<PAGE>
[LOGO OF EATON VANCE [PHOTO APPEARS HERE]
APPEARS HERE]
Annual Report August 31, 1997
EV
[PHOTO APPEARS HERE]
CLASSIC
GREATER CHINA
GROWTH FUND
EATON VANCE
GLOBAL MANAGEMENT-GLOBAL DISTRIBUTION
[PHOTO APPEARS HERE]
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
LETTER TO SHAREHOLDERS
[PHOTO OF JAMES B. HAWKES, PRESIDENT APPEARS HERE]
EV Classic Greater China Growth Fund had a total return of 29.7% for the year
ended August 31, 1997. That return was the result of a rise in net asset value
per share from $8.46 on August 31, 1996 to $10.97 on August 31, 1997.1 By
comparison, the Peregrine Asia 100 Index - an index composed of China region
common stocks - had a return of -7.2%.2 The past year was an extremely volatile
period for the China region markets. That volatility increased in the weeks
following the end of the Fund's fiscal year as currency crises swept through
Malaysia, Thailand, and Indonesia. While the excellent long-term growth
prospects have improved even further due to Hong Kong's handover to China,
market volatility and currency concerns were also felt strongly in Hong Kong.
Hong Kong and China reach a historic moment of unity...
On July 1, 1997, political jurisdiction over Hong Kong was officially
transferred from Great Britain to China. The long-awaited handover was greeted
enthusiastically by investors and local business interests alike. Moreover, the
absorption of Hong Kong gives China an infusion of valuable financial and
business acumen. For Hong Kong-based companies, reunification opens vast new
markets on China's mainland. Naturally, there remain concerns about continued
political tolerance in democratic Hong Kong. But China has vowed to preserve
Hong Kong's unique status while leveraging its vitality to expand economic
growth.
"Reform is the inevitable road for China..." - Jiang Zemin
The year also marked the passing of Deng Xiaoping, the architect of China's
modern economy. Deng's successor, Jiang Zemin, has indicated his desire to
continue along the path of reform. During the recently-ended Fifteenth Chinese
Communist Party Congress, Jiang dedicated the Party to expanding economic growth
throughout mainland China. Among the Party proposals was a call to privatize the
remaining state-owned industries. That new resolve - together with the reunion
with Hong Kong - should add further momentum to China's growth. We believe that
the recent volatility in the region will pass, and that the shareholders of EV
Classic Greater China Growth Fund will continue to share in that growth.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
October 9, 1997
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Fund Information
as of August 31, 1997
Performance/3/
- -------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------
One year 29.7%
Life of Fund (12/28/93) 2.6
SEC Average Annual Total Returns (including 1% CDSC)
- ----------------------------------------------------
One year 28.7%
Life of Fund (12/28/93) 2.6
Ten Largest Holdings4 By total net assets
- -------------------------------------------
HSBC Holdings 7.4%
China Merchants Holdings 6.3
Cheung Kong Holdings 5.9
Hutchison Whampoa 5.9
China Resources 5.0
China Everbright 4.4
New World Development 3.9
Shanghai Industrial Holdings 3.3
Hang Seng Bank 2.1
Nan Ya Plastic 2.1
/1/ This return does not reflect the Fund's 1% contingent deferred sales charge
(CDSC) on shareholders redeeming within the first year.
/2/ It is not possible to invest directly in the Index.
/3/ Average annual total returns are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC average
annual returns reflect 1% CDSC on shareholders redeeming within the first
year.
/4/ Ten largest holdings account for 46.1% 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.
2
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
MANAGEMENT DISCUSSION
[PHOTO OF ADALINE M. KO, PORTFOLIO MANAGER APPEARS HERE]
An interview with
Adaline M. Ko, Director,
Lloyd George Management, and investment advisor to
the Greater China Growth Portfolio.
Q: Adaline, the Fund posted very strong performance during the fiscal year. To
what do you attribute the Fund's showing?
A: The Fund benefited primarily from its strong commitment to the Hong Kong
market, as well as from stock-picking that emphasized earnings momentum.
Following a year of uncertainty, the mood of investors in the China region
has changed markedly for the better, aided by the naming of a new Chief
Executive for Hong Kong, the easy passage to the post-Deng era, and of
course, the warm reception of investors to the handover.
I believe that the volatility that has characterized the Hong Kong market in
recent weeks is a temporary hurdle tied to the region's currency
fluctuations. In my view, the long-term potential of the Hong Kong-China
alliance is still likely to produce impressive economic momentum in coming
years.
Q: Is Hong Kong still the largest weighting in the Portfolio?
A: We increased our commitment in Hong Kong to 79.3% of the Portfolio since our
last report, from 45.9% a year ago. Hong Kong has been the natural gateway
for investment in China, and now that a peaceful handover has occurred, Hong
Kong is poised to grow further in importance. Hong Kong's Hang Seng Index
rose 31.9% in the year ended August 31./1/
Hong Kong has traditionally been viewed as a lower risk way to invest in
China. And with China having eased its credit restrictions, Hong Kong
companies should see a pick-up in business, especially in the sale of
consumer goods and revival of infrastructure projects that had been delayed
by the credit squeeze. From a valuation standpoint, Hong Kong sells for
approximately 12 times earnings. That makes Hong Kong one of the most
undervalued of the global markets, despite its strong performance during the
fiscal year.
Q: What were some of the Fund's best performing stocks?
A: The Portfolio focused its largest investments predominantly on Hong Kong-
based blue chip companies. Among the larger investments, HSBC Holdings, the
parent of Hong Kong &
- --------------------------------------------------------------------------------
Five Largest Industry Positions/2/
- ----------------------------------------
By total net assets
Diversified Trading Companies 29.9%
Property 19.1%
Financial 13.8%
Transportation 9.0%
Manufacturing 9.0%
Regional Distribution/2/
- -------------------------------------------
By total investments
[PIE CHART APPEARS HERE]
Hong Kong 80.2%
Taiwan 8.1%
Singapore 3.5%
Other 2.7%
Malaysia 2.4%
Korea 2.0%
Thailand 1.1%
/1/ It is not possible to invest directly in the Index.
/2/ Five largest sectors account for 76.0% of the Portfolio's investments,
determined by dividing the total market value of the holdings by the total
net assets of the Portfolio. Industry weightings and regional distribution
are subject to change.
3
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
MANAGEMENT DISCUSSION CONT'D
[PHOTO OF HONG KONG APPEARS HERE]
- --------------------------------------------------------------------------------
Union with Hong Kong puts China in Third Gear.
A new study shows that China is moving into the front ranks of the global
economies. If the U.S. continues its 3% growth rate and China grows by 7%
annually - less than its post-1978 rate - China will overtake the U.S. by 2020.
Source: Australia Dept of Foreign Affairs and Trade
- --------------------------------------------------------------------------------
Shanghai Bank, has risen more than 53% in 1997 alone. HSBC has avoided the
credit problems that have befallen many other banks in the region. The bank
continues to build stature as the premier lending institution in Hong Kong
and provides a growing network between China and other global regions.
New World Development is another successful core holding. The giant
property company is one of the largest investors in China, with $1.2
billion in China projects, including hotels, power stations, roads,
bridges, and an airport. Recently, New World announced plans to invest an
additional $400 million in low-cost residential apartments and prime
commercial office developments in major cities like Beijing, Wuhan, and
Guangzhou.
Another core blue chip holding, Cheung Kong Holdings, rose more than 24%.
Cheung Kong is Hong Kong's largest developer of residential properties and
also operates container terminals. The company also owns 40% of Hutchison
Whampoa, a leading trading company.
Q: Did the Portfolio have any investments in "red chip" companies?
A: Yes. Red chips - China-controlled companies that are traded on the Hong
Kong exchange - have accounted for an ever-increasing percentage of Hong
Kong's market volume in the past year. However, while they represent
attractive long-term opportunities, we have remained very selective. We
have restricted the Portfolio's red chip investments to companies that we
deem to have the very highest quality management and especially sound
long-term growth potential. Two such companies were China Overseas Land &
Investment and Ng Fund Hong Ltd.
China Overseas is controlled by the China Ministry of Construction and is
among the largest construction companies in Hong Kong. In addition to its
Hong Kong-based projects, China Overseas has developed properties in major
cities on the mainland. The company has low debt levels, trades at a modest
price-earnings multiple, and is well-positioned to identify worthwhile
projects and negotiate good terms.
Ng Fung Hong is a food distributor and supermarket operator. The company
has operated in Hong Kong for over 30 years and currently has a 30% market
share of the frozen meat market. Ng Fung has purchased stores from its
parent company, China Resources, and is expected to expand its chain to 300
stores in Hong Kong and China by the year 2000.
Q: Where did you focus your investments outside of Hong Kong?
A: Taiwan (8%) was our largest commitment outside of Hong Kong. The Taiwan
economic picture has slowly showed signs of improvement, and the Taipei
market responded, up 47.4% during the year ended August 31.
4
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
MANAGEMENT DISCUSSION CONT'D
Exports grew across the board during the summer months, with strong demand
enjoyed by the electronics, chemical, and machinery sectors. Imports,
meanwhile, were also growing sharply, but the sharp rise in raw material
and machinery imports was interpreted as a sign that the economy is
accelerating. Despite the robust performance in the Taiwan market, low
interest rates and good earnings growth suggest that the market is still
attractive for investors. The country is also benefiting from its improving
relations with China.
Q: Could you give an example of a Taiwan-based investment?
A: Yes. Nan Ya Plastics is a blue chip Taiwan company and a long-time holding
of the Portfolio. Na Ya is a conglomerate with a wide array of business
interests, including plastics, polyesters, and electronics. In its
polyester business, the company has increased its plant capacity to meet
growing demand. Through its Na Ya Technology subsidiary, the company also
manufactures DRAMs, dynamic access memory chips. While the pricing of DRAMs
has been weak in the past year, Na Ya is a leader in the large Taiwan
memory chip industry. The company has raised its production capacity and
improved the yield rate of its memory products, and stands to be a major
beneficiary when chip pricing improves.
Q: Were there any countries in which you trimmed your exposure?
A: Yes. Interestingly, while the climate in Hong Kong and China was improving,
the mood in some other markets was less upbeat. While we fully expect that
the rapid growth of China will have a positive effect on the entire region
in coming years, countries like Malaysia, Thailand and Korea have been
beset by recent problems that have threatened their near-term economic
growth and frustrated investors.
We significantly reduced our investments in Thailand from over 9% a year
ago to around 1% at August 31. The country has suffered from a growing
current account deficit, a rise in consumer inflation from 4% to 9%, and a
sharp decline in estimates of GDP growth. Similarly, we reduced our
exposure to Malaysia. Although the economic fundamentals are still quite
strong in Malaysia, concerns over the currency crisis have caused investors
to reconsider their Malaysian commitments.
Investing in those countries must therefore be highly selective. One of the
Portfolio's Malaysian holdings is Sime Darby Berhad, a conglomerate with
business interests in financial services, plantations, chemical production,
and industrial products. The company saw profits rise sharply in 1996 and
it remains an economic force in Malaysia. The company's Sime Bank
subsidiary has been a powerful financial presence in Malaysia and an
important link to other Asian financial markets.
Q: You mentioned the warm reception given to the choice of a new Chief
Executive in Hong Kong. What is the significance of that move?
A: The Selection Committee's choice of Tung Chee-hwa was important from both a
practical and a psychological standpoint. Early in his career, Mr. Tung
worked for General Electric Company in the U.S. More recently, he ran his
family's global shipping company and has developed strong business ties on
the mainland. With a clearly pro-business stance and a prudent management
style, he has gained the confidence of the Hong Kong business and financial
community in Hong Kong and China. Moreover, he is viewed as someone who
will steer a steady course on Hong Kong's key economic issues. With his
selection and the turnover now completed, the markets are likely to focus
less on hurdles and more on fundamentals and opportunities.
Q: How is mainland China's economy faring in this momentous year?
A: In response to the government's inflation-fighting efforts, China's economy
expanded at its slowest rate in five years in 1996, 9.7%, and is aiming for
8% in 1997. That is good news for investors because it suggests that China
will be able to sustain a strong level of economic
5
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
MANAGEMENT DISCUSSION CONT'D
growth while keeping the danger of inflation at bay. Inflation measured a
manageable 6% in 1996, down from 14% in 1995, and a record 21.7% in 1994.
The government's goal remains to encourage steady growth while avoiding the
boom-and-bust cycles that have plagued the economy in the past.
Q: Adaline, this has clearly been a remarkable year for Hong Kong and China.
What is your outlook for the markets?
A: Over the long-term, I'm very optimistic about the union of China and Hong
Kong. I believe their new relationship should have a favorable effect on
the mainland economy and provide a boost to corporate earnings. However,
over the near-term, we must navigate through this current volatility. The
markets were in a state of euphoria earlier in the year, but more recently,
currency and political concerns have taken a severe toll. While that is
understandably unnerving to investors, I believe the key is to focus on the
longer-term.
Importantly, the soft landing of the Chinese economy and the slowing of
inflation has allowed an easing of credit restrictions by the Chinese
central bank. That is likely to spark an upturn for the country. We have
already seen an upturn within the property and retail sectors.
Of course, past trends do not guarantee future results. And, naturally,
there are risks with any foreign investment, especially when there are
major political changes afoot. But Hong Kong and China complement each
other very well. I believe that their partnership is likely to produce
enormous advantages and a bright future for both parties.
Comparison of Change in Value of a $10,000 Investment in the Fund vs. the
Peregrine 100 Asia Index* from December 31,1993 through August 31, 1997.
Peredine Asia 100 Index vs EV Classic Greater China Growth Fund
[LINE GRAPH APPEARS HERE]
[PLOT POINTS TO COME]
Performance+
- ------------------------------------------------------------
Average Annual Total Returns (At Net Asset Value)
- ------------------------------------------------------------
One year 29.7%
Life of Fund 2.6
Value at 8/31/97 $10,998
SEC Average Annual Total Returns (Including applicable CDSC)
- -------------------------------------------------------------
One year 28.7%
Life of Fund 2.6
Value at 8/31/97 $10,998
* Past performance is no guarantee of future results. Investment return and
principal will fluctuate so that shares, when redeemed, are worth more or less
their original cost. Source: Towers Data Systems, Bethesda, MD. Investment
operations commenced 10/28/92. Index information is available only at
month-end; therefore, the line comparison begins at the next month-end
following the commencement of the Fund's investment operations. It is not
possible to invest directly in an index.
The performance chart above compares the Fund's total return with that of a
broad-based securities market index. The lines on the chart represent the
total returns of $10,000 hypothetical investments in the Fund and the
Peregrine Asia 100 Index, a broad-based index of common stocks traded in the
China region.
The bold colored line on the chart represents the Fund's performance at net
asset value. The Fund's total return figure reflects fund expenses and
portfolio transaction costs and assumes reinvestment of income dividends and
capital gain distributions. The black line represents the performance of the
Peregrine Asia 100 Index. In contrast to the Fund, whose investment focus is
targeted toward selected growth stocks with specific characteristics, the
stocks in the Index represent a diversified portfolio spanning all sectors of
the economy. The Index's total return does not reflect any commissions or
expenses that would have been incurred if an investor individually purchased
or sold the securities represented in the Index.
+ Returns are calculated by determining the percentage change in net asset value
(NAV) with all distributions reinvested. SEC average annual returns reflect
applicable contingent deferred sales charge of 1%, which is deducted at
redemption during the first year.
6
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of August 31, 1997
Assets
- --------------------------------------------------------------------------
<S> <C>
Investment in Greater China Growth Portfolio, at
value (Note 1A) (identified cost, $12,678,207) $18,761,055
Receivable for Fund shares sold 65,679
Deferred organization expenses (Note 1E) 13,332
- --------------------------------------------------------------------------
Total assets $18,840,066
- --------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------
Payable for Fund shares redeemed $ 280,609
Accrued expenses 22,215
- --------------------------------------------------------------------------
Total liabilities $ 302,824
- --------------------------------------------------------------------------
Net Assets for 1,689,967 shares of
beneficial interest outstanding $18,537,242
- --------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------
Paid-in capital $15,673,837
Accumulated net realized loss on investments
(computed on basis of identified cost) (2,924,292)
Accumulated distributions in excess of net investment
income (295,151)
Net unrealized appreciation of investments (computed
on basis of identified cost) 6,082,848
- --------------------------------------------------------------------------
Total $18,537,242
- --------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- --------------------------------------------------------------------------
($18,537,242/1,689,967 shares of
beneficial interest outstanding) $ 10.97
- --------------------------------------------------------------------------
<CAPTION>
Statement of Operations
For the Year Ended
August 31, 1997
Investment Income (Note 1B)
- --------------------------------------------------------------------------
Dividend income allocated from Portfolio
(net of foreign taxes, $21,158) $ 349,928
Interest income allocated from Portfolio 1,700
Expenses allocated from Portfolio (219,296)
- --------------------------------------------------------------------------
Total investment income from Portfolio $ 132,332
- --------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------
Management fee (Note 3) $ 47,212
Compensation of Trustees not members of the
Administrator's organization (Note 3) 135
Distribution and service fees (Note 5) 188,864
Printing and postage 37,200
Transfer and dividend disbursing agent fees 19,976
Legal and accounting services 19,236
Registration fees 15,523
Amortization of organization expenses (Note 1E) 10,028
Custodian fee 6,405
Miscellaneous 4,847
- --------------------------------------------------------------------------
Total expenses $ 349,426
- --------------------------------------------------------------------------
Net investment loss $ (217,094)
- --------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 734,931
Foreign currency and forward foreign
currency exchange contract transactions (21,712)
- --------------------------------------------------------------------------
Net realized gain on investment transactions $ 713,219
- --------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ 4,397,490
Foreign currency and forward foreign currency
exchange contract transactions 79
- --------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ 4,397,569
- --------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 5,110,788
- --------------------------------------------------------------------------
Net increase in net assets from operations $ 4,893,694
- --------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE>
EV Classic Greater China Growth 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 $ (217,094) $ (184,688)
Net realized gain (loss)
on investments 713,219 (215,241)
Net change in unrealized
appreciation (depreciation) 4,397,569 1,317,029
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 4,893,694 $ 917,100
- --------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 4) --
Proceeds from sale of shares $ 12,019,109 $ 13,070,195
Cost of shares redeemed (17,177,955) (16,392,547)
- --------------------------------------------------------------------------------
Net decrease in net assets from Fund
share transactions $ (5,158,846) $ (3,322,352)
- --------------------------------------------------------------------------------
Net decrease in net assets $ (265,152) $ (2,405,252)
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $ 18,802,394 $ 21,207,646
- --------------------------------------------------------------------------------
At end of year $ 18,537,242 $ 18,802,394
- --------------------------------------------------------------------------------
Accumulated
distributions in excess
of net investment income
included in net assets
- --------------------------------------------------------------------------------
At end of year $ (295,151) $ (384,264)
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
8
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Year Ended August 31,
------------------------------------------------------------
1997 1996 1995 1994*
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value-- Beginning of year $8.460 $8.120 $9.030 $10.000
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------
Net investment loss $(0.183) $(0.092) $(0.037) $(0.033)
Net realized and unrealized gain (loss) on investments 2.693 0.432 (0.853) (0.937)
- ----------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 2.510 $ 0.340 $(0.890) $(0.970)
- ----------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------
In excess of net investment income $ -- $ -- $ (0.020) $ --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions $ -- $ -- $ (0.020) $ --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value-- End of year $10.970 $8.460 $8.120 $9.030
- ----------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 29.67% 4.19% (9.85)% (9.70)%
- ----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000 omitted) $18,537 $18,802 $21,208 $26,430
Ratio of net expenses to average net assets (2)(3) 3.04% 3.03% 3.04% 2.75%+
Ratio of net expenses to average net assets after
custodian fee reduction (2) 3.01% 2.97% -- --
Ratio of net investment loss to average net assets (1.15)% (0.91)% (0.59)% (0.74)%+
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, December 28, 1993, to August
31, 1994.
/(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 ex date. Total return is not
computed on an annualized basis.
/(2)/ Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/ The expense ratios for the year ended August 31, 1996 and the periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund to increase
its expense ratio by the effect of any expense offset arrangements with
its service providers. The expense ratios for each of the periods ended on
or before August 31, 1995 have not been adjusted to reflect this change.
See notes to financial statements
9
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-------------------------------
EV Classic Greater China 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 Greater China 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 (3.5% 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.
On June 23, 1997, the Board of Trustees approved a Plan of Reorganization (the
"Plan") for the Trust. Under the terms of the Plan, the EV Marathon Greater
China Growth Fund (the Successor Fund), a separate series of the Trust, would
acquire substantially all of the assets and liabilities of the Fund (the
Acquired Fund). The transactions will be structured for tax purposes to
qualify as a tax-free reorganization under the Internal Revenue Code. The
Trust will issue and deliver to the Acquired Fund a number of full and
fractional shares of beneficial interest of a separate class of the Successor
Fund (Class C Shares), which will be equal in value to the net asset value per
share of the Acquired Fund multiplied by the number of full and fractional
shares of the Acquired Fund then outstanding. Such transaction occurred after
the close of business, August 31, 1997.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuations -- 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 -- Investors Bank & Trust Company (IBT) serves as
custodian of the Fund. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balances the Fund maintains with IBT. All significant credit balances used to
reduce the Fund's custodian fee are reflected as a reduction of expenses in
the Statement of Operations.
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 and tax-exempt income,
including any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is necessary. At August 31, 1997, the Fund, for
federal income tax purposes, had capital loss carryovers which, will reduce
the Fund's taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Internal Revenue Code and
thus will reduce the amount of distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal income
or excise tax. The amounts and expiration dates of the capital loss carryovers
are as follows:
<TABLE>
<CAPTION>
Amount Expires
------------------------------------------------
<S> <C>
$1,396,831 8/31/04
337,254 8/31/03
173,960 8/31/02
</TABLE>
Additionally, net capital losses of $18,471 attributable to security and
currency transactions included after October 31, 1996, are treated as arising
on the first day of the Fund's next taxable year.
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 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.
10
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
G Other -- Investment transactions are accounted for on a trade date
basis.
2 Distributions to Shareholders
-----------------------------------------------------------------------------
It is 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 ex-dividend
date. The Fund distinguishes between distributions on a tax basis and a
financial reporting basis. Generally accepted accounting principles require
that only distributions in excess of tax basis earnings and profits be
reported in the financial statements as a return of capital. Differences in
the recognition or classification of income between the financial statements
and tax earnings and profits which result in temporary over distributions for
financial statement purposes are classified as distributions in excess of net
investment income or accumulated net realized gains. Permanent differences
between book and tax accounting relating to distributions are reclassified to
paid-in capital.
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 $47,212. 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 organization. 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
August 31,
---------------------------------------------------------------------
1997 1996
---------------------------------------------------------------------
<S> <C> <C>
Sales 1,281,358 1,541,301
Redemptions (1,813,711) (1,930,989)
---------------------------------------------------------------------
Net decrease (532,353) (389,688)
---------------------------------------------------------------------
</TABLE>
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 1/365th of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no
outstanding Uncovered Distribution Charges, which are equivalent to the sum
of (i) 6.25% of the aggregate amount received by the Fund for shares sold
plus, (ii) distribution fees calculated by applying the rate of 1% over the
prevailing prime rate to the outstanding balance of Uncovered Distribution
Charges of EVD reduced by amounts theretofore paid to EVD. The amount payable
to EVD with respect to each day is accrued on such day as a liability of the
Fund and, accordingly, reduces the Fund's net assets. The Fund paid or
accrued $141,648 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 $3,282,000.
In addition, the Plan permits the Fund to make monthly payments of service
fees to the Principal Underwriter in amounts not exceeding 0.25% of the
Fund's average daily net assets for each fiscal year. The Fund paid or
accrued service fees to or payable to EVD for the year ended August 31, 1997
in the amount of $47,216. EVD makes monthly service fee payments to
Authorized Firms in amounts anticipated to be equivalent to 0.25% of the
assets maintained in the Fund by their customers. EVD currently expects to
pay an Authorized Firm a service fee at the time of sale equal to 0.25% of
the purchase price of the shares sold by such Firm and monthly payments of
service
11
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
fees in amounts not expecting to exceed 0.25% per annum of the Fund's average
daily net assets based on the value of the Fund shares sold by such Firm and
remaining outstanding for at least one year. During the first year after a
purchase of Fund shares, EVD will retain the service fee as reimbursement for
the service fee payment made to an Authorized Firm at the time of sale.
Service fee payments are made for personal services and/or the maintenance of
shareholder accounts. Service fees paid to EVD and Authorized Firms 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.
Certain officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
-----------------------------------------------------------------------------
Shares purchased and redeemed during the first year after purchase (except
shares acquired through the reinvestment of distributions) generally will be
subject to a contingent deferred sales charge (CDSC) at a range of one
percent of redemption proceeds, exclusive of all reinvestments and capital
appreciation in the account. No contingent deferred sales charge is imposed
on exchanges for shares of other funds in the Eaton Vance Classic Group of
Funds or Eaton Vance Money Market Fund which are distributed with a
contingent deferred sales charge. EVD received approximately $7,100 of CDSC
for the year ended August 31, 1997.
7 Investment Transactions
-----------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the
year ended August 31, 1997 aggregated $12,011,018 and $17,293,701,
respectively.
12
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of Eaton Vance Growth Trust
------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of EV
Classic Greater China Growth Fund (one of the series constituting Eaton Vance
Growth Trust) as of August 31, 1997, and the related statement of operations
for the year then ended, the statements of changes in net assets for the years
ended August 31, 1997 and 1996 and the financial highlights for each of the
years in the three year period ended August 31, 1997 and for the period from
the start of business, December 28, 1993 to August 31, 1994. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the EV Classic
Greater China Growth Fund series of the Eaton Vance Growth Trust at August 31,
1997, the results of its operations, the changes in its net assets and its
financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 10, 1997
13
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Common Stocks -- 98.9%
Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
China -- 0.2%
Electrical Equipment -- 0.1%
- --------------------------------------------------------------------------------
Beijing Orient Elect. 480,000 $ 308,538
The company is mainly engaged in the manufacture
of electronics and lighting products.
- --------------------------------------------------------------------------------
$ 308,538
- --------------------------------------------------------------------------------
Industrial / Manufacturing -- 0.1%
- --------------------------------------------------------------------------------
Shanghai Yaohua Pilkington 2,091,113 $ 706,796
Glass manufacturer.
- --------------------------------------------------------------------------------
$ 706,796
- --------------------------------------------------------------------------------
Lodging and Gaming -- 0.0%
- --------------------------------------------------------------------------------
Shanghai New Asia Group, Ltd. 25,600 $ 11,725
The company is mainly engaged in hotel, food
and tourism.
- --------------------------------------------------------------------------------
$ 11,725
- --------------------------------------------------------------------------------
Total China
(identified cost $2,175,957) $ 1,027,059
- --------------------------------------------------------------------------------
Hong Kong -- 79.3%
Banks and Money Services -- 2.2%
- --------------------------------------------------------------------------------
Bank of East Asia Hong Kong 500,000 $ 1,784,447
Engaged in the banking related financial services.
Ka Wah Bank 1,860,000 5,557,793
Engaged in the provision of general banking and
related financial service, primarily in Hong Kong
and China.
Union Bank of Hong Kong 1,424,000 4,319,329
The bank is engaged in the provision of
commercial banking services.
- --------------------------------------------------------------------------------
$11,661,569
- --------------------------------------------------------------------------------
Beverages -- 0.0%
- --------------------------------------------------------------------------------
Guangdong Brewery Holdings Ltd. 500,000 $ 175,863
Engaged in the production, distribution and sale
of Kingway beer, dominates the market
in Shenzhen.
- --------------------------------------------------------------------------------
$ 175,863
- --------------------------------------------------------------------------------
Chemicals -- 2.0%
- --------------------------------------------------------------------------------
Shanghai Petrochemical 25,580,000 $10,565,473
A highly integrated petrochemical complex which
processes crude oil into a broad range of
synthetic fibers, resins and plastics, intermediate
petrochemicals and petrochemical products.
- --------------------------------------------------------------------------------
$10,565,473
- --------------------------------------------------------------------------------
Computer Equipment -- 0.1%
- --------------------------------------------------------------------------------
Stone Electronic Technology, Ltd. 1,000,000 $ 290,416
Engaged in manufacture, distribution and sale of
computers and related products.
- --------------------------------------------------------------------------------
$ 290,416
- --------------------------------------------------------------------------------
Diversified Trading -- 28.6%
- --------------------------------------------------------------------------------
Beijing Enterprises 500,000 $ 3,775,411
Diversified conglomerates engaged in
infrastructure, sale of consumer products, tourism
services and industrial manufacturing.
China Everbright Pacific Ltd. 8,311,000 23,439,219
Diversified company with interests in retailing,
property, investment and development, hotels
and restaurant operations.
China Resources Enterprises 6,394,000 26,822,201
Property investment and development.
China Travel International Ltd. 10,400,000 7,718,619
Provides freight forwarding and transportation
services between China and Hong Kong, express
air freight services in China. Also operates three
scenic parks in Shenzhen, China.
Cosco Pacific Ltd. 4,640,000 9,013,488
Transportation, container manufacturer (through
JV), owning and leasing.
Gold Lion Holdings Ltd. 2,958,000 1,641,743
Markets and distributes men's apparel and
accessories, ladies handbags and shoes, cosmetic
products and tobacco products.
Guang Nan Holdings Ltd. 6,450,000 8,658,277
Trader of foodstuffs and non-foodstuffs,
processing and distribution of foodstuffs.
Guangdong Investment Ltd. 4,000,000 4,827,364
Securities investment, travel and
transportation services.
Guangdong Investment Warrants 400,000 232,333
Securities investment, travel and
transportation services.
</TABLE>
See notes to financial statements
14
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Diversified Trading (continued)
- --------------------------------------------------------------------------------
Hutchison Whampoa 3,800,000 $ 31,636,012
Diversified company with interests in property
development, ports, retailing,manufacturing,
telecommunications, media, energy, finance
and investment.
Li & Fung Ltd. 2,312,000 2,357,509
Export trading of consumer products.
Moulin International Holdings 17,745,000 4,305,983
Industrial, optical products.
NG Fung Hong Ltd. 7,940,000 10,709,648
Trader of foodstuffs and non-foodstuffs.
Pacific Concord Holdings 8,416,000 5,105,544
Engaged in the sale of watches and related
products, cosmetic products, telecommunications
components, property development and
operation of department stores.
Shougang Concord
International Enterprises Co. 14,000,000 4,246,531
Trader of building and construction materials.
Manufactures and installs kitchen equipment.
Sells steel, electrical and electronic products.
Wharf Holdings Ltd. 2,581,200 9,345,293
Diversified company with interests in property
development and investments, terminals
and warehousing, public transportation
and communications.
- --------------------------------------------------------------------------------
$153,835,175
- --------------------------------------------------------------------------------
Electric Utilities -- 1.3%
- --------------------------------------------------------------------------------
Beijing Datang Power 4,500,000 $ 2,424,976
Engaged in the operation of coal fired electric
power plants in the Northern China.
China Light & Power Co. 930,000 4,309,390
Generates and supplies electricity to the New
Territories and also has investment in China and
other Asian countries.
- --------------------------------------------------------------------------------
$ 6,734,366
- --------------------------------------------------------------------------------
Electrical Equipment -- 0.6%
- --------------------------------------------------------------------------------
China Aerospace International Holding 4,930,200 $ 3,404,527
The company is an electronics manufacturer.
- --------------------------------------------------------------------------------
$ 3,404,527
- --------------------------------------------------------------------------------
Financial -- 9.8%
- --------------------------------------------------------------------------------
Hang Seng Bank 940,000 $ 11,344,305
Provides a full range of banking and related
financial services and compilation of Hang Seng
Index of 33 selected stocks listed on the HK
Stock Exchange.
HSBC Holdings PLC 1,300,000 39,599,870
Provides a comprehensive range of banking and
related financial services through an international
network of more than 3,000 offices in 71
countries in Europe, the Asia Pacific region, the
Middle East and the Americas.
National Mutual Ltd. 2,018,000 1,640,968
Banking, finance and insurance.
- --------------------------------------------------------------------------------
$ 52,585,143
- --------------------------------------------------------------------------------
Household Products -- 0.3%
- --------------------------------------------------------------------------------
CCT Telecom Holdings, Ltd. 5,000,000 $ 1,823,169
Engaged in the telecommunications
related business.
- --------------------------------------------------------------------------------
$ 1,823,169
- --------------------------------------------------------------------------------
Industrial / Manufacturing -- 5.1%
- --------------------------------------------------------------------------------
Chen Hsong Holdings 4,586,000 $ 2,634,101
Manufactures and sells plastic injection moulding
machines and related products.
CIM Company Ltd./(1)/ 1,800,000 1,510,165
Diversified company with interests in property
and investment, public transportation, trading
and hotel operations.
Shanghai Industrial Holdings Ltd. 2,707,000 17,819,555
Manufacturer of cigarettes, pharmaceuticals
and carparts.
Siu Fung Ceramics Holdings Ltd./(1)/ 9,850,000 724,685
Manufacturer of a line of ceramics, machinery
and equipment.
Varitronix International Ltd. 1,560,000 2,154,501
Designs, manufactures and sells liquid crystal
displays and related products.
VTECH Holdings Ltd. 151,000 284,556
Designs, manufactures and distributes electronic
toys and games, personal computers, satellite
receivers, modems, telephones and other
electronic products.
Zhenhai Refining & Chemical Co. 3,858,000 2,228,403
Producer of petroleum and
petrochemical products
- --------------------------------------------------------------------------------
$ 27,355,966
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
15
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Machinery -- 0.1%
- --------------------------------------------------------------------------------
First Tractor Co./(a)/ 952,000 $ 724,982
Principally engaged in the manufacture of
agricultural tractors.
- --------------------------------------------------------------------------------
$ 724,982
- --------------------------------------------------------------------------------
Metals - Industrial -- 2.0%
- --------------------------------------------------------------------------------
Angang New Steel Co., Ltd. 19,264,000 $ 6,464,847
Producer of steel products comprising cold rolled
sheets, wire rods and thick plates, in the PRC.
Maanshan Iron & Steel Co. 14,000,000 4,427,235
Engaged in the coking, iron smelting, steel
smelting and steel rolling.
- --------------------------------------------------------------------------------
$ 10,892,082
- --------------------------------------------------------------------------------
Properties -- 18.6%
- --------------------------------------------------------------------------------
Cheung Kong Holdings, Ltd. 3,000,000 $ 31,752,177
Property development and construction.
Cheung Kong Infrastructure 2,525,000 7,398,193
Property development and construction.
China Overseas Land & Investment 11,744,000 8,640,310
Property development and investment, civil
engineering, foundation works, project
management and general trading.
China Resources Beijing Land 2,900,000 1,871,571
Property development.
Hong Kong Land Holdings Ltd. 3,095,000 8,944,550
Commercial property investment, development,
leasing and management.
New World Development 3,400,000 21,196,515
Property investment and development.
Sino Land Company 3,500,000 3,320,426
Property development.
Sun Hung Kai Properties Ltd. 871,000 9,893,256
Property development and investment,
hotel ownership.
Top Glory International Holdings 15,350,000 7,231,688
Principally engaged in property investment
and development.
- --------------------------------------------------------------------------------
$100,248,686
- --------------------------------------------------------------------------------
Telecommunications -- 1.1%
- --------------------------------------------------------------------------------
Hong Kong Telecom 2,684,000 $ 5,646,880
Engaged in the provisional telecommunication
services, the sale and rental of
telecommunications equipment.
- --------------------------------------------------------------------------------
$ 5,646,880
- --------------------------------------------------------------------------------
Transportation -- 7.2%
- --------------------------------------------------------------------------------
China Eastern Airlines/(a)/ 15,000,000 $ 5,324,298
Operates airlines in China.
China Merchants Holdings 10,636,000 33,634,333
Flagship of China Merchants Group and engaged
in the Industrial and Infrastructure business.
- --------------------------------------------------------------------------------
$ 38,958,631
- --------------------------------------------------------------------------------
Utilities -- 0.3%
- --------------------------------------------------------------------------------
Harbin Power Co. 4,600,000 $ 1,528,880
The largest manufacturer of power equipment in
China, which specializes in major components for
thermal power generating stations such as boilers
and steam turbines.
- --------------------------------------------------------------------------------
$ 1,528,880
- --------------------------------------------------------------------------------
Total Hong Kong
(identified cost $244,323,116) $426,431,808
- --------------------------------------------------------------------------------
Malaysia -- 2.4%
Consumer Products -- 0.0%
- --------------------------------------------------------------------------------
Hong Leong Industry Warrants/(a)/ 65,500 $ 35,181
Manufacturer and distributor of building
materials, motorcycles and manufacturer
of packaging products, integrated circuits
and semiconductors.
- --------------------------------------------------------------------------------
$ 35,181
- --------------------------------------------------------------------------------
Diversified Trading -- 1.3%
- --------------------------------------------------------------------------------
Advance Synergy Bhd 1,600,000 $ 875,813
Diversified company with interests in property
development, the quarrying and marketing of
marble and the operation of sawmills and trading
of sawn wood.
Kumpulan Guthrie Bhd 1,415,000 1,491,002
Plantation and property development.
Magnum Corp. Bhd 1,200,000 1,112,556
Operates the forecast betting game, investment
holding company (property development).
Sime Darby Bhd 1,568,000 3,701,403
Diversified company with interests in plantation
operation, chemical manufacturing, heavy
equipment and auto distribution.
- --------------------------------------------------------------------------------
$ 7,180,774
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
16
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Entertainment and Leisure -- 0.4%
- --------------------------------------------------------------------------------
Berjaya Sports Toto Bhd 815,000 $ 2,230,585
Runs Toto betting operations, provides
computer support services for betting operations
- --------------------------------------------------------------------------------
$2,230,585
- --------------------------------------------------------------------------------
Environmental Services -- 0.2%
- --------------------------------------------------------------------------------
Puncak Niaga Holdings Bhd 805,000 $ 817,944
Water treatment services in Selangor
state, Maylasia
- --------------------------------------------------------------------------------
$ 817,944
- --------------------------------------------------------------------------------
Properties -- 0.5%
- --------------------------------------------------------------------------------
S P Setia Bhd 1,500,000 $2,565,857
Prime developer with projects located in fast
growing areas such as Selangor, Johor and
Kuala Lumpur
- --------------------------------------------------------------------------------
$2,565,857
- --------------------------------------------------------------------------------
Total Malaysia
(identified cost $21,116,564) $12,830,341
- --------------------------------------------------------------------------------
Republic of Korea -- 2.0%
Construction -- 0.4%
- --------------------------------------------------------------------------------
Tae Young Corp. 49,410 $1,998,299
Korean construction firm with controlling stake in
a private broadcasting company Seoul
- --------------------------------------------------------------------------------
$1,998,299
- --------------------------------------------------------------------------------
Electric Utilities -- 0.7%
- --------------------------------------------------------------------------------
Korea Electric Power Corp. 155,000 $4,053,186
State run electric power supplier
- --------------------------------------------------------------------------------
$4,053,186
- --------------------------------------------------------------------------------
Electronics - Instruments -- 0.6%
- --------------------------------------------------------------------------------
Samsung Electronics 27,352 $3,075,540
Manufacturer of home appliances,
telecommunications products, computers
and semiconductors
- --------------------------------------------------------------------------------
$3,075,540
- --------------------------------------------------------------------------------
Electronics - Semiconductors -- 0.2%
- --------------------------------------------------------------------------------
LG Semicon 22,000 $ 977,507
One of the three Korean memory chip producers
- --------------------------------------------------------------------------------
$ 977,507
- --------------------------------------------------------------------------------
Insurance -- 0.1%
- --------------------------------------------------------------------------------
Samsung Fire & Marine Insurance 2,120 $ 555,546
Fire and marine, auto and individual
pension insurance
- --------------------------------------------------------------------------------
$ 555,546
- --------------------------------------------------------------------------------
Total Republic of Korea
(identified cost $11,053,783) $10,660,078
- --------------------------------------------------------------------------------
Singapore -- 3.5%
Consumer - Retail -- 0.2%
- --------------------------------------------------------------------------------
Cerebos Pacific Ltd. 386,000 $1,039,868
Manufacturer and distributor of food products
- --------------------------------------------------------------------------------
$1,039,868
- --------------------------------------------------------------------------------
Financial -- 0.7%
- --------------------------------------------------------------------------------
Overseas Union Bank (Foreign) 869,000 $3,930,439
Commercial banking
- --------------------------------------------------------------------------------
$3,930,439
- --------------------------------------------------------------------------------
Industrial / Manufacturing -- 1.6%
- --------------------------------------------------------------------------------
Clipsal Industries Holdings Ltd. 2,400,000 $7,920,000
Develops, manufactures, and markets electric
installation products
Clipsal Industries Holdings Ltd. Warrants/(a)/ 234,000 407,160
Develops, manufactures, and markets electric
installation products
- --------------------------------------------------------------------------------
$8,327,160
- --------------------------------------------------------------------------------
Transportation -- 1.0%
- --------------------------------------------------------------------------------
Keppel Land Limited 1,969,000 $5,122,390
Keppel Land Limited Warrants/(a)/ 508,000 402,509
Shipping company
- --------------------------------------------------------------------------------
$ 5,524,899
- --------------------------------------------------------------------------------
Total Singapore
(identified cost $18,405,321) $18,822,366
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
17
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Taiwan -- 8.0%
Banks and Money Services -- 1.1%
- --------------------------------------------------------------------------------
Bank Sinopac 2,484,531 $ 2,145,417
One of the best new banks in Taiwan listed on the
OTC market
Bank Sinopac Rights/(a)/ 163,737 21,664
One of the best new banks in Taiwan listed on the
OTC market
International Commercial Bank China 1,792,000 3,587,744
International bank in Taiwan with strong
asset quality
- --------------------------------------------------------------------------------
$ 5,754,825
- --------------------------------------------------------------------------------
Computer Equipment -- 2.1%
- --------------------------------------------------------------------------------
Asustek Computer, Inc. 450,000 $10,137,535
Highly profitable motherboard producer in Taiwan
supplying to Intel
Compal Electronics 269,700 1,295,912
Dedicated notebook PC maker in Taiwan
supplying to Dell and Compaq
- --------------------------------------------------------------------------------
$11,433,447
- --------------------------------------------------------------------------------
Construction -- 0.4%
- --------------------------------------------------------------------------------
BES Engineering Corp. 1,843,000 $ 2,310,167
Second largest contractor in Taiwan active in
public works
- --------------------------------------------------------------------------------
$ 2,310,167
- --------------------------------------------------------------------------------
Industrial / Manufacturing -- 2.1%
- --------------------------------------------------------------------------------
China Motor Co. Ltd. 10 $ 34
Car manufacturer
Formosa Chemical Fiber 55,075 72,296
Second largest global nylon fiber manufacturer
Formosa Plastics 86,813 188,921
Principal supplier of intermediate resins and fiber
to other group members of the Formosa Plastics
Group. Producer of high density polyethylene
and polyvinyl chloride
Grand Pacific Petrochemicals 15 13
The company is the second largest styrene
monomer producer
Nan Ya Plastic 4,232,513 11,052,872
Largest global downstream plastics manufacturer
and Taiwan's largest polyester fiber producer
- --------------------------------------------------------------------------------
$11,314,136
- --------------------------------------------------------------------------------
Insurance -- 1.1%
- --------------------------------------------------------------------------------
Cathay Life Insurance 1,207,443 $5,969,946
Underwrites endowment, life, accident and
medical policies through a service network
of 22 branches, 341 operating units and over
29,000 agents
- --------------------------------------------------------------------------------
$5,969,946
- --------------------------------------------------------------------------------
Metals - Industrial -- 0.1%
- --------------------------------------------------------------------------------
Yieh Phui Enterprise 276,750 $ 284,266
A specialty steel producer in Taiwan
- --------------------------------------------------------------------------------
$ 284,266
- --------------------------------------------------------------------------------
Paper and Forest Products -- 0.3%
- --------------------------------------------------------------------------------
Cheng Loong 2,700,000 $1,767,409
Taiwan's largest corrugated carton producer
- --------------------------------------------------------------------------------
$1,767,409
- --------------------------------------------------------------------------------
Transportation -- 0.8%
- --------------------------------------------------------------------------------
Wan Hai Lines Ltd. 2,086,137 $4,031,358
Shipping company
- --------------------------------------------------------------------------------
$4,031,358
- --------------------------------------------------------------------------------
Total Taiwan
(identified cost $35,155,162) $42,865,554
- --------------------------------------------------------------------------------
Thailand -- 1.1%
Utilities -- 1.1%
- --------------------------------------------------------------------------------
Electricity Generating (Foreign) 3,352,770 $5,886,356
EGCOMP was set up in 1992 for the purpose of
partly privatizing electricity in Thailand
- --------------------------------------------------------------------------------
$5,886,356
- --------------------------------------------------------------------------------
Total Thailand
(identified cost $7,024,820) $ 5,886,356
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
18
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
The Philippines -- 0.0%
Industrial / Manufacturing -- 0.0%
- --------------------------------------------------------------------------------
Bacnotan Consolidated Industries 272 $ 409
Owner of companies that produce building
materials, primarily cement
Fortune Cement Corp. 665,000 76,062
Manufactures and distributes cement
- --------------------------------------------------------------------------------
$ 76,471
- --------------------------------------------------------------------------------
Total The Philippines
(identified cost $267,123) $ 76,471
- --------------------------------------------------------------------------------
United States -- 2.4%
Conglomerates -- 1.6%
- --------------------------------------------------------------------------------
Citic Pacific Ltd. 1,600,000 $ 8,529,203
Diversified company engaged in infrastructure,
trading, and distribution, property and
industrial manufacturing
- --------------------------------------------------------------------------------
$ 8,529,203
- --------------------------------------------------------------------------------
Electric Utilities -- 0.8%
- --------------------------------------------------------------------------------
AES Corp. 121,800 $ 4,506,600
Electric generating facility
- --------------------------------------------------------------------------------
$ 4,506,600
- --------------------------------------------------------------------------------
Total United States
(identified cost $12,244,040) $ 13,035,803
- --------------------------------------------------------------------------------
Total Stocks and Warrants
(identified cost $351,765,886) $531,635,836
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.1% $ 6,146,042
- --------------------------------------------------------------------------------
Net Assets -- 100% $537,781,878
- --------------------------------------------------------------------------------
</TABLE>
Investment descriptions are unaudited.
/(1)/Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
/(a)/Non-income producing security.
See notes to financial statements
19
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
(Expressed in United Stated Dollars)
Top Ten Holdings
<TABLE>
<CAPTION>
Percentage
Industry of Net
Company Sector Assets Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HSBC Holdings PLC Financial 7.36 % $ 39,599,870
China Merchants Holdings Transportation 6.25 33,634,333
Cheung Kong Holdings, Ltd. Properties 5.90 31,752,177
Hutchison Whampoa Diversified Trading 5.88 31,636,012
China Resources Enterprises Diversified Trading 4.99 26,822,201
China Everbright Pacific Ltd. Diversified Trading 4.36 23,439,219
New World Development Properties 3.94 21,196,515
Shanghai Industrial Holdings Ltd. Industrial/Manufacturing 3.31 17,819,555
Hang Seng Bank Financial 2.11 11,344,305
Nan Ya Plastic Industrial / Manufacturing 2.06 11,052,872
<CAPTION>
Top Ten Industry Sectors
Percentage
of Net
Industry Sector Assets Value
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Diversified Trading 29.94% $ 161,015,949
Properties 19.12 102,814,543
Financial 10.51 56,515,582
Transportation 9.02 48,514,888
Industrial / Manufacturing 8.89 47,780,529
Banks and Money Services 3.24 17,416,394
Electric Utilities 2.84 15,294,152
Computer Equipment 2.18 11,723,863
Metals - Industrial 2.08 11,176,348
Chemicals 1.96 10,565,473
</TABLE>
See notes to financial statements
20
<PAGE>
Greater China Growth 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, $351,765,886) $531,635,836
Cash 4,780,012
Foreign currency, at value
(identified cost, $1,182,161) 1,165,975
Dividends and interest receivable 843,814
Deferred organization expenses (Note 1C) 5,877
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Total assets $538,431,514
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Liabilities
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Foreign capital gains tax payable $ 520,365
Accrued expenses 129,271
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Total liabilities $ 649,636
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Net Assets applicable to investors' interest in Portfolio $537,781,878
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Sources of Net Assets
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Net proceeds from capital contributions and withdrawals $357,931,473
Net unrealized appreciation of investments and foreign
currency (computed on the basis of identified cost) 179,850,405
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Total $537,781,878
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<CAPTION>
Statement of Operations
For the Year Ended
August 31, 1997
(Expressed in United States Dollars)
Investment Income (Note 1I)
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<S> <C>
Dividends (net of foreign taxes, $583,182) $ 9,710,430
Interest 47,423
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Total income $ 9,757,853
- --------------------------------------------------------------------------------
Expenses
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Investment adviser fee (Note 2) $ 3,890,037
Administration fee (Note 2) 1,295,045
Compensation of Trustees not members of the Administrator's
organization (Note 2) 14,682
Custodian fee (Note 1D) 815,088
Legal and accounting services 100,196
Amortization of organization expenses (Note 1C) 28,638
Miscellaneous 56,657
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Total expenses $ 6,200,343
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Deduct -- Reduction of custodian fee (Note 1D) $ 173,015
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Total expense reductions $ 173,015
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Net expenses $ 6,027,328
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Net investment income $ 3,730,525
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Realized and Unrealized Gain (Loss) on Investments
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (net of foreign capital gains
taxes $442,815) $ 34,537,994
Foreign currency and forward foreign currency exchange
contract transactions (604,741)
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Net realized gain on investment transactions $ 33,933,253
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $106,262,008
Foreign currency and forward foreign currency exchange
contract transactions (1,619)
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Net change in unrealized appreciation (depreciation) $106,260,389
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Net realized and unrealized gain on investments $140,193,642
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Net increase in net assets resulting from operations $143,924,167
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</TABLE>
See notes to financial statements
21
<PAGE>
Greater China Growth 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 $ 3,730,525 $ 5,301,525
Net realized gain on
investment transactions 33,933,253 13,787,497
Net change in unrealized
appreciation (depreciation) 106,260,389 16,641,291
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Net increase in net assets
resulting from operations $ 143,924,167 $ 35,730,313
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Capital transactions --
Contributions $ 259,385,555 $ 135,099,898
Withdrawals (375,825,403) (250,949,710)
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Net decrease in net assets from
capital transactions $(116,439,848) $(115,849,812)
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Net increase (decrease)
in net assets $ 27,484,319 $ (80,119,499)
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Net Assets
- -----------------------------------------------------------------------
At beginning of year $ 510,297,559 $ 590,417,058
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At end of year $ 537,781,878 $ 510,297,559
- -----------------------------------------------------------------------
</TABLE>
See notes to financial statements.
22
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data (Expressed in United States Dollars)
<TABLE>
<CAPTION>
Year Ended August 31,
-----------------------------------------------------------------------
1997 1996 1995 1994 1993 *
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<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets
- ----------------------------------------------------------------------------------------------------------------------
Expenses /(1)/ 1.19% 1.19% 1.10% 1.15% 1.38%+
Expenses after custodian fee reduction 1.16% 1.12% -- -- --
Net investment income 0.72% 0.94% 1.35% 0.73% 0.38%+
Portfolio Turnover 48% 42% 32% 36% 18%
- ----------------------------------------------------------------------------------------------------------------------
Average Commission Rate Paid/(2)/ $ 0.0412 $ 0.0070 $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $537,782 $510,298 $590,417 $732,613 $208,043
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, October 28, 1992, to August 31,
1993.
/(1)/The expense ratios for the year ended August 31, 1996 and the periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund to increase its
expense ratio by the effect of any expense offset arrangements with its
service providers. The expense ratios for each of the periods ended on or
before August 31, 1995 have not been adjusted to reflect this change.
/(2)/Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the fiscal year by the total number of
shares purchased and sold during the fiscal year for which commissions were
charged. For fiscal years beginning on or after September 1, 1995, 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
23
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS
(Expressed in United States Dollars)
1 Significant Accounting Policies
---------------------------------------------------------------------------
Greater China Growth Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 as a diversified, open-end investment company
which was organized as a trust under the laws of the State of New York on
September 1, 1992. 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
individually 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 Portfolio'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 Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian to the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by credits which are determined based on the average daily cash
balance the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reflected as a reduction of
operating expense in the Statement of Operations.
E 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. If the Portfolio enters into a closing
transaction, the Portfolio will realize, for book purposes, a gain or loss
equal to the difference between the value of the financial futures contract
to sell and financial futures contract to buy.
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.
G 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
24
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
(Expressed in United States Dollars)
investment transactions attributable to foreign currency rates are recorded
for financial statement purposes as net realized gains and losses on
investments. That portion of unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not
separately disclosed.
H 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.
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.
2 Investment Adviser Fee and Other Transactions with Affiliates
-----------------------------------------------------------------------------
The investment adviser fee is earned by Lloyd George Management (Bermuda)
Limited (the Adviser), an affiliate of Eaton Vance, as compensation for
management and investment advisory services rendered to the Portfolio. Under
the advisory agreement, the Adviser receives a monthly fee 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 equivalent to 0.75% of
average net assets. In addition, an administrative fee is earned by Eaton
Vance Management (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
administrative fee was 0.25% of average net assets. Except as to Trustees of
the Portfolio who are not members of the Adviser or EVM's organization,
officers and Trustees receive remuneration for their services to the
Portfolio out of such investment adviser and administrative fees. Certain of
the officers and Trustees of the Portfolio are officers or directors/trustees
of the above organizations.
3 Investment Transactions
-----------------------------------------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $248,774,611 and $357,681,961, respectively.
4 Federal Income Tax Basis of Investments
-----------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investments
owned at August 31, 1997, as computed on a federal income tax basis, were as
follows:
<TABLE>
<S> <C>
Aggregate cost $ 351,765,886
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 204,021,361
Gross unrealized depreciation (24,151,411)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 179,869,950
-----------------------------------------------------------------------------
</TABLE>
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
25
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
(Expressed in United States Dollars)
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
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. There were no
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 committed $120 million unsecured line of credit
agreement with a group of banks. The Portfolio may temporarily borrow from
the line of credit to satisfy redemption requests or settle investment
transactions. Interest is charged to each portfolio or fund based on its
borrowings at an amount above the banks' adjusted certificate of deposit
rate, eurodollar rate or federal funds rate. In addition, a fee computed at
an annual rate of 0.15% on the daily unused portion of the line of credit is
allocated among the participating portfolios and funds at the end of each
quarter. The Portfolio did not have any significant borrowings or allocated
fees during the year.
26
<PAGE>
Greater China Growth Portfolio as of August 31, 1997
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors
of Greater China Growth Portfolio
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Greater China Growth Portfolio as of August 31,
1997, and the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended August 31, 1997 and 1996
and the supplementary data for each of the years in the four year period ended
August 31, 1997, and for the period from the start of business, October 28, 1992
to August 31, 1993. These financial statements and supplementary data are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and supplementary data based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
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 supplementary data present fairly,
in all material respects, the financial position of Greater China Growth
Portfolio at August 31, 1997, the results of its operations, the changes in its
net assets and supplementary data for the respective stated periods, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 10, 1997
27
<PAGE>
EV Classic Greater China Growth Fund as of August 31, 1997
INVESTMENT MANAGEMENT
EV Classic Greater China Growth Fund
<TABLE>
<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
Greater China Growth Portfolio
Officers Independent Trustees
Hon. Robert Lloyd George Hon. Edward K.Y. Chen
President, Trustee and Professor and Director, Center for Asian Studies,
Co-Portfolio Manager University of Hong Kong
James B. Hawkes Donald R. Dwight
Vice President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
Scobie Dickinson Ward
Vice President, Assistant Samuel L. Hayes, III
Secretary, Assistant Treasurer, Jacob H. Schiff Professor of Investment Banking,
and Co-Portfolio Manager Harvard University Graduate School of
Business Administration
William Walter Raleigh Kerr
Vice President and Norton H. Reamer
Assistant Treasurer President and Director, United Asset
Management Corporation
James L. O'Connor
Vice President and Treasurer
Alan R. Dynner
Vice President and Secretary
</TABLE>
28
<PAGE>
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<PAGE>
Sponsor and Manager of
EV Classic Greater China Growth Fund &
Administrator of Greater China Growth Portfolio
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Adviser of Greater China Growth Portfolio
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
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
Transfer Agent
First Data Investor Services Group
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
EV Classic Greater China Growth 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 distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
- --------------------------------------------------------------------------------
C-CGSRC-10/97
