EV Marathon
Information
Age Fund
[PHOTO OF BABY LOOKING AT COMPUTER IN SPHERE SHAPED LINES OMITTED]
Annual
Shareholder
Report
August 31, 1996
EV Marathon Information Age Fund
24 Federal Street
Boston, MA 02110
To Shareholders
EV Marathon Information Age Fund had a total return of 10.4% for the
period from inception on September 18, 1995 through August 31, 1996.
That performance was the result of an increase in net asset value
per share from $10.00 to $11.04 during that time period. It does not
not include the contingent deferred sales charge on certain
redeeming shareholders. By comparison, the S&P 500 - an unmanaged
index of U.S. common stocks - rose 13.4%, while the Morgan Stanley
Capital International Europe, Australasia, Far East Index (EAFE) - an
unmanaged index of global common stocks - rose 6.1%* during the same
period.
In a volatile investment period, Information Age companies continued
to make headlines...
While the stock markets remained volatile in 1996, information-based
companies continued to forge new alliances and transform the face of
information industries. For example, Intel, a large Portfolio
holding, teamed with software leader Microsoft to develop Internet
telephony standards. Another large Portfolio investment, Cisco
Systems, Inc., agreed with long-distance carrier Sprint to
standardize voice, video, and data integration for the World Wide
Web. Elsewhere, Portfolio holding Providence Journal Co. agreed to a
purchase by A.H. Belo, creating a media powerhouse whose television
station properties reach across the nation.
*The total return figure for the MSCI EAFE Index is for the period
9/30/95-8/31/96. It is not possible to invest directly in these
Indices.
Companies spend fewer dollars on bricks and mortar... more on
computers and information technology...
A trend first noted early in the decade has gathered steam in 1996,
as companies are spending more on communications and multimedia
equipment than on construction, mining, farm and industrial
equipment. That trend is consistent with industry's efforts to
purchase technology that will give them an edge in the growing,
competitive global marketplace. Companies increasingly view
information technology not merely as a business expenditure, but as
an investment they hope will pay future dividends. Those dividends
are measured in more productive employees and better management of
time and resources.
Businesses that supply these services, equipment, information, and
media resources are among the fastest-growing companies in the
world. While naturally, past trends cannot guarantee future results,
the outlook for information companies remains promising. We believe
that shareholders of EV Marathon Information Age Fund will continue
to share in the long-term growth of the information industries.
Sincerely,
/S/James B. Hawkes
James B. Hawkes
President
October 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
Management, Ltd., Investment Advisers to the Information Age
Portfolio.
Q: Duncan, the Fund has fared very well since its inception, despite
a difficult climate for some of its sectors. To what do you
attribute that?
Mr. Richardson: There were several reasons. First, in recent months,
the market has put a premium on stock picking. We are, above all,
driven by fundamentals, and tend to focus first and foremost on
individual companies with good growth prospects. We were able to do
that successfully during this period.
[PHOTO OF DUNCAN W. RICHARDSON OMITTED]
Second, the Fund is a global growth fund. While there are certainly
additional market, political and currency risks associated with
global investing, the Fund's global approach has offered broader
diversification and partially insulated it from some of the recent
volatility in the U.S. market. Finally, while the Fund has some
exposure to certain technology-based sectors of the market, the Fund
is not primarily a technology fund. That's a very important
distinction. We were able to invest in a wide range of industries
that we believe have the most promising growth prospects, and were
thus able to sidestep many of the problems encountered by the
technology sector in the past year.
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.
Q: Jacob, the benefits of global diversification were clearly
evident during this period. Where have you been focusing your
investments?
Mr. Rees-Mogg: From a country standpoint, there was a modest shift
from Europe and the U.K. toward Asia and the Pacific. Asia has
increasingly presented us with some interesting opportunities in
"content" companies. The emphasis on stock-picking has been no less
intense in the international markets than in the U.S. market, as the
performance of different markets varied widely.
[PHOTO OF HON. JACOB REES-MOGG OMITTED]
From a sectoral standpoint, we have focused on content companies. A
growing number of entertainment distributors, combined with
increasing levels of wealth and leisure time, have created a massive
and growing demand for entertainment products. We have emphasized
creative companies that are producing quality products in their
individual markets.
[GRAPHICS OF PROCESSOR CHIP, COMPUTER & FILM PROJECTOR OMITTED: Information
Age Portfolio*: Investing in the growth industries of the world's
information-driven economies...]
Examples:
Intel Corp.
Cisco Systems
Oracle Corp.
Reuters
DST Systems, Inc.
McGraw-Hill Companies
New World Communications
Grammy Entertainment
Sony Corp.
Foornote reads:
*As of August 31, 1996
Q: Duncan, you indicated that the past year has featured a
challenging environment for some of the information-based sectors.
Can you expand on that theme?
Mr. Richardson: Yes. The period brought a fairly hostile climate for
some information sectors. Technology stocks badly underper-formed as
the sector was hit by sporadic earnings disappointments. And, as is
sometimes the case in the technology group, much of the sector was
dragged lower by companies with earnings shortfalls. In the
entertainment sector, some companies faltered as investors
questioned the companies' high cost structures amid an increasingly
competitive entertainment market. Finally, in the telecommunications
segment, long distance providers and regional Bell operating company
stocks lagged the market as investors questioned the outlook
following landmark legislation. Thus, with difficulties in several
large information sectors, it was a most challenging period.
Q: Jacob, you also alluded to the importance of stock-picking in the
global markets. Can you give an example?
Mr. Rees-Mogg: Certainly. Thailand comes immediately to mind. The
Thai market has been under significant pressure in 1996 due to
concerns over high inflation, high interest rates, disappointing
first quarter earnings, and an on-going political squabble that
appears to threaten the stability of the present Thai government.
However, despite the overall market woes, several Thai companies,
including Fund holding Grammy Entertain-ment PLC, turned in a
sterling performance.
While the overall Thai market declined 20% in the first half of the
year, Grammy rose more than 40%. Thai media companies such as Grammy
have benefited from first-rate management and from their ability to
produce entertainment products that are superior in their rapidly-
growing markets. That has generally been our approach in these
different foreign markets and it has paid off handsomely.
Q: Are there any specific areas in the international markets that
you presently find especially attractive?
Mr. Rees-Mogg: Yes. Telecommunication stocks are very interesting,
especially in Asia. The telecom group drew interest from investors
earlier in the year but has since retreated to more reasonable
valuations. At these levels, the stocks are very compelling,
especially given their continued, strong cash flow growth. Hong Kong
Telecom and Philippine Long Distance are among the Fund's Asia-based
telecom investments. Hong Kong Telecom is potentially well-
positioned to take advantage of its access to the Chinese market.
Philippines Long Distance is the dominant supplier of public phone
services in the Philippines. With a current penetration rate of only
2.1 telephones per 100 people in the country, the company has very
attractive growth prospects. Apart from Asia, we've also found some
attractive telecoms in Europe. For example, we have an investment in
STET, the Italian telecom company. Mobile phones have caught on
fabulously among Italian consumers. STET's 57%-owned Telecom Italia
Mobile enjoyed 72% subscriber growth in 1995 alone.
Q: Are there any areas in the international markets where you're
exercising caution at this point?
Mr. Rees-Mogg: Yes. Japan is a good example of an area where we have
become increasingly selective. Japan clearly remains a most
important segment of the world economy as well as an important
player among the information-based industries. However, the outlook
is somewhat uncertain with respect to the technology front. For
example, orders for semiconductor equipment in Japan fell sharply in
mid-summer. As a result, prices for memory chips have declined
sigificantly. It's quite uncertain when demand will pick up again
and the timing is very difficult to ascertain. That segment of
technology tends to influence the remainder of the Japanese
technology stocks. So, for the time being, I remain cautious with
respect to Japan's technology issues.
[GRAPHIC PIE CHARTS OMITTED: Information Age Portfolio: Asset Allocation*]
Caption reads: Based on market value as of August 31, 1996
By Region/Country...
U.S 48.6%
Asia/Pacific 17.7%
U.K. 17.1%
Europe 10.5%
Japan 6.2%
By Industry (Common Stocks only)...
Hardware & Software 16.4%
Publishing 16.3%
Business services 15.0%
Broadcasting 13.3%
Entertainment 12.1%
Other 11.8%
Telephone services 7.2%
Electronics 5.5%
Semiconductors 2.3%
Footnote reads:
*Since the Porfolio is actively managed, country allocations and
industry holdings are subject to change.
Q: What U.S.-based companies have been among the Fund's stronger
performers?
Mr. Richardson: The Fund's best-performing stocks have featured a
mix of large-cap companies that dominate their industries with
strong earnings growth together with smaller companies that have
made a name for themselves in small niche markets.
For example, Intel Corp. is the Fund's largest U.S. holding. The
company remains the industry standard for microprocessors and has
been reporting much stronger than expected earnings this year.
Intel's earnings performance stands out in a difficult climate for
U.S. technology companies. The market has rewarded its superior
earnings prospects and the stock rose more than 50% in the period
from January through August.
Q: What other areas drove the U.S. portion of the Fund?
Mr. Richardson: Computer services companies and broadcasting were
also among the Fund's stronger sectors. Computer services companies
have been able to take advantage of the increasing trend within
industry to outsource some computer functions. Companies such as
First Data Corp. and Automatic Data Processing Corp. performed well
for the Fund and helped counter the downtrend in other segments of
the technology sector.
[GRAPHIC OF SATELLITE DISH OMITTED: Even among the world's most
advanced cellular markets, there is ample room for growth.]
Caption reads:
World's Top Ten Cellular phone markets by market penetration:
Subscribers per
1000 inhabitants:
1.) Sweden 23
2.) Norway 22
3.) Finland 20
4.) Denmark 16
5.) Australia 14
6.) United States 13
7.) Brunei 12
8.) Hong Kong 12
9.) Iceland 11
10.) New Zealand 11
Footnote reads:
Source: Financial Times
International Telecommunication Union
Among broadcasting and media companies, New World Communications and
Providence Journal Co. each fared very well, up 31% and 25%,
respectively. New World Communica-tions is a producer of television
programming and the owner of ten Fox-affiliated television stations,
while Providence Journal is the owner of some print media properties
as well as nine network-affiliated television stations around
the country.
Q: Many of the Fund's investments are mid-cap to large-cap issues.
Did any small-cap stocks contribute to the Fund's performance?
Mr. Richardson: Yes. At the smaller end of the market-cap spectrum,
we owned Galileo Electro-Optics Corp., which more than doubled
during the period. The company is a niche manufacturer that supplies
fiber optic materials for a wide range of applications, including
night-scopes for the military, arthroscopes for medical procedures,
and glass- coated instruments for Xerox copiers. The company has a
dominant position within its various business segments, enjoys some
pricing flexibility, and has a growth strategy that could result in
a much larger company a few years down the road.
Q: Jacob, in your view, what sets this Fund apart from other funds
that invest in these industries?
Mr. Rees-Mogg: In this Fund, we have a good deal of flexibility in
our approach to the information-based industries. The wide
parameters of our investment mandate enhance our ability to moderate
risk. As we've indicated earlier, that was especially important
during this period. Furthermore, as Duncan noted, we are not tied to
technology as closely as are some other funds, which helps us lessen
the effect of the occasional technology sell-off.
Finally, we believe that one of our major strengths is that we have
research capabilities that span the globe, enhancing our ability to
monitor information companies on a global basis. All of these aspects
contribute to the Fund's flexibility and give us a singular profile
among information funds.
Q: Duncan, what is your outlook for the information-based stocks in
the year ahead?
Mr. Richardson: We see the demand for information equipment,
services, and products continuing to grow, both in industrialized
nations and developing nations. The rush to fill their
communications needs continues to create vast opportunities.
Naturally, past trends do not guarantee future performance and this
investment is, of course, subject to the risks of changing
technologies, fluctuations in foreign markets, and shifting
political trends. But we believe that the information industries
present some of the most promising long-term opportunities for
growth today. And we expect that patient shareholders of EV Marathon
Information Age Fund will share in that growth.
Some Recent Developments among Information Age companies:
(bullet) Oracle Corp. - one of the fastest-growing suppliers of
business applications software, Oracle is developing equipment to
facilitate global network access. The Redwood City, CA company has
devised a lean, inexpensive PC with Web-browsing software that will
enable viewers to access the Internet via phone lines and view it on
their televisions.
(bullet) Duracell International - the world's largest maker of
alkaline batteries agreed to be acquired by Gillette, a leading
personal care products company. The Duracell acquisition will boost
Gillette's size by 30%, while adding an important new product line,
especially for European and emerging markets.
(bullet) News Corp. - the global media giant has formed Internet
Ventures to create interactive games for the World Wide Web. Among
the company's first offerings is a game based on the "X-Files," Fox
Television's most popular prime-time show.
[GRAPHIC WORM CHART OMITTED: Comparison of change in Value of a $10,000
Investment in EV Marathon Information Age Fund, the Standard & Poor's 500
Index (S&P 500) and the Europe-Australasia-Far East Index (EAFE)
Caption reads: From September 30,1995 through August 31, 1996
Inset box info reads:
- ------------------------------------------------------
CUMULATIVE Value of
TOTAL 1 Investment at
RETURNS Year 8/31
- ------------------------------------------------------
With CDSC 5.4% $10,366
- ------------------------------------------------------
Without CDSC 10.4% $10,866
- ------------------------------------------------------
Data from worm chart reads:
Date Fund @ NAV Fund w/CDSC S&P Index EAFE Index
-------- ---------- ----------- --------- ----------
9/30/95 $10,000 $10,366 $10,000 $10,000
10/31/95 $10,128 $10,366 $9,950 $9,734
11/30/95 $10,226 $10,366 $10,359 $10,007
12/31/95 $10,285 $10,366 $10,600 $10,413
1/31/96 $10,315 $10,366 $10,946 $10,458
2/28/96 $10,541 $10,366 $11,022 $10,496
3/31/96 $10,571 $10,366 $11,168 $10,722
4/30/96 $11,112 $10,366 $11,318 $11,036
5/31/96 $11,329 $10,366 $11,577 $10,836
6/30/96 $11,161 $10,366 $11,668 $10,899
7/31/96 $10,482 $10,366 $11,135 $10,583
8/31/96 $10,866 $10,366 $11,344 $10,609
Footnote reads:
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 9/18/95
+ Index information is available only at month-end; therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations.
Fund Performance
In accordance with SEC guidelines, we are including a performance
chart that compares your Fund's total return with that of two broad-
based investment indices. The lines on the chart represent the total
returns of $10,000 hypothetical invest-ments in EV Marathon
Information Age Fund, the unmanaged S&P 500 Stock Index, and the
unmanaged Morgan Stanley Capital International EAFE Index (MSCI
EAFE). Unlike the Fund, the S&P 500 includes only U.S. common
stocks, while the EAFE is composed of foreign companies. Both
indices are broad-based, whereas the Fund concentrates investments
in information-based companies.
The Total Return Figures
The solid purple 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, and assumes the reinvestment of
income dividends and capital gain distributions. 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 dotted black line represents the performance of the S&P 500
Index. The dashed black line represents the performance of the MSCI
EAFE Index. 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. It is not possible to invest directly in the Indices.
EV Marathon Information Age Fund
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
August 31, 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investment in Information Age Portfolio (Portfolio), at value (Note 1A)
(identified cost, $20,463,124) $ 21,752,820
Receivable for Fund shares sold 47,232
Deferred organization expenses (Note 1D) 36,532
Tax reclaim receivable 4,129
-------------
Total assets $ 21,840,713
Liabilities:
Payable for Fund shares redeemed $ 33,684
Payable to affiliate --
Trustees' fees 27
Accrued expenses 6,524
-------------
Total liabilities 40,235
-------------
Net Assets for 1,974,488 shares of beneficial interest outstanding $ 21,800,478
=============
Sources of Net Assets:
Paid-in Capital $ 20,623,491
Accumulated net realized loss on investment and
foreign currency transactions from Portfolio (106,601)
Accumulated net investment loss (6,108)
Unrealized appreciation of investments and foreign currency from Portfolio
(computed on the basis of identified cost) 1,289,696
-------------
Total $ 21,800,478
=============
Net Asset Value, Offering and Redemption Price (Note 6) Per Share
($21,800,478 (divided by) 1,974,488 shares of beneficial interest) $11.04
======
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Period from the Start of Business, September 18, 1995 to August 31, 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income (Note 1B):
Dividend income allocated from Portfolio
(net of foreign taxes, $20,022) $ 147,416
Interest income allocated from Portfolio 79,663
Expenses allocated from Portfolio (209,977)
-------------
Total investment income $ 17,102
Expenses --
Management fee (Note 3) $ 34,782
Compensation of Trustees not members of the
Administrator's organization (Note 3) 109
Distribution fees (Note 5) 104,346
Transfer and dividend disbursing agent fees 18,678
Printing and postage 17,153
Registration fees 9,745
Amortization of organization expenses (Note 1D) 9,470
Legal and accounting services 6,509
Custodian fee 2,778
-------------
Total expenses 203,570
-------------
Net investment loss $ (186,468)
-------------
Realized and Unrealized Gain (Loss) from Portfolio:
Net realized loss from Portfolio (identified cost basis) --
Investment transactions $ (86,012)
Foreign currency and forward foreign currency contracts (27,040)
-------------
Net realized loss $ (113,052)
Unrealized appreciation of investments and foreign currency from Portfolio 1,289,696
-------------
Net realized and unrealized gain $ 1,176,644
-------------
Net increase in net assets from operations $ 990,176
=============
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 August 31, 1996
- -----------------------------------------------------------------------------------------------
<S> <C>
Increase (Decrease) in Net Assets:
From operations --
Net investment loss $ (186,468)
Net realized loss from Portfolio (113,052)
Unrealized appreciation from Portfolio 1,289,696
-------------
Net increase in net assets from operations $ 990,176
-------------
Transactions in shares of beneficial interest (Note 4) --
Proceeds from sale of shares $ 24,825,891
Cost of shares redeemed (4,015,589)
-------------
Increase in net assets from Fund share transactions $ 20,810,302
-------------
Net increase in net assets $ 21,800,478
Net Assets:
At beginning of period --
-------------
At end of period (including accumulated net
investment loss of $6,108) $ 21,800,478
=============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
For the Period from the Start of Business, September 18, 1995 to August 31, 1996
- ----------------------------------------------------------------------------------------------
<S> <C>
Net asset value -- Beginning of period $ 10.000
--------
Income from operations:
Net investment loss $ (0.134)
Net realized and unrealized gain
on investments 1.178
--------
Total income from operations $ 1.040
--------
Net asset value -- End of period $ 11.040
========
Total Return (1) 10.40%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $21,800
Ratio of net expenses to average daily net assets * 2.96%+
Ratio of net investment loss to average daily net assets (1.34%)+
* Includes the Fund's share of Information Age Portfolio's allocated expenses.
+ Computed on an annualized basis.
(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. Total return is computed on a non-annualized
basis.
Note: The above per share information is computed based on average shares
outstanding.
See notes to financial statements
</TABLE>
Notes to Financial Statements
August 31, 1996
(1) Significant Accounting Policies
EV Marathon 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 (50.9% 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 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 or loss 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. At August 31, 1996, net capital losses of $91,588
attributable to security transactions incurred after October 31,
1995, are treated as arising on the first day of the Fund's next
taxable year.
D. Deferred Organization Expenses - Costs incurred by the Fund in
connection with its organization are being amortized on the
straight-line basis over five years.
E. Expense Reduction - Investors Bank & Trust Company (IBT), serves
as custodian of the Fund and the Portfolio. Prior to November 10,
1995, IBT was an affiliate of EVM. Pursuant to the custodian
agreement, IBT receives a fee reduced by credits which are
determined based on the average cash balances the Fund or the
Porfolio maintains with IBT. All significant credit balances used to
reduce the Fund's custodian fees are reported as a reduction of
expenses in the Statement of Operations.
F. Use of Estimates - The preparation of 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 reported period. Actual results could differ from those
estimates.
G. Other - Investment transactions are accounted for on a trade date
basis.
(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 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 temporary 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. During the period
ended August 31, 1996, $180,360 was reclassified from accumulated
net investment loss to paid-in capital due to permanent differences
between book and tax accounting for operating losses. Additionally,
$6,451 was reclassed from accumulated net relized loss on
investments and foreign currency transactions to paid-in capital due
to permanent differences between book and tax accounting for captial
losses. Net investment loss, net realized captial loss and net
assets were not affected by these reclassifications.
(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 ended August 31, 1996 the fee was
equivalent to 0.25% of the Fund's average net assets for such period
and amounted to $34,782. 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. Certain officers and Trustees of the Fund and the Portfolio are
officers and directors/trustees of the above organizations. In
addition, investment adviser and administrative 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 August 31, 1996 were as
follows:
Sales 2,344,257
Issued to shareholders electing to
receive payments of distributions
in Fund shares --
Redemptions (369,769)
---------
Net increase 1,974,488
=========
(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) amounts equal to 1/365 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 the 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 the aggregate
amount of contingent deferred sales charges (see Note 6) and daily
amounts therefore 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
$104,346 to EVD for the period from the start of business September
18, 1995 to August 31, 1996, representing 0.75% of average daily net
assets. At August 31, 1996, the amount of Uncovered Distribution
Charges of EVD calculated under the Plan was approximately $923,000.
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 initially
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% per annum of the
Fund's average daily net assets based on the value of Fund shares
sold by such persons and remaining outstanding for at least one
year. Service fee payments will be made for personal services and/or
the maintenance of shareholder accounts. 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 where there are no outstanding Uncovered
Distribution Charges of EVD. The fund expects to begin accruing for
its service fee payments during the quarter ending September 30,
1996.
Certain officers and Trustees of the Fund are officers or directors
of EVD.
(6) 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 year thereafter. 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 $41,000 of CDSC paid by shareholders for
the period ended August 31, 1996.
(7) Investment Transactions
Increases and decreases in the Fund's investment in the Portfolio
aggregated $24,778,935 and $4,215,732, respectively.
Independent Auditor's Report
To the Trustees and Shareholders of
EV Marathon Information Age Fund
(a series of Eaton Vance Growth Trust):
We have audited the accompanying statement of assets and liabilities
of EV Marathon Information Age Fund (one of the series constituting
the Eaton Vance Mutual Funds Trust) as of August 31, 1996, and the
related statement of operations, the statement of changes in net
assets and the financial highlights for the period from the start of
business September 18, 1995, to August 31, 1996. These financial
statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and 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 at August
31, 1996 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
present fairly, in all material respects, the financial position of
EV Marathon Information Age Fund at August 31, 1996, the results of
its operations, the changes in net assets, and the financial
highlights for the respective stated period, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
October 4, 1996
<TABLE>
<CAPTION>
Information Age Portfolio
Portfolio of Investments
August 31, 1996
Common Stock - 99.0%
- --------------------------------------------------------------------------------------
Name of Company Shares Value
(Note 1)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Broadcasting - 15.2%
BEC World Co. Ltd.+ (2) 82,700 $882,395
Benpress Holdings GDR+ (2) 32,000 236,160
Comcast Corp. 26,000 419,250
Financiere Richemont+ (2) 30,000 451,253
Jacor Communications, Inc. (2) 17,000 569,500
Lin Television Corp. (2) 15,000 536,250
Providence Journal Bulletin Class A (2) 35,000 678,125
PT Indonesia Satellite ADR+ 14,000 437,500
Renaissance Communications (2) 13,000 458,250
TCA Cable TV, Inc. (2) 5,000 130,000
Television Broadcasts Ltd.+ 230,000 818,029
Yorkshire-Tyne Tees TV Holdings+ 45,000 862,293
-----------
$6,479,005
-----------
Business, Computer, & Financial Services - 20.6%
ADT Ltd. (2) 25,000 $490,625
Automatic Data Processing, Inc. 16,000 666,000
CCC Information Services (2) 10,000 185,000
Ceridian Corp. (2) 10,500 447,563
Computer Sciences Corp. (2) 10,000 700,000
DST Systems, Inc. (2) 20,000 615,000
First Data Corp. 5,000 390,000
Fiserv, Inc. (2) 17,000 575,875
Metromail Corp. (2) 32,000 560,000
National Processing, Inc. (2) 10,000 171,250
NTT Data Comm Systems+ 270 827,443
Reuters Holding PLC+ 100,000 1,165,809
Sunguard Data Systems, Inc. (2) 14,000 598,500
True North Communications, Inc. (2) 30,000 577,500
Xerox Corp. 15,000 823,125
-----------
$8,793,690
-----------
Computer Hardware & Software - 11.3%
Adobe 20,000 $697,500
Bay Networks (2) 30,000 825,000
Broderbund Software, Inc. 5,000 150,625
Cisco Systems (2) 10,000 527,500
Information Resources (2) 5,000 68,750
Informix Corporation (2) 20,000 450,000
INTUIT Inc. (2) 10,000 365,000
Misys PLC+ 33,000 435,738
Oracle Corp. (2) 18,000 634,500
Scholastic Corp. (2) 10,000 677,500
-----------
$4,832,113
-----------
Electronics - 9.1%
Allen Group (2) 15,000 $234,375
Anritsu Corp.+ (2) 30,000 411,375
Galileo Electro Optics (2) 32,000 860,000
Intel Corp. (2) 12,000 957,750
Samsung Electronics GDR+ 3,300 256,991
Samsung Electronics GDR+ (1) 1,206 56,358
Sharp Corp.+ 37,000 585,680
VTECH Holdings Ltd.+ 275,000 506,822
-----------
$3,869,351
-----------
Entertainment - 11.9%
Gaylord Entertainment 20,000 $490,000
Grammy Entertainment PLC+ 43,000 564,157
Havas SA+ 10,000 671,505
Hoyts Cinemas+ 255,000 403,436
New World Communications Group (2) 10,000 230,625
News International PLC+ 150,000 878,456
Polygram+ 11,000 655,132
Sony Corp.+ 19,100 1,198,804
-----------
$5,092,115
-----------
Miscellaneous - 7.9%
Boston Scientific Corp. 15,000 $688,125
Duracell International, Inc. 15,000 676,875
Eastman Kodak Co. 12,000 870,000
Oxford Molecular Group PLC+ 50,000 267,051
Sofamer Inc. 10,000 287,500
Thermo Electron Corp. 15,000 594,375
-----------
$3,383,926
-----------
Publishing - 16.0%
Dorling Kindersley PLC+ 45,000 $367,546
Dow Jones & Co., Inc. 11,000 430,375
John Fairfax Holdings+ 250,000 526,048
Matichon Publishing Group+ 90,000 441,019
McGraw-Hill Companies, Inc. 10,000 410,000
Oriental Press Group Ltd+ 1,580,000 812,274
Pearson PLC+ 105,000 1,119,153
United News & Media PLC+ 50,000 559,479
Springer Axel Verlag AG+ 1,327 784,836
Star Publications (Malaysia)+ 185,000 634,477
Wolters Kluwer NV+ 6,000 754,114
-----------
$6,839,321
-----------
Telephone Services - 7.0%
British Telecommunications PLC+ 105,000 615,739
Hong Kong Telecom+ 300,000 502,457
Korea Mobile Telecom Corp.+ 290 322,455
Philippine Long Distance+ 8,300 496,963
STET+ 180,000 572,650
Telecom Italia Mobile SA+ 240,000 494,984
-----------
$3,005,248
-----------
Total Common Stocks (identified cost, $39,841,160) $42,294,769
-----------
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Short-Term Obligations - 1.5%
- ----------------------------------------------------------------------------------------------------------
Principal
Amount Value
(000 omitted) (Note 1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Associates Corp. of North America, 5.30s, 9/03/96 $ 621 $ 620,817
(at amortized cost)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Put Options Purchased - 0.2%
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Option to Deliver/Receive, Strike Price, Expiration Date:
JPY/USD, 101.85, December 1996 (premium paid, $58,443) 1,650 $ 78,210
-----------
Total Investments (identified cost, $40,520,420) - 100.7% $42,993,796
Other Assets, Less Liabilities - (0.7%) (290,411)
Net Assets - 100% $42,703,385
===========
+ Foreign Security
(1) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be
resold in transactions exempt from registration, normally to qualified institutional buyers. At August 31,
1996, the value of these securities amounted to $56,358 or 0.1% of net assets.
(2) Non-income producing security.
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
JPY - Japanese Yen
USD - United States Dollars
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Statements
Statement of Assets and Liabilities
August 31, 1996
<S> <C> <C>
Assets:
Investments, at value (Note 1A) (identified cost, $40,520,420) $42,993,796
Cash 1,135
Foreign currencies, at value (identified cost, $963) 1,153
Receivable for investments sold 407,852
Dividends receivable 60,719
Deferred organization expenses (Note 1C) 5,211
-----------
Total assets $43,469,866
Liabilities:
Payable for investments purchased $ 738,113
Payable to affiliate --
Trustees' fees 273
Accrued expenses 28,095
----------
Total liabilities 766,481
-----------
Net Assets applicable to investors' interest in Portfolio $42,703,385
===========
Sources of Net Assets:
Net proceeds from capital contributions and withdrawals $40,229,819
Net unrealized appreciation of investments and foreign currency
(computed on the basis of identified cost) 2,473,566
-----------
Total $42,703,385
===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Period from the Start of Business, September 18, 1995, to August 31, 1996
<S> <C> <C>
Investment Income:
Income --
Dividends (net of foreign taxes of $38,742) $ 283,323
Interest 140,841
----------
Total income 424,164
Expenses --
Investment adviser fee (Note 2) $ 199,131
Administration fee (Note 2) 66,210
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 724
Custodian fees 115,885
Legal and accounting services 15,444
Printing and postage 4,361
Amortization of organization expenses (Note 1C) 1,187
Miscellaneous 2,091
----------
Total expenses 405,033
----------
Net investment income $ 19,131
----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss (identified cost basis)--
Investment transactions $ (218,951)
Foreign currency and forward foreign currency contracts (50,123)
----------
Net realized loss $(269,074)
Unrealized appreciation --
Investments (identified cost basis) $2,473,376
Foreign currency 190
----------
Net unrealized appreciation 2,473,566
----------
Net realized and unrealized gain on investments $2,204,492
----------
Net increase in net assets from operations $2,223,623
==========
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 August 31, 1996
<S> <C>
Increase (Decrease) in Net Assets:
From operations --
Net investment income $ 19,131
Net realized loss on investments and foreign currency transactions (269,074)
Net unrealized appreciation of investments and foreign currency 2,473,566
-----------
Increase in net assets from operations $ 2,223,623
-----------
Capital transactions --
Contributions $47,226,307
Withdrawals (6,846,545)
-----------
Increase in net assets resulting from capital transactions $40,379,762
-----------
Total increase in net assets $42,603,385
Net Assets:
At beginning of period 100,000
-----------
At end of period $42,703,385
===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Supplementary Data
For the Period from the Start of Business, September 18, 1995, to August 31, 1996
<S> <C>
Ratios (to average daily net assets):
Expenses 1.52%+
Net investment income 0.07%+
Portfolio Turnover 115%
Average commission rate paid * $0.0303
Net Assets, end of period (000 omitted) $42,703
+ Computed on an annualized basis.
* 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.
See notes to financial statements
</TABLE>
Notes to Financial Statements
(1) Significant Accounting Policies
Information Age Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 as a diversified, open-end management
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. Options on Foreign Currency - Upon the purchase of a put option
on foreign currency by the Portfolio, the premium paid is recorded
as an investment, the value of which is marked-to-market daily. When
a purchased option expires, the Portfolio will realize a loss in the
amount of the cost of the option. When a Portfolio enters into a
closing sales transaction, the Portfolio will realize a gain or loss
depending on whether the sales proceeds from the closing sales
transaction are greater or less than the cost of the option. When a
Portfolio exercises a put option, settlement is made in cash. The
risk associated with purchasing options is limited to the premium
originally paid.
F. 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.
G. 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.
H. Use of Estimates - The preparation of 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 reported period. Actual results could differ from those
estimates.
I. 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.
J. Expense Reduction - Investors Bank & Trust Company (IBT), serves
as custodian of the Portfolio. Prior to November 10, 1995, IBT was
an affiliate of EVM. Pursuant to the custodian agreement, IBT
receives a fee reduced by credits which are determined based on the
average cash balances the Portfolio maintains with IBT. All
significant credit balances used to reduce the Portfolio's custodian
fees are reflected as a reduction of operating expenses in the
Statement of Operations.
(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 August 31, 1996 the adviser
fee was 0.75% (annualized) of average net assets for such period and
amounted to $199,131. 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 August 31, 1996,
the administration fee was 0.25% (annualized) of average net assets
for such period and amounted to $66,210. 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.
Trustees of the Portfolio that are not affiliated with the Advisers
may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of the Trustees Deferred
Compensation Plan. For the period ended August 31, 1996, no
significant amounts have been deferred.
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 $70,236,045 and $30,143,015, 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 $ 62,295
==========
Gross unrealized appreciation $3,447,113
Gross unrealized depreciation 1,015,612
----------
Net unrealized appreciation $2,431,501
==========
(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 August 31, 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 1/4 of 1% on the $20 million committed
facility and on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds
and portfolios at the end of each quarter. The Portfolio did not
have any significant borrowings or allocated fees during the period.
Independent Auditors' Report
To the Trustees and Investors of
Information Age Portfolio:
We have audited the accompanying statement of assets and liabilities
of Information Age Portfolio, including the portfolio of
investments, as of August 31, 1996, and the related statement of
operations, the statement of changes in net assets and the
suplementary data for the period from the start of business,
September 18, 1995, to August 31, 1996. These financial statements
and supplementary data are the responsibility of the Portfolio's
management. Our responsibility is to express an opinion on these
financial statements and supplementary data based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of
securities owned as of August 31, 1996 by correspondence with the
custodian and brokers; where replies were not received from brokers
we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and supplementary data
present fairly, in all material respects, the financial position of
Information Age Portfolio as of August 31, 1996, and the results of
its operations, changes in its net assets and supplementary data for
the respective stated period, in conformity with United States
generally accepted accounting principles.
Coopers & Lybrand
Chartered Accountants
Toronto, Canada
October 4, 1996
EV Marathon
Information
Age Fund
Officers
- --------------------
James B. Hawkes
President and Trustee
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 Company Incorporated
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 and Co-Portfolio Manager
Hon. Robert Lloyd George
Vice President, Trustee and Co-Portfolio Manager
James L. O'Connor
Treasurer
Thomas Otis
Secretary
Independent Trustees
- --------------------
Hon. Edward K.Y. Chen
Professor and Director, Center for Asian Studies,
University of Hong Kong
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 Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
[LOGO: ARCHED DOORWAY]
Sponsor and Manager of
EV Marathon Information Age Fund
and Administrator of
Information Age Portfolio
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Co-Advisers of Information Age Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Lloyd George Investment Management
(Bermuda) Limited
3808 One Exchange Square
Central, Hong Kong
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
Custodian
Investors Bank & Trust Company
89 South Street
Boston, MA 02205-1537
Transfer Agent
First Data Investors Services Group
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
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.
M-IASRC-10/96
