharmaCare Management
Services.
------------
$ 12,076,250
------------
SEMICONDUCTORS - 6.1%
Intel Corp. 60,000 $ 4,788,750
A manufacturer of semiconductors and
other microcomputer components and
systems which comprise the heart of the
personal computer.
MEMC Electronic Materials, Inc.* 120,000 $ 4,230,000
Worldwide producer of silicon wafers
used in the production of
semiconductors.
------------
$ 9,018,750
------------
TRANSPORTATION - 1.7%
Southwest Airlines Co. 110,000 $ 2,516,250
Discount airline expanding throughout ------------
the U.S.
TOTAL COMMON STOCKS
(IDENTIFIED COST, $106,799,647) $137,205,053
------------
- -------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 5.4%
- -------------------------------------------------------------------------------
FACE AMOUNT
(000'S OMITTED)
- -------------------------------------------------------------------------------
American Express Credit Corp., $ 4,000 $ 3,998,827
5.28s, 9/3/96
Associates Corp. of North America, 3,982 3,980,827
5.30s, 9/3/96
------------
TOTAL SHORT-TERM OBLIGATIONS, AT
AMORTIZED COST $ 7,979,654
------------
TOTAL INVESTMENTS - 98.9%
(IDENTIFIED COST, $114,779,301) $145,184,707
OTHER ASSETS, LESS LIABILITIES - 1.1% $ 1,547,183
------------
NET ASSETS - 100% $146,731,890
============
*Non-income producing security.
+ADR - American Depository Receipt.
The accompanying notes are an integral part of the financial statements
<PAGE>
-----------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
August 31, 1996
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$114,779,301) $145,184,707
Cash 3,312
Foreign currency, at value (cost, $54,291) 55,451
Receivable for investments sold 3,828,459
Dividends receivable 168,672
Deferred organization expenses (Note 1D) 9,540
Other receivables 18,490
------------
Total assets $149,268,631
LIABILITIES:
Payable for investments purchased $2,517,055
Payable to affiliate --
Trustees' fee 730
Accrued expenses 18,956
----------
Total liabilities 2,536,741
------------
NET ASSETS applicable to investors' interest in Portfolio $146,731,890
============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $116,325,076
Unrealized appreciation of investments and
foreign currency (computed on the basis of
identified cost) 30,406,814
------------
Total $146,731,890
============
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the year ended August 31, 1996
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividends (net of withholding tax of $30,981) $ 1,765,188
Interest 314,006
-----------
Total income $ 2,079,194
Expenses --
Investment adviser fee (Note 2) $ 897,686
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 5,765
Custodian fee 87,366
Legal and accounting services 34,869
Amortization of organization expenses (Note 1C) 3,294
Miscellaneous 4,619
-----------
Total expenses 1,033,599
-----------
Net investment income $ 1,045,595
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis) $15,075,037
Change in unrealized appreciation of investments 4,390,133
-----------
Net realized and unrealized gain on
investments and foreign currency $19,465,170
-----------
Net increase in net assets from operations $20,510,765
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
------------------------------------
1996 1995
------ ------
INCREASE IN NET ASSETS:
From operations --
Net investment income $ 1,045,595 $ 846,704
Net realized gain on investment
transactions 15,075,037 1,358,348
Change in unrealized
appreciation of investments 4,390,133 16,976,967
------------ ------------
Net increase in net assets
from operations $ 20,510,765 $ 19,182,019
------------ ------------
Capital transactions --
Contributions $ 12,571,319 $ 48,765,499
Withdrawals (20,352,794) (65,480,787)
------------ ------------
Decrease in net assets
resulting from capital
transactions $ (7,781,475) $(16,715,288)
------------ ------------
Total increase in net assets $ 12,729,290 $ 2,466,731
NET ASSETS:
At beginning of year 134,002,600 131,535,869
------------ ------------
At end of year $146,731,890 $134,002,600
============ ============
- -------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
-------------------------------------
1996 1995 1994*
------ ------ --------
RATIOS (As a percentage of average
daily net assets):
Expenses 0.72% 0.73% 0.73%+
Net investment income 0.73% 0.67% 0.66%+
PORTFOLIO TURNOVER 62% 84% 4%
AVERAGE COMMISSION RATE PAID** $0.0595 -- --
+Computed on an annualized basis.
*For the period from the start of business, August 2, 1994, to August 31, 1994.
**Average commission rate paid is computed by dividing the total dollar amount
of commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were
charged. For fiscal years beginning on or after September 1, 1995, the
Portfolio is required to disclose its average commission rate per share for
security trades on which commissions are charged.
The accompanying notes are an integral part of the financial statements
<PAGE>
-----------------------
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996
- --------------------------------------------------------------------------------
(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 on
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 Portfolio are valued in U.S. dollars at the current
exchange rate.
B. INCOME TAXES -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally
must satisfy the applicable source of income and diversification requirements
(under the Internal Revenue Code) in order for its investors to satisfy them.
The Portfolio will allocate at least annually among its investors each
investors' distributive share of the Portfolio's net taxable (if any) and tax-
exempt investment income, net realized capital gains, and any other items of
income, gain, loss, deduction or credit.
C. EXPENSE REDUCTION -- The Portfolio has entered into an arrangement with its
custodian agent whereby interest earned on uninvested cash balances are used
to offset custody fees. All significant reductions are reported as a reduction
of expenses in the Statement of Operations.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income and distributions to
shareholders are recorded on the ex-dividend date and interest income is
recorded on the accrual basis.
F. USE OF ESTIMATES -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results
could differ from those estimates.
- ------------------------------------------------------------------------------
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to the Portfolio. The fee
is based upon a percentage of average daily net assets. For the year ended
August 31, 1996, the fee was equivalent to 0.625% of the Portfolio's average net
assets for such period and amounted to $897,686. 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 Portfolio out of such
investment adviser fee. Certain of the officers and Trustees of the Portfolio
are officers and directors/trustees of the above organizations. Trustees of the
Portfolio that are not affiliated with the Investment Adviser may elect to defer
receipt of all or a portion of their annual fees in accordance with the terms of
the Trustees Deferred Compensation Plan. For the year ended August 31, 1996 no
significant amounts have been deferred.
- ------------------------------------------------------------------------------
(3) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term obligations,
aggregated $84,757,949 and $99,136,218, respectively.
- ------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at August 31, 1996, as computed on a federal income tax basis, are as
follows:
Aggregate cost $114,779,301
============
Gross unrealized appreciation $ 32,683,716
Gross unrealized depreciation (2,276,902)
-----------
Net unrealized appreciation $ 30,406,814
============
- ------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $120 million unsecured line of credit agreement with
a bank. The line of credit consists of a $20 million committed facility and a
$100 million discretionary facility. Borrowings will be made by the Portfolio
solely to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Interest is charged to each portfolio based on its borrowings
at an amount above either the bank's adjusted certificate of deposit rate, a
variable adjusted certificate of deposit rate, or a federal funds effective
rate. In addition, a fee computed at an annual rate of 1/4 of 1% on the $20
million committed facility and on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds and portfolios
at the end of each quarter. The Portfolio did not have any significant
borrowings or allocated fees during the year. At August 31, 1996, the Fund did
not have an outstanding balance pursuant to the line of credit.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND INVESTORS OF
GROWTH PORTFOLIO:
We have audited the accompanying statement of assets and liabilities of
Growth Portfolio, including the portfolio of investments, as of August 31, 1996,
and the related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended, and
the supplementary data for each of the two years in the period then ended and
for the period from August 2, 1994 (start of business) to August 31, 1994. These
financial statements and supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclo~ sures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and supplementary data referred to
above present fairly, in all material respects, the financial position of Growth
Portfolio as of August 31, 1996, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the supplementary data for each of the two years in the period
then ended, and for the period from August 2, 1994 (start of business) to August
31, 1994, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
SEPTEMBER 30, 1996
<PAGE>
-------------------------
INVESTMENT MANAGEMENT
EV MARATHON OFFICERS INDEPENDENT TRUSTEES
GROWTH FUND JAMES B. HAWKES DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners,
Boston, MA 02110 Inc. Chairman, Newspapers
M. DOZIER GARDNER of New England, Inc.
Vice President
SAMUEL L. HAYES, III
WILLIAM D. BURT Jacob H. Schiff
Vice President Professor of Investment
Banking, Harvard
BARCLAY TITTMAN University Graduate School
Vice President of Business Administration
JAMES L. O'CONNOR NORTON H. REAMER
Treasurer President and Director, United
Asset Management Corporation
THOMAS OTIS
Secretary JOHN L. THORNDIKE
Vice President and Director,
Fiduciary Company Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
----------------------------------------------------------
GROWTH OFFICERS INDEPENDENT TRUSTEES
PORTFOLIO JAMES B. HAWKES DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners,
Boston, MA 02110 Inc. Chairman, Newspapers
M. DOZIER GARDNER of New England, Inc.
Vice President
SAMUEL L. HAYES, III
THOMAS E. FAUST, JR. Jacob H. Schiff
Vice President and Professor of Investment
Portfolio Manager Banking, Harvard
University Graduate School
JAMES L. O'CONNOR of Business Administration
Treasurer
NORTON H. REAMER
THOMAS OTIS President and Director, United
Secretary Asset Management Corporation
JOHN L. THORNDIKE
Vice President and Director,
Fiduciary Company Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
<PAGE>
INVESTMENT ADVISER OF
GROWTH PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV 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
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
TRANSFER AGENT
First Data Investor Services Group
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
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-10/96
[Eaton Vance Logo Omitted]
EV MARATHON
GROWTH
FUND
ANNUAL
SHAREHOLDER REPORT
AUGUST 31, 1996
