<PAGE>
[LOGO OF EATON VANCE MUTUAL Investing [PHOTO OF NY STOCK EXCHANGE
FUNDS APPEARS HERE] for the IN NEWSPAPER & CALCULATOR
21st APPEARS HERE]
Century
Semiannual Report February 28, 1997
[PHOTO OF NY STOCK EXCHANGE FLAG APPEARS HERE]
EV
MARATHON
GROWTH
FUND
Eaton Vance
Global Management--Global Distribution
[PHOTO OF NY STOCK EXCHANGE TRADING FLOOR APPEARS HERE] MARATHON
<PAGE>
EV Marathon Growth Fund as of February 28, 1997
INVESTMENT UPDATE
[PHOTO OF THOMAS E. FAUST, JR., PORTFOLIO MANAGER
APPEARS HERE]
Investment Environment
- --------------------------------------------------------------------------------
The Economy
. The current expansion is in its sixth year, the third time in 30 years that
the economy has shown sustained growth for this long.
. The economy's growth, measured by Gross Domestic Product (GDP), increased at
a 3.4% pace in 1996.
. Unemployment, which inched up during the period from 5.1% to 5.3%, remains
low. Wage pressures, which can lead to higher inflation, do not appear
threatening.
. The inflation rate, as measured by the Consumer Price Index (CPI), rose 0.1%
during January, 1997, the smallest increase since June, 1996. For the 12
months ended January, 1997, the CPI, rose a moderate 3.0%.
The Markets
. The stock market continued its remarkable growth, led by a relatively small
group of large capitalization, blue chip stocks. The S&P 500 Index, a broadly
based, unmanaged index of large capitalization stocks traded in the U.S., had
a total return of 22.6% during the six months ended February 28, 1997.*
. Momentum in the equity markets shifted in 1996 from smaller, more speculative
stocks and initial public offerings (IPOs), to high quality, "brand name"
companies, after the former corrected in May-July.
. Stock valuations have risen significantly, and this is a concern. However,
earnings appear solid, and growth should be sustained through this year. Good
companies with reasonable valuations can still be found, and it is our goal
to identify them.
The Fund
- --------------------------------------------------------------------------------
The Past Six Months
. During the six months ended February 28, 1997, EV Marathon Growth Fund had a
total return of 16.5%./1/
. This return resulted from an increase in net asset value to $15.15 per share
on February 28, 1997 from $13.32 per share on August 31, 1996, and the
reinvestment of $0.330 per share in capital gains distributions.
. By comparison, the average annual total return for mutual funds in the Lipper
Growth Funds Category was 15.3% during this period.*
Current Strategy and Outlook
. The Fund has benefited from three major positive developments: investing in
the type of high-quality large capitalization stocks that have performed
well; investing in areas of the economy that are doing well, such as the
financial and health care sectors; and generally avoiding stocks which have
performed poorly.
. In what has been a very good market for this type of fund, management has
taken steps to reduce risk and take profits, while focusing on higher
quality, more conservative stocks.
. While the market has produced spectacular returns in the recent past, a
correction of some magnitude will eventually occur. Understanding this, we
believe that investing in companies with strong underlying growth prospects
makes sense for the long term.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
/1/This return does not include the maximum applicable 5% contingent deferred
sales charge (CDSC).
/2/Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC average annual returns
reflect applicable CDSC on the following schedule: 5% 1st and 2nd years; 4%-
3rd year; 3%-4th year; 2%-5th year; 1%-6th year. Past performance is not
indicative of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
/3/Sector weighting and holdings are as of 2/28/97 only and may not be
representative of the Portfolio's current or future investments. Top 10
holdings account for 29.65% of the Portfolio's Investments, determined by
dividing the total market value of the holdings by the total net assets of
the Portfolio.
* It is not possible to invest directly in an index or Lipper Category.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance/2/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year 19.0%
Five Years N.A.
Life of Fund (9/13/94) 19.8
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One Year 14.0%
Five Years N.A.
Life of Fund (9/13/94) 18.6
Portfolio Sector Weighting/3/
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE] Retail 6%
Cash & Other 10%
Financial 25%
Health Care 22%
Business Products & Services 13%
Capital Gains 9%
Technology 8%
Basic Materials 7%
Ten Largest Holdings/3/
- --------------------------------------------------------------------------------
By total net assets
Sofomor/Danek 4.07%
Allstate 3.64
Intel 3.00
Federal Nat'l Mortgage Corp. 2.90
Xerox 2.83
Reuters Holdings, PLC 2.71
Franklin Resources 2.65
Eli Lily 2.64
MGIC Investment Corp. 2.61
Boston Scientific 2.60
2
<PAGE>
Marathon Growth Fund as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<S> <C>
As of February 28, 1997
Assets
- ---------------------------------------------------------------------
Investment in Growth Portfolio, at value (Note 1A) $10,106,384
(identified cost, $8,839,165)
Receivable for Fund shares sold 3,966
Deferred organization expenses (Note 1E) 18,531
- ---------------------------------------------------------------------
Total assets $10,128,881
- ---------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------
Payable for Fund shares redeemed $ 174
Payable to affiliate for Trustees' fees 28
Accrued expenses $ 10,217
- ---------------------------------------------------------------------
Total liabilities $ 10,419
- ---------------------------------------------------------------------
Net Assets for 667,798 shares of
beneficial interest outstanding $10,118,462
- ---------------------------------------------------------------------
Sources of Net Assets
- ---------------------------------------------------------------------
Paid-in capital $ 8,322,726
Accumulated net realized gain on investments and
foreign currency transactions (computed on basis
of identified cost) 583,349
Net investment loss (54,832)
Net unrealized appreciation of investments and
foreign currency (computed on basis of identified
cost) 1,267,219
- ---------------------------------------------------------------------
Total $10,118,462
- ---------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price
Per Share
- ---------------------------------------------------------------------
($10,118,462 / 667,798 shares of $ 15.15
beneficial interest outstanding)
- ---------------------------------------------------------------------
<CAPTION>
Statement of Operations
For the Six Months Ended
February 28, 1997
<S> <C>
Investment Income (Note 1B)
- ---------------------------------------------------------------------
Dividend Income allocated from Portfolio
(net of foreign taxes, $38) $ 44,371
Interest income allocated from Portfolio 3,687
Expenses allocated from Portfolio (31,609)
- ---------------------------------------------------------------------
Total investment income $ 16,449
- ---------------------------------------------------------------------
Expenses
- ---------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization $ 86
Custodian fee 2,139
Distribution fees (Note 4) 38,945
Transfer and dividend disbursing agent fees 4,623
Printing and postage 11,089
Legal and accounting services 3,674
Registration fees 5,752
Amortization of organization expenses (Note 1E) 3,620
Miscellaneous 1,353
- ---------------------------------------------------------------------
Total expenses $ 71,281
- ---------------------------------------------------------------------
Net investment loss $ (54,832)
- ---------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- ---------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 634,356
Foreign currency transactions (16)
- ---------------------------------------------------------------------
Net realized gain on investment transactions $ 634,340
- ---------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ 748,844
Foreign currency transactions (120)
- ---------------------------------------------------------------------
Net change in unrealized appreciation of investments $ 748,724
- ---------------------------------------------------------------------
Net realized and unrealized gain on investments $ 1,383,064
- ---------------------------------------------------------------------
Net increase in net assets from operations $ 1,328,232
- ---------------------------------------------------------------------
</TABLE>
See notes to financial statements
3
<PAGE>
Marathon Growth Fund as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) February 28, 1997 Year Ended
in Net Assets (Unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment loss $ (54,832) $ (5,874)
Net realized gain on investments 634,340 133,650
Change in unrealized
appreciation (depreciation) 748,724 323,262
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations $ 1,328,232 $ 451,038
- --------------------------------------------------------------------------------
Distributions to shareholders --
From net realized gain $ (200,571) $ (21,890)
- --------------------------------------------------------------------------------
Total distributions to
shareholders $ (200,571) $ (21,890)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 2) --
Proceeds from sale of shares $ 3,207,836 $8,394,185
Net asset value of shares issued to
shareholders in payment of
distributions declared 145,284 20,140
Cost of shares redeemed (1,871,511) (3,573,941)
- --------------------------------------------------------------------------------
Net increase in net assets from Fund
share transactions $ 1,481,609 $4,840,384
- --------------------------------------------------------------------------------
Net increase in net assets $ 2,609,270 $5,269,532
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 7,509,192 $2,239,660
- --------------------------------------------------------------------------------
At end of period $10,118,462 $7,509,192
- --------------------------------------------------------------------------------
Undistributed net
investment income (loss)
included in net assets
- --------------------------------------------------------------------------------
At end of period $ (54,832) $ --
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
4
<PAGE>
Marathon Growth Fund as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended Year Ended August 31,
February 28, 1997 ----------------------------------
(Unaudited) 1996 1995 *
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value -- Beginning of period $13.320 $11.680 $10.000
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------
Net investment loss $(0.082) $(0.010) $(0.074)
Net realized and unrealized gain on investments 2.242 1.725 1.754
- ----------------------------------------------------------------------------------------------------------------------
Total income from operations $ 2.160 $ 1.715 $ 1.680
- ----------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments $(0.330) $(0.075) $ --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions $(0.330) $(0.075) $ --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $15.150 $13.320 $11.680
- ----------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 16.45% 14.75% 16.80%
- ----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data**
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $10,118 $ 7,509 $ 2,240
Ratio of net expenses to average net assets /(2)/ 2.36%+ 1.52% 2.82%+
Ratio of net investment (loss) to average net assets (1.26)%+ (0.12)% (1.59)%+
** The expenses related to the operation of the fund reflect
an assumption of expenses by the administrator. Had such
action not been taken, the ratios would have been as follows:
Ratios/Supplemental Data:
Expenses /(2)/ -- 2.87% 8.01%+
Net investment loss -- (1.47)% (6.79)%+
Net investment loss per share -- $(0.126) $(0.167)
</TABLE>
* For the period from the start of business, September 13, 1994, to
August 31, 1995.
+ Annualized.
/(1)/ 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 payable date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
See notes to financial statements
5
<PAGE>
Marathon Growth Fund as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
------------------------------------------------------------------------------
EV Marathon Growth Fund (the "Fund") is a diversified series of Eaton Vance
Growth Trust (the "Trust"). The Trust is an entity of the type commonly known
as a Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Fund invests all of its investable assets in interests in the Growth
Portfolio (the "Portfolio"), a New York Trust, having the same investment
objective as the Fund. The value of the Fund's investment in the Portfolio
reflects the Fund's proportionate interest in the net assets of the
Portfolio,(6.1% at February 28, 1997). 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 Trust in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A Investment Valuations -- Valuation 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. Investors Bank & Trust Company
(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, including registration costs, are being amortized on
the straight-line basis over five years.
F Other -- Investment transactions are accounted for on a trade-date basis.
Distributions to shareholders are recorded on the ex-dividend date. Dividend
income may include dividends that represent returns of capital for federal tax
purposes.
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 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.
I Interim Financial Information -- The interim financial statements relating
to February 28, 1997 and for the six months then ended have not been audited
by independent certified public accountants, but in the opinion of the Fund's
management reflect all adjustments consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
6
<PAGE>
Marathon Growth Fund as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
2 Shares of Beneficial Interest
------------------------------------------------------------------------------
The Fund's 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:
<TABLE>
<CAPTION> Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Sales 224,669 651,594
Issued to shareholders electing to receive
payment of distribution in Fund shares 10,482 1,676
Redemptions (131,273) (281,036)
- -------------------------------------------------------------------------------
Net Increase 103,878 372,234
- -------------------------------------------------------------------------------
</TABLE>
3 Investment Transactions
------------------------------------------------------------------------------
Increases and decreases in each Fund's investment in its corresponding
Portfolio for the six months ended February 28, 1997, aggregated $1,999,241
and $10,045,318, 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 Funds 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 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
5 ) and 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. For the six months ended February
28, 1997, the Fund paid or accrued $32,673, to or payable to EVD representing
0.75% (annualized) of average daily net assets. At February 28, 1997, the
amount of Uncovered Distribution Charges of EVD calculated under the Plan was
approximately $209,000.
In addition, the Plan permits the Fund to make payments of service fees to the
Principal Underwriter in amounts not expected to exceed 0.25% of the Fund's
average daily net assets for any fiscal year. The Trustees have implemented
the Plan by authorizing the Fund to make quarterly service fee payments to
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 six month period ended February 28, 1997, the Fund provided
for $6,272 under the Plan to the Authorized Firms.
Certain officers and Trustees of the Fund are officers or directors of EVD
5 Contingent Deferred Sales Charge
------------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon
the lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by reinvestment of dividends or capital
gains distributions. The CDSC is imposed at declining rates that begin at 5%
in the case of redemptions in the first and second year 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 each Fund's Distribution Plan
(See Note 4). CDSC charges received when no Uncovered Distribution Charges
exist will be credited to the Fund. EVD received approximately $17,900 of CDSC
paid by shareholders, for the period ended February 28, 1997.
7
<PAGE>
Marathon Growth Fund as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
6 Transactions with Affiliates
------------------------------------------------------------------------------
Eaton Vance Management (EVM) serves 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 Portfolios' Notes to Financial Statements which are included
elsewhere in this report. Except as to Trustees of the Fund and Portfolio who
are not members of EVM's or BMR's organization, officers and Trustees receive
remuneration for their services to the Fund out of the investment adviser fee
earned by BMR. Certain of the officers and Trustees of the Fund and Portfolio
are officers and directors/trustees of the above organizations.
8
<PAGE>
Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited)
Common Stocks -- 95.33%
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
Aerospace and Defense -- 2.46%
- -----------------------------------------------------------
Boeing Co. 40,000 $ 4,070,000
Makes the Boeing 737,
747, 757, 767, and 777
jets, which represent a
variety of passenger and
cargo configurations and
capabilities. Boeing's
Defense & Space Group
has jointly developed the
F-22 fighter (with
Lockheed Martin), the
V-22 Osprey tiltrotor
aircraft (Bell Helicopter
Textron) and the RAH-66
Comanche helicopter
(with Sikorsky).
- -----------------------------------------------------------
$ 4,070,000
- -----------------------------------------------------------
Banks - International -- 0.93%
- -----------------------------------------------------------
Banco Latinoamericano de
Exportaciones 30,000 $ 1,533,750
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.
- -----------------------------------------------------------
$ 1,533,750
- -----------------------------------------------------------
Banks - Regional -- 2.41%
- -----------------------------------------------------------
Norwest Corp. 80,000 $ 3,980,000
Provides community banking
through more than 700 branches
in a 16-state region.
- -----------------------------------------------------------
$ 3,980,000
- -----------------------------------------------------------
Beverages -- 2.28%
- -----------------------------------------------------------
PepsiCo, Inc. 115,000 $ 3,780,625
Global soft drink producer
with businesses in snack
foods and fast food
restaurants.
- -----------------------------------------------------------
$ 3,780,625
- -----------------------------------------------------------
Chemicals -- 3.67%
- -----------------------------------------------------------
Monsanto Co. 100,000 $ 3,637,500
Produces a range of products
for the agricultural, home
furnishings, automobile,
construction and personal
care markets.
Praxair Inc. 50,000 2,431,250
The largest producer of
industrial gases in North
and South America.
- -----------------------------------------------------------
$ 6,068,750
- -----------------------------------------------------------
Computers and Business Equipment -- 4.19%
- -----------------------------------------------------------
Hewlett Packard Co. 40,000 $ 2,240,000
One of the world's most
successful high tech
companies. Products
include servers, computers,
and workstations for
home and business.
Xerox Corp. 75,000 $ 4,687,500
The dominant producer of
high end document processing
machines.
- -----------------------------------------------------------
$ 6,927,500
- -----------------------------------------------------------
Drugs -- 10.71%
- -----------------------------------------------------------
American Home Products Corp. 40,000 $ 2,560,000
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 80,000 3,840,984
Swedish based international
pharmaceutical firm with
drugs for the control of
ulcers and asthma.
Elan Corp. PLC ADR/1/ 95,000 3,289,375
Develops drug delivery
systems designed to improve
and control the absorption
and utilization of
pharmaceutical compounds.
Eli Lilly & Co. 50,000 4,368,750
A major U.S. drug company,
researches, produces and
markets pharmaceuticals
spanning the entire drug
spectrum.
Pfizer, Inc. 40,000 3,665,000
A large international
ethical pharmaceutical
manufacturer with
important positions in
hospital products and
animal health.
- -----------------------------------------------------------
$ 17,724,109
- -----------------------------------------------------------
Electronics - Semiconductors -- 3.59%
- -----------------------------------------------------------
Intel Corp. 35,000 $ 4,965,625
A manufacturer of
semiconductors and other
microcomputer components
and systems which comprise
the heart of the personal
computer.
MEMC Electronic Materials,
Inc. 40,000 980,000
Worldwide producer of
silicon wafers used in
the production of
semiconductors.
- -----------------------------------------------------------
$ 5,945,625
- -----------------------------------------------------------
Financial - Miscellaneous -- 7.69%
- -----------------------------------------------------------
Federal National
Mortgage Association 120,000 $ 4,800,000
U.S. Government
sponsored mortgage
lender and provider of
secondary mortgage
market.
MBNA Corp. 112,500 3,600,000
Dominant issuer of
MasterCard/Visa credit
cards to affinity groups.
MGIC Investment Corp. 55,000 4,324,375
The leading provider of
private mortgage
insurance coverage to
U.S. banks and other
mortgage suppliers.
- -----------------------------------------------------------
$ 12,724,375
- -----------------------------------------------------------
</TABLE>
See notes to financial statements
9
<PAGE>
Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Shares Value
- -------------------------------------------------------
<S> <C> <C>
Health Services -- 0.81%
- -------------------------------------------------------
Covance, Inc./1/ 21,250 $ 403,750
The second largest contract
research organization in the
world offering a full range
of drug development services
to pharmaceutical and
biotechnology companies
worldwide.
Quest Diagnostics, Inc./1/ 10,625 179,297
A major provider of
clinical laboratory
testing services in the
U.S. with over 30 regional
and branch laboratories
that process more than 60
million patient
requisitions each year.
Vencor, Inc./1/ 21,900 758,288
Managers of acute
long-term care hospitals.
- -------------------------------------------------------
$ 1,341,335
- -------------------------------------------------------
Information Services -- 7.37%
- -------------------------------------------------------
Automatic Data
Processing, Inc. 80,000 $ 3,410,000
The leading independent
computing and payroll
processing services firm
in the U.S.
Ceridian Corp./*1/ 110,000 4,303,750
Provides payroll
processing and other
employer services, media
and market research.
Reuters Holdings, PLC ADR 70,000 4,488,750
Worldwide provider of
proprietary financial
data and information.
- -------------------------------------------------------
$12,202,500
- -------------------------------------------------------
Insurance -- 7.91%
- -------------------------------------------------------
Allstate Corp. 95,000 $ 6,020,625
Leading underwriter of
automotive and
homeowners insurance as
well as a life insurance
carrier.
General Re Corp. 25,000 4,240,625
Is the parent company of
General Reinsurance, the
largest property/casualty
reinsurer in the U.S.
and one of the 3 largest
in the world.
Mutual Risk Management Ltd. 80,000 2,830,000
Provides risk management
services to clients
seeking an alternative
to traditional commercial
insurance, particularly
for workers' compensation.
- -------------------------------------------------------
$13,091,250
- -------------------------------------------------------
Investment Services -- 2.65%
- -------------------------------------------------------
Franklin Resources, Inc. 75,000 $ 4,387,500
Provides investment
management and related
services to a family of
equity and fixed income
mutual funds.
- -------------------------------------------------------
$ 4,387,500
- -------------------------------------------------------
Lodging and Gaming -- 2.05%
- -------------------------------------------------------
ITT Corp./1/ 60,000 $ 3,390,000
Operator of Sheraton
hotels, Caesar's Palace
resort casinos and Madison
Square Garden.
- -------------------------------------------------------
$ 3,390,000
- -------------------------------------------------------
Machinery -- 2.32%
- -------------------------------------------------------
Deere & Co. 90,000 $ 3,836,250
The largest agricultural
equipment company and
also producer of
earthmoving and forestry
machinery.
- -------------------------------------------------------
$ 3,836,250
- -------------------------------------------------------
Medical Products -- 9.04%
- -------------------------------------------------------
Baxter International, Inc. 85,000 $ 3,910,000
Leading U.S. maker and
distributor of health
care products used in
hospitals and other
medical facilities.
Boston Scientific Corp./1/ 65,000 4,306,250
Medical device manufacturer
focusing primarily on
disposable products in
less invasive surgery
procedures.
Sofamor Danek Group,
Inc./1/ 170,000 6,736,250
The dominant supplier
of spinal implant
devices used in surgical
treatment of spinal
diseases and deformities.
- -------------------------------------------------------
$14,952,500
- -------------------------------------------------------
Metals and Minerals -- 5.47%
- -------------------------------------------------------
Freeport McMoran Copper
& Gold, Inc. 100,000 $ 3,262,500
Operator of third largest
copper mine in the world
with world's largest gold
reserves.
J & L Specialty Steel,
Inc. 190,000 2,636,250
Manufactures flat rolled
stainless steel. The
company's products are
used in a variety of
industrial, commercial
and consumer products
including chemical and
refining equipment,
cargo containers & beer
kegs.
Potash Corp. of
Saskatchewan, Inc.* 40,000 3,145,000
The global leader of
potash production and
number three in phosphates,
two of the three
components of fertilizer
nutrients.
- -------------------------------------------------------
$ 9,043,750
- -------------------------------------------------------
Oil and Gas - Exploration and Production -- 4.06%
- -------------------------------------------------------
Anadarko Petroleum Corp. 60,000 $ 3,375,000
Leading independent
natural gas and crude
oil production company.
</TABLE>
See notes to financial statements
10
<PAGE>
Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------
Oil and Gas - Exploration
and Production (continued)
- --------------------------------------------------------
Triton Energy Ltd. 80,000 $ 3,350,000
Independent oil and gas
producer with major
developments in Colombia
and Thailand.
- --------------------------------------------------------
$ 6,725,000
- --------------------------------------------------------
Photography -- 1.62%
- --------------------------------------------------------
Eastman Kodak Co. 30,000 $ 2,688,750
Largest producer of
photographic products in
the world.
- --------------------------------------------------------
$ 2,688,750
- --------------------------------------------------------
Publishing -- 1.68%
- --------------------------------------------------------
McGraw-Hill, Inc. 53,500 $ 2,775,312
Supplies informational
products and services
for businesses, education
and industry through a
broad range of media.
- --------------------------------------------------------
$ 2,775,312
- --------------------------------------------------------
Retail - Food and Drug -- 2.24%
- --------------------------------------------------------
CVS Corp. 80,000 $ 3,700,000
Is the largest drugstore
chain in the Northeast.
- --------------------------------------------------------
$ 3,700,000
- --------------------------------------------------------
Retail - Specialty and Apparel -- 3.41%
- --------------------------------------------------------
Home Depot, Inc. 50,000 $ 2,725,000
A chain of do-it-yourself
warehouse style stores.
Lowes Companies 80,000 2,920,000
Operator of discount
stores that cater to
home building and the
home improvement market.
- --------------------------------------------------------
$ 5,645,000
- --------------------------------------------------------
Specialty Chemicals and Materials -- 5.21%
- --------------------------------------------------------
Corning, Inc. 85,000 $ 3,198,125
Manufactures specialty
glass. Its consumer
products division makes
Corelle dinnerware, Corning
Ware cookware, Pyrex
glassware, Serengeti
sunglasses, and Steuben
crystal.
Millipore Corp. 40,000 1,725,000
Products use membrane
separations technology
to analyze and purify
fluids for a variety of
high tech industries.
Sealed Air Corp./1/ 90,000 3,701,250
Global manufacturer of
a broad line of protective
and specialty packaging
materials and systems.
- --------------------------------------------------------
$ 8,624,375
- --------------------------------------------------------
Transportation -- 1.56%
- --------------------------------------------------------
Southwest Airlines Co. 110,000 $ 2,585,000
Discount airline expanding
throughout the U.S.
- --------------------------------------------------------
$ 2,585,000
- --------------------------------------------------------
Total Common Stocks
(identified cost $113,366,143) $157,743,256
- --------------------------------------------------------
Short-Term Investments -- 4.31%
- --------------------------------------------------------
Principal
Amount
(000
omitted) Value
- --------------------------------------------------------
American General Finance
Corp., 5.32%, 3/10/97 $3,146 $ 3,141,816
CIT Group Holdings, 5.40%,
3/3/97 4,000 3,998,800
- --------------------------------------------------------
Total Short-Term Investments
(identified cost $7,140,616) $ 7,140,616
- --------------------------------------------------------
Total Investments -- 99.64%
(identified cost $120,506,759) $164,883,872
- --------------------------------------------------------
Other Assets, Less Liabilities -- 0.36% $ 592,046
- --------------------------------------------------------
Net Assets -- 100% $165,475,918
- --------------------------------------------------------
</TABLE>
ADR -- American Depositary Receipt
1 Non-income producing security.
* Foreign Security
See notes to financial statements
11
<PAGE>
Growth Portfolio as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of February 28, 1997
Assets
- -------------------------------------------------------------
<S> <C>
Investments, at value (Note 1A)
(identified cost, $120,506,759) $164,883,872
Cash 6,464
Receivable for investments sold 381,384
Dividends and interest receivable 213,025
Other assets 12,110
Deferred organization expenses (Note 1D) 7,911
- -------------------------------------------------------------
Total assets $165,504,766
- -------------------------------------------------------------
Liabilities
- -------------------------------------------------------------
Payable to affiliate for Trustees' fees $ 1,922
Accrued expenses 26,926
- -------------------------------------------------------------
Total liabilities $ 28,848
- -------------------------------------------------------------
Net Assets applicable to investors'
interest in Portfolio $165,475,918
- -------------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $121,099,539
Net unrealized appreciation of investments
and foreign currency transactions
(computed on the basis of identified cost) 44,376,379
- -------------------------------------------------------------
Total $165,475,918
- -------------------------------------------------------------
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
February 28, 1997
Investment Income
- -------------------------------------------------------------
<S> <C>
Dividends (net of foreign taxes, $347) $ 786,596
Interest 67,618
- -------------------------------------------------------------
Total income $ 854,214
- -------------------------------------------------------------
Expenses
- -------------------------------------------------------------
Investment adviser fee (Note 2) $ 492,924
Compensation of Trustees not members of the
Administrator's organization (Note 2) 6,792
Custodian fee 47,372
Legal and accounting services 14,069
Amortization of organization expenses (Note 1D) 1,629
Registration fees 275
Miscellaneous 3,952
- -------------------------------------------------------------
Total expenses $ 567,013
- -------------------------------------------------------------
Net investment income $ 287,201
- -------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- -------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 11,036,803
Foreign currency transactions (279)
- -------------------------------------------------------------
Net realized gain on investment
transactions $ 11,036,524
- -------------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 13,971,707
Foreign currency transactions (2,142)
- -------------------------------------------------------------
Net change in unrealized appreciation
of investments $ 13,969,565
- -------------------------------------------------------------
Net realized and unrealized gain on
investments $ 25,006,089
- -------------------------------------------------------------
Net increase in net assets from
operations $ 25,293,290
- -------------------------------------------------------------
</TABLE>
See notes to financial statements
12
<PAGE>
Growth Portfolio as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) February 28, 1997 Year Ended
in Net Assets (Unaudited) August 31, 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment income $ 287,201 $ 1,045,595
Net realized gain on
investments and foreign
currency transactions 11,036,524 15,075,037
Change in unrealized
appreciation (depreciation) 13,969,565 4,390,133
- -------------------------------------------------------------------------------
Net increase in net assets
from operations $ 25,293,290 $ 20,510,765
- -------------------------------------------------------------------------------
Capital transactions --
Contributions $ 6,053,597 $ 12,571,319
Withdrawals (12,602,859) (20,352,794)
- -------------------------------------------------------------------------------
Net decrease in net assets from
capital transactions $ (6,549,262) $ (7,781,475)
- -------------------------------------------------------------------------------
Net increase in net assets $ 18,744,028 $ 12,729,290
- -------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------
At beginning of period $ 146,731,890 $ 134,002,600
- -------------------------------------------------------------------------------
At end of period $ 165,475,918 $ 146,731,890
- -------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
13
<PAGE>
Growth Portfolio as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Six Months Ended
February 28, 1997 Year Ended August 31,
-------------------------------------
(Unaudited) 1996 1995 1994*
- ----------------------------------------------------------------------------------------------------------------------
Ratios to average daily net assets**
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenses 0.72%+ 0.72% 0.73% 0.73%+
Net investment income 0.37%+ 0.73% 0.67% 0.66%+
Portfolio Turnover 25% 62% 84% 4%
- ----------------------------------------------------------------------------------------------------------------------
Average commission rate (per share) (1) $0.0598 $0.0595 $ -- --
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $165,476 $146,732 $134,003 $131,536
</TABLE>
+ Annualized.
* For the period from the start of business, August 2, 1994, to August 31,
1994.
(1) Average commission rate paid is computed 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, a Fund is
required to disclose its average commission rate per share for security
trades on which commissions were charged.
See notes to financial statements
14
<PAGE>
Growth Portfolio as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
-----------------------------------------------------------------------------
Growth Portfolio (the "Portfolio") is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company which
was organized as a trust under the laws of the State of New York 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 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 classing sale prices are not available are valued
at the mean between the latest bid and asked prices. Short debt securities
with a remaining maturity of 60 days or less are values 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
individually responsible for the payment of any taxes on its share of such
income. Since some of the Portfolios' 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
Portfolios' net taxable (if any) and tax-exempt 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 Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolios. Pursuant to the respective custodian agreements,
IBT receives a fee reduced by the credits which are determined based on the
average daily cash balances each Portfolio maintains with IBT. All
significant credit balances used to reduce the Portfolios' custodian fees are
reflected as a reduction of operating expense on 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 a trade date basis.
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.
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 six
months ended February 28, 1997, the fee was equivalent to 0.625% of the
Portfolio's average daily net assets for such period and amounted to
$492,924. Except as to the 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 Portfolios are officers and
directors/trustees of the above organizations. Trustees of the Portfolios
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
15
<PAGE>
Growth Portfolio as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
Trustees Deferred Compensation Plan. For the period ended February 28, 1997,
no significant amounts have been deferred.
3 Investment Transactions
------------------------------------------------------------------------------
Purchase and sales of investments, other than short-term obligations,
aggregated $37,486,014 and $41,881,534, respectively.
4 Federal Income Tax Basis of Investments
------------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investments
owned at February 28, 1997, as computed on a federal income tax basis, were
as follows:
<TABLE>
<S> <C>
Aggregate cost $120,506,759
---------------------------------------------------------------------------
Gross unrealized appreciation $ 46,291,673
Gross unrealized depreciation (1,914,560)
---------------------------------------------------------------------------
Net unrealized appreciation $ 44,377,113
---------------------------------------------------------------------------
</TABLE>
5 Line of Credit
------------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $120 million unsecured line of credit agreement
with a bank. The line of credit consists of a $20 million committed facility
and a $100 million discretionary facility. Borrowings will be made by the
Portfolio solely to facilitate the handling of unusual and/or unanticipated
short-term cash requirements. Interest is charged to each portfolio based on
its borrowings at an amount above either the bank's adjusted certificate of
deposit rate, a variable adjusted certificate of deposit rate, or a federal
funds effective rate. In addition, a fee computed at an annual rate of 1/4 of
1% on the $20 million committed facility and on the daily unused portion of
the $100 million discretionary facility is allocated among the participating
funds and portfolios at the end of each quarter. The Portfolio did not have
any significant borrowings or allocated fees during the period.
16
<PAGE>
Marathon Growth Fund as of February 28, 1997
INVESTMENT MANAGEMENT
Marathon Growth Fund
Officers Independent Trustees
James B. Hawkes Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
M. Dozier Gardner
Vice President Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
William D. Burt Harvard University Graduate School of
Vice President Business Administration
Barclay Tittmann Norton H. Reamer
Vice President President and Director, United Asset
Management Corporation
James L. O'Connor
Treasurer John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Thomas Otis
Secretary Jack L. Treynor
Investment Adviser and Consultant
Growth Portfolio
Officers Independent Trustees
James B. Hawkes Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
M. Dozier Gardner
Vice President Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Thomas E. Faust, Jr. Harvard University Graduate School of
Vice President and Business Administration
Portfolio Manager
Norton H. Reamer
James L. O'Connor President and Director, United Asset
Treasurer Management Corporation
Thomas Otis John L. Thorndike
Secretary Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
17
