<PAGE>
[LOGO OF EATON VANCE APPEARS HERE]
[PHOTO OF EARTH APPEARS HERE]
Annual Report August 31, 1997
[PHOTO OF SATELLITE APPEARS HERE]
EATON VANCE
MARATHON
INFORMATION
AGE FUND
Global Management-Global Distribution
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<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
Letter to Shareholders
[PHOTO OMITTED]
James B. Hawkes,
President
EV Marathon Information Age Fund had a total return of 20.8% for the year ended
August 31, 1997. That return was the result of a rise in net asset value per
share from $11.04 on August 31, 1996 to $12.31 on August 31, 1997, and the
reinvestment of $1.042 in capital gains distributions.1 By comparison, the
S&P 500 Index - a widely recognized, unmanaged index of U.S. common stocks - had
a total return of 40.7% for the same period, while the Morgan Stanley Capital
International Europe, Australasia, and Far East Index - an index composed of
global common stocks - had a return of 9.4%./2/
In a volatile market environment, information age companies sustained strong
earnings growth...
The past year featured an unusually volatile stock market environment. For much
of the year, the advance in the broad stock market was liquidity-driven and led
by large cap, blue chip issues. However, as the year progressed, many of these
consumer-related stocks became significantly overpriced and have since retreated
from those levels. While the information age stocks mirrored the volatility
of the broader market, the companies continued their positive earnings uptrend.
Change is coming rapidly to information age companies...
The past year has seen the pace of change quicken for information age companies.
In the telecom industry, deregulation brought about by the Telecommunications
Act of 1996 has completely transformed an industry once dominated by local
monopolies. Meanwhile, in the media sector, the broadcast industry has been
energized by a wave of mergers that has sharply increased the size of the
listening and viewing audience for major broadcast companies. Finally,
technology-based companies continued to refine new applications that will bring
diverse information industries closer together.
Information age companies continue to offer prime growth opportunities...
Despite the volatility of the markets, the trends we've noted above contributed
to an excellent climate for information age companies during the past year. We
believe these companies offer outstanding long-term opportunities. In the
following pages, portfolio managers Duncan Richardson and Jacob Rees-Mogg review
the past year and comment on their outlook for the year ahead.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
October 9, 1997
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Fund Information
as of August 31, 1997
Performance/3/
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Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One year 20.8%
Life of Fund (9/18/95) 15.9
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year 15.8%
Life of Fund (9/18/95) 13.7
Ten Largest Holdings/4/ By total net assets
- --------------------------------------------------------------------------------
Pearson PLC 2.4%
Telecom Italia SPA 2.4
Westinghouse Electric Corp. 2.3
Electric & Eltek International 2.0
Reuters Holdings PLC 2.0
Oracle Corp. 1.9
Philips Electronics NV 1.9
McGraw-Hill Companies Inc. 1.8
Thermo Electron Corp. 1.7
Roland 1.7
/1/ This return does not reflect the Fund's applicable contingent deferred sales
charge (CDSC).
/2/ It is not possible to invest directly in the Indices.
/3/ Average annual total returns are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns
reflect applicable CDSC on the following schedule: 5% - 1st year; 5% - 2nd
year; 4% -3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year.
/4/ Ten largest holdings account for 20.1% of the Portfolio's investments,
determined by dividing the total market value of the holdings by the total
net assets of the Portfolio. Holdings are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
- --------------------------------------------------------------------------------
Mutual fund shares are not insured 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.
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2
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
Management Discussion
[PHOTO OMITTED]
Duncan Richardson,
Co-Portfolio Manager
[PHOTO OMITTED]
Hon. Jacob Rees-Mogg,
Co-Portfolio Manager
An interview with Duncan Richardson and Hon. Jacob Rees-Mogg, co-portfolio
managers of Information Age Portfolio.
Q: Duncan, how would you characterize the U.S. market during the past year?
A: Mr. Richardson: The broad market displayed significant volatility during the
year, and that volatility was mirrored in the information age stocks. The
market saw a fair amount of sector rotation, with market leadership shifting
frequently between industry groups. While large-cap stocks paced the market
for most of the year, in recent months, smaller stocks have come into favor.
In that kind of fluid environment, the Fund's relatively broad charter was a
distinct benefit, as it allowed us to move among the various information
sectors.
Q: Jacob, what was your view of the markets from London?
A: Mr. Rees-Mogg: The past year was a most interesting period for the global
media, telecom, and technology stocks, with widely varying performance among
the regional markets. For example, while Japan remained mired in an economic
downturn, the European markets were quite robust. Economic conditions in
Europe have slowly begun to gather steam. Long-term interest rates have
converged in the expectation that European Monetary Union will occur on
schedule.
The U.K. has also fared quite well despite a political shift to the left,
somewhat higher interest rates, and a surge in the pound relative to other
European currencies. The Far East, which has turned in such strong
performances in recent years, proved a major disappointment in the past year.
Thailand and Malaysia have been caught in the throes of currency turmoil and
questions over the credibility of their economic and political leadership.
Hong Kong was a notable exception for most of the period. The turnover of the
former colony to Chinese jurisdiction received a warm reception from
investors. More recently, Hong Kong has been visited by that same volatility.
Q: How have you positioned the Fund in recent months?
A: Mr. Richardson: We've maintained a roughly 50/50 mix between U.S. and foreign
companies, while also maintaining a good diversification among information
industries. That diversification, as well as the broad range of our charter,
has helped us avoid much of the volatility that has characterized the markets
both here and abroad.
From a sector standpoint, media-related stocks
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Five Largest Industry Positions1
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By total net assets
Electronics 18.0%
Communications Services 16.0%
Broadcasting 13.2%
Computer Software 12.1%
Information Services 9.0%
Regional Distribution/1/
- --------------------------------------------------------------------------------
By total net assets
U.S. 52.3%
Europe 12.7%
U.K. 12.3%
East Asia 12.2%
Other 7.8%
Australasia 2.7%
/1/ Because the Fund is actively managed, sector weightings and regional
distributions are subject to change.
3
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
MANAGEMENT DISCUSSION CONT'D
[GRAPHIC APPEARS HERE]
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The Future of Mobile Telephony: The U.S. is now the largest market for mobile
phones - with 33 million subscribers. It is estimated that by the end of the
century, there will be more than 350 million subscribers worldwide, with the
fastest rate of growth in Asia.
Source: L.M. Ericsson
- --------------------------------------------------------------------------------
have played a large role in the Portfolio. The period saw a good deal of
merger activity, especially among broadcasters and entertainment companies.
As a result, the Portfolio's radio and television holdings fared very well.
Elsewhere in the media area, we shifted some assets into cable television
investments. The cable group has underperformed for several years running,
but more recently, industry fundamentals have improved significantly.
Q: Have media stocks been a focus of the non-U.S. portion of the Portfolio as
well?
A: Mr. Rees-Mogg: Yes. The fundamentals of global companies are equally as
compelling. Large media companies like Pearson PLC have gained market share
through acquisitions and now offer advertisers the ability to reach a massive
audience. Another holding, News Corp., is the largest newspaper company in
the world, in addition to owning the Fox network in the U.S., BSkyB
Broadcasting in the U.K., and a wide variety of entertainment and sports
properties. The company is unmatched in its ability to span the globe through
a variety of distribution channels. In the entertainment sector, the
Portfolio has an investment in the Dutch conglomerate Philips Electronics.
Philips has developed into a powerful "content" company and capitalized on
the value of its vast music library.
Q: The telecommunications sector has frequently been in the news. What areas of
that industry have you found attractive?
A: Mr. Richardson: In the U.S. portion of the Portfolio, we've favored the phone
equipment companies, which have continued to enjoy strong sales growth. For
much of the period, we generally underweighted the telecom service providers,
which are battling over access to each other's markets. Following the 1996
deregulation of the phone industry, the intended result was to unleash
competition among service companies. Up to this point, it has mostly created
uncertainty among the companies and investors, while it is hard to discern
which companies will be the winners in the long run. Recently, we've added to
our phone service holdings. Companies such as Ameritech and Bell South have
continued to see strong growth in lines as they offer additional higher-
margin services. While they are subject to inroads by competitors, they
should be able to defend their franchises, and we view their valuations as
attractive.
Q: Are the same dynamics at work in the telecom companies overseas?
A: Mr. Rees-Mogg: Yes. The telecom sector witnessed a number of events that
raised investor interest. First, the World Trade Organization talks generated
further proposals to open up global phone markets. Next, U.S. regulators
urged the lowering of international rates, a move that should make the
telecom markets in emerging countries increasingly competitive. Finally, the
global telecom sector was characterized by merger activity as companies
sought to expand their global market presence. There is a growing perception
among these companies that, to be truly successful, they will need a global
reach.
Moreover, the outlook for the telecom stocks is very good, as the companies
are coming to terms with new pricing schemes. Due to the companies' excellent
cash flows, the stocks should stand up well in increasingly volatile markets.
One of our holdings in Europe, Telecom Italia, recently agreed to a share-
4
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
MANAGEMENT DISCUSSION CONT'D
exchange with AT&T. The crossholding should help cement the AT&T foothold in
Europe while giving Telecom Italia access to AT&T's leading technologies.
Q: Let's turn to the technology sector. What have you found attractive there?
A: Mr. Richardson: Technology has remained a fairly volatile area. The Fund was
underexposed to technology stocks in the first quarter of 1997, when the
sector did quite poorly. As the group bottomed in April, we added to our
positions in some of the larger companies. Those included Intel, the world's
leading semiconductor manufacturer, and Oracle Corp., the world's largest
producer of database software.
We also had investments in companies that are making novel uses of
technology. Those included financial services companies such as Charles
Schwab & Co., Inc. and Raymond James Financial Corp. These firms are
pioneering the linkage of technology and personal finance. Their use of
technology and media is helping these companies rapidly grow their
businesses.
Q: How did the global technology sector fare during the period?
A: Mr. Rees-Mogg: Global technology companies continued to post strong growth,
with the exception of semiconductor companies, which felt some pricing
restraints. It paid, therefore, to be selective. Technology stocks continued
to be driven largely by U.S. demand. Given the strength of the U.S.economy,
the outlook remains fairly bright.
Among our global technology stocks were Hitachi Ltd., a Japanese manufacturer
of electronics equipment. Another holding, Misys, PLC, is a U.K.-based
software company. The company has a range of products that help businesses
run their offices. Interestingly, Misys recently bought a holding in the U.S.
portion of the Portfolio, U.S.-based Medic Computer Systems, Inc., which
makes office management software for physicians. Misys apparently agreed with
Duncan's assessment that Medic Computer was undervalued. The purchase should
provide Misys a good foothold in America for further growth.
Q: Have internet-related stocks played a part in your strategy?
A: Mr. Richardson: Clearly, the growth of internet usage has been enormous, and
has drawn great interest to internet stocks. Many of these companies
represent interesting concepts that we monitor closely. However, we generally
restrict our investments in that area to companies that have proven business
models. Companies that are mere concepts simply don't make the cut.
We did participate in several internet-related public offerings in the past
year, including E*Trade and Ameritrade. Both of these companies offer
investors the opportunity to trade securities on the internet at a major
discount from regular brokerage commissions. They also provide investors a
data base from which they can gather investment research. The growth of these
businesses on the internet has been staggering and may provide a glimpse into
the future of internet commerce. Another internet-related holding, Worldcom,
Inc., started out with a focus on fiber optics and long-distance phone
service, but became an aggressive provider of internet access with its
acquisition of MFS Communications.
Q: Jacob, what do you look for among global information companies?
A: Mr. Rees-Mogg: We focus on companies that can provide value-added services
and products. As Duncan indicated, the internet has increased the volume and
accessibility of information, in voice, data and video form. Global companies
that can fill the communications needs in those areas will enjoy a tremendous
advantage.
Reuters Holdings, PLC, for example, is an established U.K.-based company that
is using new technologies to provide key financial information and data to
the financial services industry. Because this data is time-sensitive and very
critical for decision-makers in financial markets, there is a high degree of
value-added in Reuters products. That value-added quality makes the company
compelling as a growth opportunity.
5
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
MANAGEMENT DISCUSSION CONT'D
Q: What is your outlook for the coming year for information-based companies?
A: Mr. Rees-Mogg: We've seen an increasing realization that the information
business is truly global in nature, whether in telecom, media, or technology.
As a result, companies are making commitments overseas to expand their reach
and explore new markets. That is true in the telecom business and the media
sector. In such an environment, we believe the Information Age Portfolio is
quite well situated, especially given the global nature of our research
capabilities. With the pace of change as rapid as it is, we have the distinct
advantage of being able to closely monitor companies, whether they are in the
U.S., Europe, or Asia.
A: Mr. Richardson: Another trend that has become apparent in the past year is
the consolidation of previously fragmented industries into an assemblage of
larger players. As I indicated earlier, that was especially true this year in
the broadcasting and financial services sectors. This convergence of
information age industries allows companies to leverage their strengths and
make inroads in other markets.
For example, earlier in the year, Microsoft made an investment in Web TV, and
another in Comcast Corp., a major cable operator. Clearly, each of those
investments is somewhat far afield of Microsoft's core business of system
software. But each represents the trend of technology, media, and broadcast
companies trying to forge new alliances and explore new business
opportunities. We expect that activity to continue. While it adds to the
unpredictability of the industry, it also increases the opportunities for
growth. We hope to continue the Portfolio's participation in that growth.
- --------------------------------------------------------------------------------
[LINE CHART APPEARS HERE]
EV Marathon Information Age Fund
Comparison of Change in Value of a $10,000 investment in the Fund vs. the S&P
500, and Europe, Australia & Far East Indexes*
September 30, 1995 through August 31, 1997
<TABLE>
<CAPTION>
Date Fund/NAV Fund/CDSC S&P 500 EAFE INDEX
<S> <C> <C> <C> <C>
9/30/95 $10,000 - $10,000 $10,000
10/31/95 $10,128 - $9,950 $9,734
11/30/95 $10,226 - $10,359 $10,007
12/31/95 $10,285 - $10,600 $10,413
1/31/96 $10,315 - $10,946 $10,458
2/28/96 $10,541 - $11,022 $10,496
3/31/96 $10,571 - $11,168 $10,722
4/30/96 $11,112 - $11,318 $11,036
5/31/96 $11,329 - $11,577 $10,836
6/30/96 $11,161 - $11,668 $10,899
7/31/96 $10,482 - $11,135 $10,583
8/31/96 $10,866 - $11,344 $10,609
9/30/96 $11,516 - $12,027 $10,894
10/31/96 $11,289 - $12,341 $10,785
11/30/96 $11,811 - $13,246 $11,217
12/31/96 $11,685 - $13,028 $11,075
1/31/97 $11,892 - $13,826 $10,690
2/28/97 $11,902 - $13,908 $10,868
3/31/97 $11,478 - $13,379 $10,910
4/30/97 $11,567 - $14,160 $10,970
5/31/97 $12,513 - $14,990 $11,687
6/30/97 $12,966 - $15,710 $12,334
7/31/97 $13,587 - $16,937 $12,536
8/31/97 $13,126 $12,626 $15,964 $11,602
</TABLE>
Performance+
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (At Net Asset Value)
- --------------------------------------------------------------------------------
<S> <C>
One year 20.8%
Life of Fund 15.9
Value at 8/31/97 $13,126
SEC Average Annual Total Returns (Including Applicable CDSC)
- --------------------------------------------------------------------------------
One year 15.8%
Life of Fund 13.7
Value at 8/31/97 $12,626
</TABLE>
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced
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. Past performance is no guarantee of future
results. Investment return and principal value will fluctuate so that shares,
when redeemed, may be worth more or less their original cost.
The performance chart above compares the Fund's total return with that of a
broad-based securities market index. Returns are calculated by determining the
percentage change in net asset value (NAV) with all distributions reinvested.
The lines on the chart represent the total returns of $10,000 hypothetical
investments in the Fund, the S&P 500 Index - a broad-based, widely recognized
index of 500 common stocks traded in the U.S. - and the Morgan Stanley Capital
International Europe, Australasia, and Far East Index (EAFE) - a broad-based
index of common stocks traded in foreign markets. The Indices' total returns
do not reflect any commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Indices. It is not possible to invest directly in an index.
**This figure represents the Fund's performance including the Fund's applicable
contingent deferred sales charge (CDSC) deducted at redemption as follows:
5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; and
1% - 6th year.
+ Returns are calculated by determining the percentage change in net
asset value (NAV) with all distributions reinvested. SEC returns reflect
applicable contingent deferred sales charge (CDSC).
6
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of August 31, 1997
<S> <C>
Assets
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Investment in Information Age Portfolio, at value (Note 1A)
(identified cost, $24,957,199) $ 28,546,753
Receivable for Fund shares sold 498,197
Tax reclaim receivable 16,166
Deferred organization expenses (Note 1D) 27,166
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Total assets $ 29,088,282
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for Fund shares redeemed 46
Payable to affiliate for Trustees' fees 27
Accrued expenses 51,391
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Total liabilities $ 51,464
- --------------------------------------------------------------------------------
Net Assets for 2,358,033 shares of
beneficial interest outstanding $ 29,036,818
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $ 25,377,591
Accumulated undistributed net realized gain on investments
from Portfolio (computed on basis of identified cost) 69,673
Net unrealized appreciation of investments from Portfolio
(computed on basis of identified cost) 3,589,554
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Total $ 29,036,818
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Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
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($29,036,818 / 2,358,033 shares of
beneficial interest outstanding) $ 12.31
- --------------------------------------------------------------------------------
<CAPTION>
Statement of Operations
For the Year Ended
August 31, 1997
<S> <C>
Investment Income (Note 1B)
- --------------------------------------------------------------------------------
Dividend income allocated from Portfolio
(net of foreign taxes, $34,034) $ 346,951
Interest income allocated from Portfolio 43,261
Expenses allocated from Portfolio (379,848)
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Net investment income from Portfolio $ 10,364
- --------------------------------------------------------------------------------
Expenses
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Management fee (Note 3) $ 64,015
Compensation of Trustees not members of the
Administrator's organization (Note 3) 258
Distribution fees (Note 5) 242,459
Transfer and dividend disbursing agent fees 36,733
Printing and postage 25,625
Registration fees 18,691
Legal and accounting services 17,067
Amortization of organization expenses (Note 1D) 9,366
Custodian fee 4,831
Miscellaneous 19,093
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Total expenses $ 438,138
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Net investment loss $ (427,774)
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 2,903,668
Foreign currency transactions (11,648)
- --------------------------------------------------------------------------------
Net realized gain on investments $ 2,892,020
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ 2,299,138
Foreign currency transactions 720
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 2,299,858
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 5,191,878
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 4,764,104
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended Year Ended
in Net Assets August 31, 1997 August 31, 1996*
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment loss $ (427,774) $ (186,468)
Net realized gain (loss) on investments 2,892,020 (113,052)
Net change in unrealized
appreciation (depreciation) of
investments 2,299,858 1,289,696
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations $ 4,764,104 $ 990,176
- ----------------------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net realized gain on investments $ (2,278,431) --
- ----------------------------------------------------------------------------------------------
Total distributions to shareholders $ (2,278,431) --
- ----------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Note 4) --
Proceeds from sale of shares $ 8,573,846 $ 24,825,891
Net asset value of shares issued to
shareholders in payment of
distributions declared 2,073,164 --
Cost of shares redeemed (5,896,343) (4,015,589)
- ----------------------------------------------------------------------------------------------
Net increase in net assets from Fund
share transactions $ 4,750,667 $ 20,810,302
- ----------------------------------------------------------------------------------------------
Net increase in net assets $ 7,236,340 $ 21,800,478
- ----------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------
At beginning of year $ 21,800,478 --
- ----------------------------------------------------------------------------------------------
At end of year $ 29,036,818 $ 21,800,478
- ----------------------------------------------------------------------------------------------
Accumulated
undistributed
net investment loss
included in net assets
- ----------------------------------------------------------------------------------------------
At end of year $ -- $ (6,108)
- ----------------------------------------------------------------------------------------------
</TABLE>
* For the period from the start of business, September 18, 1995, to August 31,
1996.
See notes to financial statements
8
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Year Ended August 31,
-------------------------------
1997 1996*++
- --------------------------------------------------------------------------------
<S> <C> <C>
Net asset value -- Beginning of year $ 11.040 $10.000
- --------------------------------------------------------------------------------
Income (loss) from operations
- --------------------------------------------------------------------------------
Net investment loss $ (0.178) $(0.134)
Net realized and unrealized gain on investments 2.490 1.174
- --------------------------------------------------------------------------------
Total income from operations $ 2.312 $ 1.040
- --------------------------------------------------------------------------------
Less distributions
- --------------------------------------------------------------------------------
From net realized gain on investments $ (1.042) $ --
- --------------------------------------------------------------------------------
Total distributions $ (1.042) $ --
- --------------------------------------------------------------------------------
Net asset value -- End of year $ 12.310 $11.040
- --------------------------------------------------------------------------------
Total Return/(1)/ 20.79% 10.40%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of year (000 omitted) $ 29,037 $21,800
Ratio of net expenses to average net assets/(2)/ 3.19% 2.96%+
Ratio of net investment loss to average net assets (1.67)% (1.34)%+
- --------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Computed using average shares outstanding throughout the period.
* For the period from the start of business, September 18, 1995, to August
31, 1996.
/(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 the Portfolio's allocated expenses.
See notes to financial statements
9
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS
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 (55.6% at August 31, 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 Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
On June 23, 1997, the Board of Trustees of the Trust adopted a multiple class
plan for the Fund which permits the Fund to issue more than one class of
shares. Initially, the Fund will offer three classes of shares and, effective
September 1, 1997, the existing shares of the Fund will be designated as Class
B shares. On June 23, 1997, the Board of Trustees also approved a Plan of
Reorganization (the "Plan") for the Trust. Under the terms of the Plan, the
Fund will acquire substantially all of the assets and liabilities of the EV
Traditional Information Age Fund and EV Classic Information Age Fund. The
transaction will be structured for tax purposes to qualify as a tax-free
reorganization under the Internal Revenue Code. As a result of the
reorganization, shareholders of the Traditional Fund and the Classic Fund will
receive Class A shares and Class C shares of the Fund, respectively. The
reorganization will occur after the close of business, August 31, 1997.
A Investment Valuation -- 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 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, if any,
and any net realized capital gains. Accordingly, no provision for federal
income or excise tax is necessary. Pursuant to Section 852 of the Internal
Revenue Code, the Fund designates $826,483 as a long-term capital gain
distribution for its taxable year ended August 31, 1997.
D 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.
E Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian to the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based
on the average daily cash balances the Fund or the Portfolio maintains with
IBT. All significant credit balances used to reduce the Fund's custodian fees
are reported as a reduction of expenses on 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 reporting period. Actual results could
differ from those estimates.
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
10
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
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.
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 year ended
August 31, 1997 the fee was equivalent to 0.25% of the Fund's average net
assets for such period and amounted to $64,015. 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
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 were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, 1997 August 31, 1996*
-----------------------------------------------------------------------------
<S> <C> <C>
Sales 703,921 2,344,257
Issued to shareholders
electing to receive
payment of distribution
in Fund shares 165,596 --
Redemptions (485,972) (369,769)
------------------------------------------------------------------------------
Net increase 383,545 1,974,488
------------------------------------------------------------------------------
</TABLE>
* For the period from the start of business, September 18, 1995 to August 31,
1996.
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 average 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 6) and daily 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. During the year
ended August 31, 1997 the Fund paid distribution fees to EVD aggregating
$192,044 representing 0.75% of average daily net assets. At August 31, 1997
the amount of Uncovered Distribution Charges of EVD calculated under the Plan
was approximately $982,000.
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
are 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 when there are no outstanding Uncovered Distribution
Charges of EVD. The Fund paid or accrued an aggregate of $50,415 for the year
ended August 31, 1997 as service fees under the Plan. EVD may pay up to the
entire amount of the service fees to authorized firms through which the Fund's
shares are distributed.
11
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
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
gains 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 $109,000 of CDSC paid by shareholders
for the year ended August 31, 1997.
7 Investment Transactions
------------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio aggregated
$8,627,075 and $7,019,057, respectively.
8 Subsequent Events
------------------------------------------------------------------------------
Effective September 1, 1997, the Fund changed its name to Eaton Vance
Information Age Fund and shares of the Fund are designated Class B shares.
Two additional classes of shares are also offered.
12
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
INDEPENDENT ACCOUNTANT'S REPORT
To the Trustees and Shareholders
of EV Marathon Information Age Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of EV
Marathon Information Age Fund as of August 31, 1997, and the related statement
of operations, the statement of changes in net assets and the financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our 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 as of August 31, 1997 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
audits provide 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, 1997, and the results of its operations, the
changes in its net assets and its financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
October 3, 1997
13
<PAGE>
Information Age Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Common Stocks -- 95.8%
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
<S> <C> <C>
Advertising -- 2.6%
- --------------------------------------------------------------------------------
Omnicom Group, Inc. 13,000 $ 880,750
WPP Group PLC 10,000 460,000
- --------------------------------------------------------------------------------
$ 1,340,750
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 13.2%
- --------------------------------------------------------------------------------
Benpres Holdings, GDR* 32,000 $ 177,150
Comcast Corp. Class A 20,000 468,750
Emmis Broadcasting Corp., Class A 10,000 492,500
Fuji Television Network Inc. 10 56,233
Granada Group, PLC 40,000 526,339
Jacor Communications, Inc. 10,000 440,000
Liberty Media Group, Class A 20,000 527,500
Lin Television Corp./1/ 17,000 806,438
Pathe SA* 2,100 389,439
TCA Cable TV, Inc. 8,000 304,000
Tele-Communications, Inc. 35,000 612,500
Westinghouse Electric Corp. 45,000 1,158,750
Yorkshire-Tyne Tees TV Holdings* 45,000 842,775
- --------------------------------------------------------------------------------
$ 6,802,374
- --------------------------------------------------------------------------------
Business Services - Miscellaneous -- 1.8%
- --------------------------------------------------------------------------------
Learning Tree International 20,000 $ 550,000
Tyco International Ltd./1/ 4,813 377,520
- --------------------------------------------------------------------------------
$ 927,520
- --------------------------------------------------------------------------------
Communications Equipment -- 1.4%
- --------------------------------------------------------------------------------
General Cable Corp./1/ 10,000 $ 346,250
Glenayre Technologies, Inc. 20,000 350,000
- --------------------------------------------------------------------------------
$ 696,250
- --------------------------------------------------------------------------------
Communications Services -- 16.0%
- --------------------------------------------------------------------------------
Ameritech Corp. 9,000 $ 564,188
Bellsouth Corp. 10,000 440,000
Bezek 250,000 690,928
British Telecommunications, PLC* 125,000 806,696
GTE Corp. 15,000 668,438
Korea Mobile Telecom Corp.* 298 235,171
Nippon Telegraph and Telephone Corp.* 700 654,124
Orange, PLC 225,000 792,792
Orbital Sciences Corp./1/ 25,000 542,188
SBC Communications, Inc. 10,000 543,750
Sprint Corp. 10,000 470,000
Telecom Italia Spa/1/ 350,000 1,226,829
WorldCom, Inc./1/ 20,000 598,750
- --------------------------------------------------------------------------------
$ 8,233,854
- --------------------------------------------------------------------------------
Computer Software -- 12.1%
- --------------------------------------------------------------------------------
Computer Associates International, Inc. 5,000 $ 334,375
Documentum Inc. 20,000 710,000
Great Plains Software Inc./1/ 3,000 79,125
Intuit, Inc./1/ 25,000 653,125
Medic Computer Systems, Inc./1/ 10,000 312,500
Misys, PLC* 33,000 850,801
Net One Systems Co., Ltd./1/ 50 289,436
Nice Systems Ltd./1/ 15,000 599,063
Oracle Corp. 25,500 972,188
Reynolds & Reynolds Inc, Class A 30,000 603,750
USCS International, Inc./1/ 15,000 268,125
Vanda Systems and Communications 1,000,000 567,779
- --------------------------------------------------------------------------------
$ 6,240,267
- --------------------------------------------------------------------------------
Computers and Business Equipment -- 4.2%
- --------------------------------------------------------------------------------
Flextech Holdings Limited 507,000 $ 680,920
Fujitsu Ltd. 50,000 595,410
Lexmark International Group Inc./1/ 25,000 875,000
- --------------------------------------------------------------------------------
$ 2,151,330
- --------------------------------------------------------------------------------
Consumer Services -- 0.6%
- --------------------------------------------------------------------------------
Sterling Commerce, Inc./1/ 10,000 $ 330,625
- --------------------------------------------------------------------------------
$ 330,625
- --------------------------------------------------------------------------------
Drugs -- 0.6%
- --------------------------------------------------------------------------------
Genzyme Corp. 300 $ 3,225
Genzyme Corp. Class A 10,000 281,250
- --------------------------------------------------------------------------------
$ 284,475
- --------------------------------------------------------------------------------
Electronics - Instruments -- 10.4%
- --------------------------------------------------------------------------------
Avimo Group Ltd.* 200,000 $ 254,052
Electric and Eltek International* 3,000,000 1,045,029
</TABLE>
See notes to financial statements
14
<PAGE>
Information Age Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Value
Security Shares (Note 1A)
- --------------------------------------------------------------------------------
<S> <C> <C>
Electronics - Instruments (continued)
- --------------------------------------------------------------------------------
Martin Gruppen 7,500 $ 501,599
Philips Electronics* 14,000 995,280
Roland* 40,000 893,116
Tandberg Television, ASA* 92,000 744,675
Thermo Electron Corp./1/ 22,000 885,500
- --------------------------------------------------------------------------------
$ 5,319,251
- --------------------------------------------------------------------------------
Electronics - Semiconductors -- 7.6%
- --------------------------------------------------------------------------------
Alcatel Alsthom 5,000 $ 612,124
Analog Devices 15,000 496,875
Creative Technology Limited/1/ 19,000 382,137
Hitachi Ltd.* 65,000 596,651
Intel Corp. 2,000 184,250
Kokusai Electric 30,000 525,946
LSI Logic/1/ 20,000 643,750
Samsung Electronics* 3,354 377,134
Samsung Electronics Ltd., GDR* 1,225 67,436
- --------------------------------------------------------------------------------
$ 3,886,303
- --------------------------------------------------------------------------------
Entertainment -- 3.2%
- --------------------------------------------------------------------------------
Sony Corp.* 10,000 $ 868,307
Time Warner Inc. 15,000 772,500
- --------------------------------------------------------------------------------
$ 1,640,807
- --------------------------------------------------------------------------------
Information Services -- 9.0%
- --------------------------------------------------------------------------------
Affiliated Computer Services, Inc. Class A 10,000 $ 262,500
Automatic Data Processing, Inc. 5,000 227,813
BISYS Group, Inc./1/ 10,000 337,500
CCC Information Services Group 25,000 431,250
DST Systems, Inc./1/ 17,000 615,188
First Data Corp. 12,000 492,750
First USA Paymentech, Inc./1/ 25,000 759,375
FIserv, Inc. 5,000 225,000
Forrester Research Inc./1/ 2,500 68,750
Reuters Holdings, PLC* 100,000 1,015,059
SunGard Data Systems, Inc. 4,000 208,500
- --------------------------------------------------------------------------------
$ 4,643,685
- --------------------------------------------------------------------------------
Investment Services -- 3.2%
- --------------------------------------------------------------------------------
Ameritrade Holding Corp., Class A/1/ 19,500 $ 366,844
Charles Schwab and Co., Inc. 15,000 636,563
Raymond James Financial Corp. 22,000 638,000
- --------------------------------------------------------------------------------
$ 1,641,407
- --------------------------------------------------------------------------------
Medical Products -- 0.7%
- --------------------------------------------------------------------------------
Healthdyne Technologies Inc./1/ 20,000 $ 337,500
- --------------------------------------------------------------------------------
$ 337,500
- --------------------------------------------------------------------------------
Miscellaneous -- 0.8%
- --------------------------------------------------------------------------------
Waters Corp./1/ 12,000 $ 399,750
- --------------------------------------------------------------------------------
$ 399,750
- --------------------------------------------------------------------------------
Publishing -- 8.4%
- --------------------------------------------------------------------------------
CMP Media Inc., Class A 1,700 $ 45,475
Dow Jones & Co., Inc. 20,000 856,250
John Fairfax Holdings* 250,000 597,228
McGraw-Hill, Inc. 15,000 919,688
Pearson, PLC* 105,000 1,234,367
Springer Alex Verlag AG* 800 686,600
- --------------------------------------------------------------------------------
$ 4,339,608
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $42,485,276) $49,215,756
- --------------------------------------------------------------------------------
<CAPTION>
Commercial Paper -- 2.4%
Principal
Amount
Security (000 omitted) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
General Electric Capital Corp.,
5.60%, 9/2/97 $ 1,241 $ 1,240,421
- --------------------------------------------------------------------------------
Total Commercial Paper
(identified cost $1,240,421) $ 1,240,421
- --------------------------------------------------------------------------------
Total Investments -- 98.2%
(identified cost $43,725,697) $50,456,177
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.8% $ 917,767
- --------------------------------------------------------------------------------
Net Assets -- 100% $51,373,944
- --------------------------------------------------------------------------------
</TABLE>
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
* Foreign Security
/1/ Non-income producing security.
See notes to financial statements
15
<PAGE>
Information Age Portfolio as of August 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of August 31, 1997
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Assets
- -------------------------------------------------------------------------------
<S> <C>
Investments, at value (Note 1A)
(identified cost, $43,725,697) $50,456,177
Cash 65,868
Receivable for investments sold 705,154
Dividends and interest receivable 181,643
Deferred organization expenses (Note 1C) 3,963
- -------------------------------------------------------------------------------
Total assets $51,412,805
- -------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------
Payable to affiliate for Trustees' fees (Note 2) $ 54
Accrued expenses $ 38,807
- -------------------------------------------------------------------------------
Total liabilities $ 38,861
- -------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $51,373,944
- -------------------------------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $44,641,361
Net unrealized appreciation of investments (computed
on the basis of identified cost) 6,732,583
- -------------------------------------------------------------------------------
Total $51,373,944
- -------------------------------------------------------------------------------
</TABLE>
Statement of Operations
For the Year Ended
August 31, 1997
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Investment Income
- -------------------------------------------------------------------------------
<S> <C>
Dividends (net of foreign taxes, $93,807) $ 615,561
Interest 81,657
- -------------------------------------------------------------------------------
Total income $ 697,218
- -------------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 362,172
Administration fee (Note 2) 120,758
Compensation of Trustees not members of the
Administrator's organization (Note 2) 6,570
Custodian fee 177,602
Legal and accounting services 35,148
Amortization of organization expenses (Note 1C) 1,248
Miscellaneous 13,506
- -------------------------------------------------------------------------------
Total expenses $ 717,004
- -------------------------------------------------------------------------------
Net expenses $ 717,004
- -------------------------------------------------------------------------------
Net investment loss $ (19,786)
- -------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- -------------------------------------------------------------------------------
Net realized gain (loss) --
- -------------------------------------------------------------------------------
Investment transactions (identified cost basis) $ 5,627,570
Foreign currency transactions (22,502)
- -------------------------------------------------------------------------------
Net realized gain on investment transactions $ 5,605,068
- -------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 4,257,104
Foreign currency transactions 1,913
- -------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ 4,259,017
- -------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 9,864,085
- -------------------------------------------------------------------------------
Net increase in net assets from operations $ 9,844,299
- -------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
16
<PAGE>
Information Age Portfolio as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended Year Ended
in Net Assets August 31, 1997 August 31, 1996*
- -------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment income (loss) $ (19,786) $ 19,131
Net realized gain (loss) on
investment transactions 5,605,068 (269,074)
Net change in unrealized
appreciation (depreciation) 4,259,017 2,473,566
- --------------------------------------------------------------------------------
Net increase in net assets
from operations $ 9,844,299 $ 2,223,623
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 19,061,455 $47,226,307
Withdrawals (20,235,195) (6,846,545)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital transactions $ (1,173,740) $40,379,762
- --------------------------------------------------------------------------------
Net increase in net assets $ 8,670,559 $42,603,385
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $ 42,703,385 $ 100,000
- --------------------------------------------------------------------------------
At end of year $ 51,373,944 $42,703,385
- --------------------------------------------------------------------------------
</TABLE>
* For the period from the start of business, September 18, 1995, to August 31,
1996.
See notes to financial statements
17
<PAGE>
Information Age Portfolio as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data (Expressed in Unites States Dollars)
<TABLE>
<CAPTION>
Year Ended August 31,
----------------------------------
1997 1996*
- --------------------------------------------------------------------------------
<S> <C> <C>
Ratios to average daily net assets
- --------------------------------------------------------------------------------
Expenses 1.48% 1.52%+
Net investment income (loss) (0.04)% 0.07%+
Portfolio Turnover 160% 115%
- --------------------------------------------------------------------------------
Average commission rate paid per share/(1)/ $0.0160 $0.0303
- --------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $51,374 $42,703
- --------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, September 18, 1995, to August
31, 1996.
/(1)/ 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
18
<PAGE>
Information Age Portfolio as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS
(Expressed in United States Dollars)
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 are being amortized on the straight-line
basis over five years.
D Financial 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 the 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 Financial Futures -- 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 upon 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
19
<PAGE>
Information Age Portfolio as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
(Expressed in United States Dollars)
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 reporting period. Actual results could
differ from those estimates.
I 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.
J Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT
receives a fee reduced by credits which are determined based on the average
daily cash balances the Portfolio maintains with IBT. All significant credit
balances used to reduce the Portfolio's custodian fees are reflected as a
reduction of operating expense on 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 year ended August
31, 1997 the adviser fee was 0.75% of average net assets for such period and
amounted to $362,172. 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 year ended August 31, 1997 the administration fee
was 0.25% of average net assets for such period and amounted to $120,758.
Except as to the 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 year ended
August 31, 1997, no significant amounts have been deferred.
Certain of the officers and Trustees of the Portfolio are officers and
directors/trustees of the above organizations.
3 Investment Transactions
------------------------------------------------------------------------------
Purchase and sales of investments, other than short-term obligations,
aggregated $74,731,034 and $77,133,653, respectively.
20
<PAGE>
Information Age Portfolio as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS (CONT'D)
(Expressed in United States Dollars)
4 Federal Income Tax Basis of Investments
------------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investments
owned at August 31, 1997, are as follows:
Aggregate cost $ 43,829,717
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 7,547,438
Gross unrealized depreciation (920,978)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 6,626,460
-----------------------------------------------------------------------------
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, 1997.
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 group of banks. 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 or fund based on
its borrowings at the bank's base rate or at an amount above either the
bank's adjusted certificate of deposit rate, a Eurodollar rate, or a federal
funds effective rate. In addition, a fee computed at an annual rate of 0.15%
on the daily unused portion of the 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.
21
<PAGE>
Information Age Portfolio as of August 31, 1997
INDEPENDENT ACCOUNTANTS' 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, 1997, and the related statements of operations, the statements of changes in
net assets and the supplementary data for each of the periods indicated therein.
These financial statements and supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and supplementary data based on our audits.
We conducted our audits in accordance with 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, 1997 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 audits provide 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, 1997, and the results of its operations, changes in its net assets
and supplementary data for each of the periods indicated therein, in conformity
with United States generally accepted accounting principles.
Coopers & Lybrand
Chartered Accountants
Toronto, Canada
October 3, 1997
22
<PAGE>
EV Marathon Information Age Fund as of August 31, 1997
INVESTMENT MANAGEMENT
<TABLE>
<CAPTION>
EV Marathon Information Age Fund
<S> <C>
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
Alan R. Dynner
Secretary Jack L. Treynor
Investment Adviser and Consultant
<CAPTION>
Information Age Portfolio
<S> <C>
Officers Independent Trustees
James B. Hawkes Hon. Edward K.Y. Chen
President and Trustee Professor and Director, Center for Asian Studies,
University of Hong Kong
William Chisholm
Vice President Donald R. Dwight
President, Dwight Partners, Inc.
Michel Normandeau Chairman, Newspapers of New England, Inc.
Vice President
Samuel L. Hayes, III
Raymond O'Neill Jacob H. Schiff Professor of Investment Banking,
Vice President Harvard University Graduate School of
Business Administration
Duncan W. Richardson
Vice President and Norton H. Reamer
Co-Portfolio Manager President and Director, United Asset
Management Corporation
Hon. Robert Lloyd George
Vice President, Trustee John L. Thorndike
and Co-Portfolio Manager Formerly Director, Fiduciary Company Incorporated
James L. O'Connor Jack L. Treynor
Treasurer Investment Adviser and Consultant
Alan R. Dynner
Secretary
</TABLE>
23
<PAGE>
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-Advisor 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
(617) 482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
Transfer Agent
First Data Investor Services Group, Inc.
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
Independent Auditors
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV Marathon Information Age Fund
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges
and expenses. Please read the prospectus carefully before you invest or send
money.
- --------------------------------------------------------------------------------
MIASRC-11/97
