<PAGE>
[EATON VANCE LOGO [PHOTO OF
APPEARS HERE] CALCULATOR AND NEWSPAPER]
Annual Report August 31, 1997
[PHOTO OF N.Y. STOCK EXCHANGE
BUILDING & FLAG]
EV
TRADITIONAL
GROWTH
FUND
Eaton Vance
Global Management-Global Distribution
[PHOTO OF TRADING FLOOR AT
N.Y. STOCK EXCHANGE]
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
LETTER TO SHAREHOLDERS
[PHOTO OF JAMES B. HAWKES APPEARS HERE]
During the year ended August 31, 1997, EV Traditional Growth Fund had a total
return of 33.0%./1/ This return resulted from an increase in net asset value to
$10.36 per share on August 31, 1997 from $9.24 per share on August 31, 1996 and
the reinvestment of distributions totaling $1.745 per share. By comparison, the
average total return for mutual funds in the Lipper Growth Funds Category was
33.5% during this period.*
The economic environment in the past year has been extraordinary for the equity
markets...
Over the past year, the sustained growth of the U.S. economy and low inflation
have produced a near-perfect investment environment in which prices of large
capitalization stocks have soared to record levels. In the year ended August 31,
1997, the S&P 500 Index had a total return of 40.7%.* An increase in
volatility has accompanied higher stock valuations, however. Within a six-week
period in March and April, the S&P 500 Index declined almost 10% and then fully
recovered to reach new record highs. In August, the S&P 500 declined almost 7%
but again recovered this loss by the end of September.*
Short-term interest rates rose on March 25 when the Federal Reserve raised the
Fed Funds Rate 0.25% to 5.50%. Long-term bonds sold off in the first quarter but
rallied in the second and third quarters when inflation fears were quelled. From
a peak of over 7% at the end of March, the yield on the 30-year Treasury bond
has generally trended downward, reaching a level of 6.23% on July 30 before
closing the period at 6.61% on August 29. By reducing the cost of borrowing,
lower interest rates have fueled mergers and acquisitions activity and increased
corporate profitability - both of which have contributed to stock gains.
...But increased volatility may suggest a peaking bull market...
The increase in volatility during the past six months is symptomatic of a market
that is highly valued. In the pages that follow, Portfolio Manager Thomas E.
Faust Jr. discusses the current investment climate and its implications for
investors. Eaton Vance continues to believe that active, professional management
and a long-term outlook are a sensible way to approach investing in any market
environment.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
October 7, 1997
- -------------------------------------------------------------------------------
Growth of a $10,000 Investment/2/
- ----------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DATE VALUE
---- -----
<S> <C>
8/31/95 $ 10,000
9/30/95 9,627
10/31/95 9,457
11/30/95 9,831
12/31/95 10,103
1/31/96 10,361
2/29/96 10,619
3/31/96 10,695
4/30/96 11,001
5/31/96 11,307
6/30/96 11,107
7/31/96 10,448
8/31/96 10,872
9/30/96 11,373
10/31/96 11,409
11/30/96 12,093
12/31/96 11,945
1/31/97 12,791
2/28/97 12,778
3/31/97 12,202
4/30/97 12,842
5/31/97 13,740
6/30/97 14,265
7/31/97 15,316
8/31/97 14,461
</TABLE>
Ten Largest Holdings/3/
- ----------------------------------------------
As a percentage of total net assets
<TABLE>
<S> <C>
Sofomor Danek Group, Inc. 4.5%
Allstate Corp. 3.9
Intel Corp. 3.6
Franklin Resources, Inc. 3.2
MGIC Investment 3.1
Federal National Mortgage Association 2.9
Eli Lilly & Company 2.9
General Re Corp. 2.7
Sealed Air Corp. 2.6
Norwest Corp. 2.6
</TABLE>
/1/ This return does not include the maximum 5.75% initial sales charge.
/2/ For illustration purposes only. Chart reflects a hypothetical investment on
8/31/95 with the applicable 5.75% sales charge deducted and includes
reinvestment of all distributions.
/3/ Ten largest holdings are as of 8/31/97 only and may not be representative
of the Portfolio's current or future investments. Holdings accounted for
32.0% of the Portfolio's investments at 8/31/97, determined by dividing the
total market value of the holdings by the total net assets of the Portfolio
on that date.
* It is not possible to invest directly in an index, average, or Lipper
Category.
Part performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
- -------------------------------------------------------------------------------
Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
2
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
MANAGEMENT DISCUSSION
An interview with Thomas E. Faust Jr., Vice President and Manager of the Eaton
Vance Growth Portfolio
Q. How would you describe the stock market's performance over the past
12 months?
A. The market for stocks has been unusually strong during this 12-month period.
Several factors have contributed to making this an optimal environment for
the equity markets: rising earnings and earnings expectations, stable
interest rates, low inflation, favorable demographic trends - the aging of
baby boomers in prime savings years and their belief in stocks as the best
vehicle for retirement funds - and strong money flows into the stock market.
Interest rates have been a factor, but not the driving force of this rally.
Rather, it has resulted from strong, consistent economic growth with low
inflation, which, putting everything else aside, is a recipe for high stock
valuations. Stocks are expensive relative to historical standards in terms of
price to earnings, price to book value, and price to cash flow, and the issue
we face now is whether growth rates of companies have accelerated to an
extent sufficient to justify the higher prices. So far, investors seem to
believe higher valuations are justified.
Q. How concerned are you about the market's volatility?
A. U.S. stock market volatility is not as high as some people may think - given
the number of days with movements of more than 100 points in the Dow Jones
Industrial Average - because the overall level of the market is so much
higher that a 100-point swing is not terribly significant. Over the past few
months, the market - on a percentage basis - has been somewhat more volatile
than the historical average, but not overly so.
Q. Does the Fund try to time the market by raising and lowering cash levels, or
does it tend to remain fully invested?
A. As we have mentioned in many reports, market timing is generally not our
style. We typically remain fully invested, as long as we can identify
attractive stocks in which to invest. The Fund's cash levels now are higher
than they have been, but remain within our normal, conservative range.
[PHOTO OF THOMAS E. FAUST, JR. APPEARS HERE]
Thomas E. Faust Jr.,
Portfolio Manager
Q. What sectors look attractive to you now?
A. The Fund currently has significant exposure to the financial and health care
sectors, both of which have done quite well over the past year. We continue
to seek high-quality companies with strong growth prospects, reasonable
valuations, and with an identified catalyst for outperformance. While we
typically do not make "sector bets," we have found many financial services
and health care companies that meet our criteria. Going forward, we believe
companies in these industries should continue to perform well.
Q. How long do you think the U.S. economy can continue to grow with low
inflation?
A. The so-called "new economy" theory - which essentially states that the
historical link between growth and inflation has weakened due to technology-
driven productivity enhancements and the globalization of many markets - is
getting quite a lot of media attention. It is hard not to give the theory
some credibility. We are seeing a sustained level of high growth, high
productivity and low inflation that has not been seen for at least three
decades. While I would not say that the basic
3
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
MANAGEMENT DISCUSSION CONT'D
rules of economics have fundamentally changed, there are major sectors of the
economy - especially technology - where we are actually expecting annual
price decreases. This has a very powerful effect on the overall economy. I
certainly would not say that we will never have inflation again, but there is
simply no evidence at this point of a serious inflationary threat. And, with
a strong dollar helping keep the price of imports down, our current outlook
for inflation is that it should continue to remain low.
Q. Some of the stalwart blue-chip growth stocks have recently had steep price
declines. Have you added any of these to the Fund?
A. No. Rather than focusing on stocks that have had large price decreases, but
which may remain richly valued or which may have faltering fundamentals, we
look for companies with good financial characteristics, attractive valuations
and positive business momentum - thereby offering better risk/reward
possibilities. Recently, we have emphasized investments in certain smaller
companies with high growth rates and good prospects for sustaining above-
average growth. We think this makes sense. A good example is Sofomor Danek,
our largest holding, which is an established, market-leading company within
the spinal implant business. It has a price/earnings ratio of 23 times
earnings, a growth rate of more than 20 percent, rising earnings estimates, a
strong competitive position, and interesting new products. When I compare a
company with these characteristics to companies that have lower growth rates
but much higher price multiples, I am much more inclined to stick to the
former and continue to seek others like it. In recent years we have seen
large, blue chip consumer products companies go from expensive to even more
expensive, sometimes without fundamental justification. We think the best
opportunities in the market lie elsewhere.
Five Largest Sectors - 8/31/97/*/
-------------------------------------
As a percentage of total net assets
<TABLE>
<S> <C>
Drugs 11.3%
Medical Products 9.6%
Insurance 8.6%
Financials 8.4%
Specialty Chemical &
Materials 6.2%
</TABLE>
/*/ Sectors are as of 8/31/97 only and may not be representative of the
Portfolio's current or future investments. Sectors accounted for 44.1%
of the Portfolio's investments, determined by dividing the total market
value of the holdings by the total net assets.
Q. Can you give examples of recent additions to the Fund?
A. Absolutely. Magna International, a new holding, is a good example of the type
of company we are looking for. The company provides auto parts and value-
added assemblies to automobile manufacturers, which is a very good business
to be in because of the tremendous increase in outsourcing by Ford, GM and
Chrysler. Magna is selling at 14 times earnings and has an expected annual
growth rate of 15%. The company has executed very well, and continues to
benefit from the increased efficiencies within the automotive industry.
Unilever, another recent purchase, is a global consumer products company that
has traditionally been a less profitable competitor of companies like Procter
& Gamble. We bought the stock because of management changes that we feel have
the potential to increase profit margins and, consequently, earnings and the
share price.
4
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
MANAGEMENT DISCUSSION CONT'D
Q. With price/earnings ratios at such a high level, have you used any other
measures to value companies?
A. I don't focus on price/earnings ratios exclusively. I look primarily at
growth and sustainability of growth. We analyze a company's business and its
industry environment to assess if it is likely to provide continued growth.
Companies like Coca-Cola, though probably overpriced, have several
advantages-global brand dominance, market leadership, high margins, and
tremendous cash flow. These things imply sustainability and durability and
inspire confidence that above-average profit growth can be maintained over
time.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
EV Traditional
Growth Fund
EV Traditional (including maximum S&P 500
Date Growth Fund 5.75% sales charge) Index
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
8/31/87 $10,000 $9,425 $10,000
9/30/87 $9,846 $9,280 $9,826
10/31/87 $7,607 $7,170 $7,688
11/30/87 $7,103 $6,695 $7,031
12/31/87 $7,793 $7,345 $7,611
1/31/88 $7,901 $7,447 $7,919
2/28/88 $8,261 $7,786 $8,250
3/31/88 $8,116 $7,650 $8,044
4/30/88 $8,225 $7,752 $8,120
5/31/88 $8,189 $7,718 $8,146
6/30/88 $8,586 $8,092 $8,577
7/31/88 $8,478 $7,990 $8,531
8/31/88 $8,104 $7,638 $8,201
9/30/88 $8,347 $7,867 $8,604
10/31/88 $8,480 $7,993 $8,828
11/30/88 $8,299 $7,821 $8,661
12/31/88 $8,458 $7,971 $8,867
1/31/89 $9,071 $8,549 $9,497
2/28/89 $8,933 $8,419 $9,222
3/31/89 $9,147 $8,621 $9,494
4/30/89 $9,588 $9,036 $9,970
5/31/89 $9,890 $9,321 $10,320
6/30/89 $9,814 $9,250 $10,330
7/31/89 $10,544 $9,938 $11,243
8/31/89 $10,770 $10,151 $11,418
9/30/89 $10,874 $10,249 $11,435
10/31/89 $10,741 $10,123 $11,147
11/30/89 $10,861 $10,236 $11,331
12/31/89 $11,024 $10,390 $11,668
1/31/90 $10,270 $9,679 $10,865
2/28/90 $10,431 $9,831 $10,958
3/31/90 $10,702 $10,086 $11,315
4/30/90 $10,404 $9,806 $11,011
5/31/90 $11,595 $10,928 $12,023
6/30/90 $11,662 $10,992 $12,023
7/31/90 $11,446 $10,788 $11,961
8/31/90 $10,485 $9,882 $10,833
9/30/90 $9,803 $9,239 $10,379
10/31/90 $9,487 $8,941 $10,309
11/30/90 $10,179 $9,593 $10,927
12/31/90 $10,422 $9,822 $11,304
1/31/90 $10,832 $10,210 $11,774
2/28/91 $11,760 $11,084 $12,566
3/31/91 $11,989 $11,300 $12,940
4/30/91 $12,005 $11,314 $12,945
5/31/91 $12,616 $11,891 $13,444
6/30/91 $11,898 $11,214 $12,912
7/31/91 $12,586 $11,862 $13,491
8/31/91 $12,922 $12,179 $13,756
9/30/91 $12,769 $12,035 $13,602
10/31/91 $13,307 $12,542 $13,763
11/30/91 $12,861 $12,122 $13,159
12/31/91 $14,555 $13,718 $14,734
1/31/92 $14,442 $13,612 $14,440
2/28/92 $14,474 $13,642 $14,579
3/31/92 $13,970 $13,167 $14,363
4/30/92 $13,775 $12,983 $14,764
5/31/92 $13,791 $12,998 $14,778
6/30/92 $13,580 $12,799 $14,637
7/31/92 $14,002 $13,197 $15,213
8/31/92 $13,856 $13,059 $14,848
9/30/92 $14,052 $13,244 $15,098
10/31/92 $14,215 $13,398 $15,130
11/30/92 $15,130 $14,260 $15,588
12/31/92 $15,316 $14,435 $15,855
1/31/92 $15,224 $14,349 $15,966
2/28/93 $14,709 $13,863 $16,134
3/31/93 $15,097 $14,229 $16,545
4/30/93 $14,100 $13,289 $16,124
5/31/93 $14,395 $13,567 $16,491
6/30/93 $14,266 $13,446 $16,623
7/31/93 $14,026 $13,219 $16,535
8/31/93 $14,913 $14,055 $17,104
9/30/93 $15,061 $14,195 $17,051
10/31/93 $15,191 $14,317 $17,382
11/30/93 $14,671 $13,828 $17,158
12/31/93 $14,931 $14,073 $17,445
1/31/94 $15,619 $14,720 $18,012
2/28/94 $15,266 $14,388 $17,471
3/31/94 $14,204 $13,387 $16,789
4/30/94 $14,278 $13,457 $16,983
5/31/94 $14,446 $13,615 $17,194
6/30/94 $13,812 $13,018 $16,861
7/31/94 $14,353 $13,527 $17,392
8/31/94 $14,837 $13,984 $18,046
9/30/94 $14,482 $13,649 $17,685
10/31/94 $14,800 $13,949 $18,055
11/30/94 $14,239 $13,420 $17,341
12/31/94 $14,273 $13,452 $17,682
1/31/95 $14,355 $13,530 $18,112
2/28/95 $14,994 $14,131 $18,765
3/31/95 $15,448 $14,560 $19,399
4/30/95 $15,531 $14,638 $19,941
5/31/95 $15,923 $15,007 $20,665
6/30/95 $16,439 $15,494 $21,244
7/31/95 $16,914 $15,942 $21,919
8/31/95 $17,203 $16,214 $21,912
9/30/95 $17,576 $16,565 $22,928
10/31/95 $17,265 $16,273 $22,813
11/30/95 $17,948 $16,916 $23,750
12/31/95 $18,444 $17,384 $24,303
1/31/96 $18,915 $17,828 $25,096
2/28/96 $19,387 $18,272 $25,270
3/31/96 $19,526 $18,403 $25,606
4/30/96 $20,085 $18,930 $25,950
5/31/96 $20,643 $19,456 $26,543
6/30/96 $20,278 $19,112 $26,753
7/31/96 $19,075 $17,978 $25,529
8/31/96 $19,849 $18,707 $26,009
9/30/96 $20,764 $19,570 $27,574
10/31/96 $20,829 $19,631 $28,294
11/30/96 $22,078 $20,808 $30,370
12/31/96 $21,808 $20,554 $29,869
1/31/97 $23,353 $22,010 $31,700
2/28/97 $23,329 $21,988 $31,888
3/31/97 $22,276 $20,995 $30,675
4/30/97 $23,446 $22,098 $32,466
5/31/97 $25,084 $23,642 $34,368
6/30/97 $26,044 $24,546 $36,018
7/31/97 $27,962 $26,354 $38,832
8/31/97 $26,400 $24,882** $36,602
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Performance+
- ------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- ------------------------------------------------------------------------------
<S> <C>
One Year 33.0%
Five Years 13.8
Ten Years 10.2
<CAPTION>
SEC Average Annual Total Returns (including maximum 5.75% sales charge)
- ------------------------------------------------------------------------------
<S> <C>
One Year 25.4%
Five Years 12.4
Ten Years 9.5
</TABLE>
* Source: Towers Data Systems, Bethesda, MD. 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.
The performance chart above compares the Fund's total return with that of a
broad-based securities market index. Returns are calculated by determining
the percentage change in net asset value (NAV) with all distributions
reinvested. The lines on the chart represent the total returns of $10,000
hypothetical investments in the Fund and the S&P 500 Stock Index, a broad-
based, widely recognized, unmanaged index of 500 common stocks. The Index's
total return does not reflect any commissions or expenses that would have
been incurred if an investor individually purchased or sold the securities
represented in the Index. It is not possible to invest directly in an index.
** This figure represents the Fund's performance including the Fund's maximum
5.75% initial sales charge.
+ Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC Returns reflect maximum
sales charge as noted.
5
<PAGE>
EV Traditional 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 Growth Portfolio, at value (Note 1A)
(identified cost, $105,916,058) $ 165,580,575
Receivable for Fund shares sold 129,873
Other assets 54,652
- --------------------------------------------------------------------------------
Total assets $ 165,765,100
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 16,344
Accrued expenses 72,649
- --------------------------------------------------------------------------------
Total liabilities $ 88,993
- --------------------------------------------------------------------------------
Net Assets for 15,997,503 shares of
beneficial interest outstanding $ 165,676,107
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $ 106,016,002
Accumulated distributions in excess of investment income (4,412)
Net unrealized appreciation of investments (computed on basis of
identified cost) 59,664,517
- --------------------------------------------------------------------------------
Total $ 165,676,107
- --------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share
- --------------------------------------------------------------------------------
($165,676,107 / 15,997,503 shares of
beneficial interest outstanding) $ 10.36
- --------------------------------------------------------------------------------
Computation of Offering Price
- --------------------------------------------------------------------------------
Offering price per share (100 / 95.25 of $10.36) $ 10.88
- --------------------------------------------------------------------------------
</TABLE>
On sales of $100,000 or more, the offering price is reduced.
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
August 31, 1997
Investment Income (Note 1B)
- --------------------------------------------------------------------------------
<S> <C>
Dividend income allocated from Portfolio
(net of foreign taxes, $7,564) $ 1,610,757
Interest income allocated from Portfolio
(includes security lending income) 236,313
Expenses allocated from Portfolio (1,109,084)
- --------------------------------------------------------------------------------
Total investment income $ 737,986
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Compensation of Trustees not members of the
Administrator's organization (Note 4) $ 3,020
Custodian fee 16,804
Service fees (Note 5) 164,595
Transfer and dividend disbursing agent fees 121,925
Printing and postage 79,599
Legal and accounting services 15,361
Registration fees 21,234
Miscellaneous 24,688
- --------------------------------------------------------------------------------
Total expenses $ 447,226
- --------------------------------------------------------------------------------
Net investment income $ 290,760
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------
Net realized gain --
Investment transactions (identified cost basis) $ 13,147,715
Foreign currency transactions 76
- --------------------------------------------------------------------------------
Net realized gain on investment transactions $ 13,147,791
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)--
Investment transactions $ 29,932,971
Foreign currency transactions (2,447)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 29,930,524
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 43,078,315
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 43,369,075
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
6
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Statement 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 income $ 290,760 $ 655,719
Net realized gain on investments 13,147,791 14,862,253
Net change in unrealized
appreciation (depreciation) 29,930,524 4,038,278
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 43,369,075 $ 19,556,250
- --------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income $ (290,760) $ (544,098)
In excess of net investment income (264,761) --
From net realized gain (13,147,791) (4,607,568)
In excess of net realized gain (11,492,907) --
Paid in capital (599,793) --
- --------------------------------------------------------------------------------
Total distributions to shareholders $ (25,796,012) $ (5,151,666)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $ 3,859,499 $ 3,289,100
Net asset value of shares
issued to shareholders
in payment of
distributions declared 21,757,950 4,324,311
Cost of shares redeemed (15,766,240) (14,732,257)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
from Fund share transactions $ 9,851,209 $ (7,118,846)
- --------------------------------------------------------------------------------
Net increase in net assets $ 27,424,272 $ 7,285,738
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $ 138,251,835 $ 130,966,097
- --------------------------------------------------------------------------------
At end of year $ 165,676,107 $ 138,251,835
- --------------------------------------------------------------------------------
<CAPTION>
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- --------------------------------------------------------------------------------
<S> <C> <C>
$ (4,412) $ 260,273
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Year Ended August 31,
-------------------------------------------------------------------------
1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value -- Beginning of year $ 9.240 $ 8.330 $ 7.960 $ 8.070 $ 8.520
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.020 $ 0.043 $ 0.024 $ 0.052 $ 0.030
Net realized and unrealized gain (loss) on investments 2.845 1.202 1.086 (0.092) 0.660
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 2.865 $ 1.245 $ 1.110 $ (0.040) $ 0.690
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.019) $ (0.035) $ (0.032) $ (0.060) $ --
In excess of net investment income (0.018) -- (0.018) -- --
From net realized gain on investments (0.890) (0.300) (0.083) (0.010) (1.140)
In excess of net realized gain on investments (0.762) -- (0.607) -- --
Paid in capital (0.056) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (1.745) $ (0.335) $ (0.740) $ (0.070) $ (1.140)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 10.360 $ 9.240 $ 8.330 $ 7.960 $ 8.070
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 33.01% 15.38% 15.95% (0.75)% 7.63%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000 omitted) $ 165,676 $138,252 $130,966 $130,269 $143,264
Ratio of net expenses to average net assets/(2)/ 1.01% 0.98% 0.98% 0.95% 0.89%
Ratio of net investment income to average net assets 0.19% 0.48% 0.42% 0.61% 0.56%
Portfolio Turnover/(3)/ -- -- -- 89% 84%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(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-dividend date. Total return is
not computed on an annualized basis.
/(2)/Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/Portfolio Turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The portfolio
turnover rate for the period since the Fund transferred substantially all
of its investable assets to the Portfolio is shown in the Portfolio's
financial statements which are included elsewhere in this report.
See notes to financial statements
8
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-----------------------------------------------------------------------------
EV Traditional 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 (1940 Act), as amended, as an open-end
management investment company. The Fund invests all of its investable assets
in interests in the Growth Portfolio (the "Portfolio"), a New York Trust,
having the same investment objective as the Fund. The value of the Fund's
investment in the Portfolio reflects the Fund's proportionate interest in the
net assets of the Portfolio, (92.1% 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 of the Trust adopted a multiple class
plan for the Fund which permits the Fund to issue more than one class of
shares. Initially, the Fund will offer three classes of shares and, effective
September 1, 1997, the existing shares of the Fund will be designated as
Class A shares. On June 23, 1997, the Board of Trustees also approved a Plan
of Reorganization (the "Plan") for the Trust. Under the terms of the Plan,
the Fund will acquire substantially all of the assets and liabilities of the
EV Marathon Growth Fund (the Marathon Fund) and EV Classic Growth Fund (the
Classic Fund). The transactions will be structured for tax purposes to
qualify as a tax-free reorganization under the Internal Revenue Code. As a
result of the reorganization, shareholders of the Marathon Fund and the
Classic Fund will receive Class B shares and Class C shares of the Fund,
respectively. The reorganization will occur 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 to 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 fees are reflected as a reduction of operating
expenses on 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 income, including any
net realized gain on investments, option and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary.
Pursuant to Section 852 of the IRC, the Fund designated $20,393,838 as a
long-term capital gain distribution for its taxable year ended August 31,
1997.
E Other -- Investment transactions are accounted for on a trade-date basis.
F Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results
could differ from those estimates.
2 Distributions to Shareholders
-----------------------------------------------------------------------------
The Fund's policy is to distribute semi-annually substantially all of the net
investment income allocated to the Fund by the Portfolio (less the Fund's
direct expenses) and to distribute at least annually substantially all of its
net realized capital gains. Distributions are paid in the form of additional
shares of the Fund or, at the election of the shareholder, in cash. The Fund
distinguishes between
9
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
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
over distributions only 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 Shares of Beneficial Interest
-----------------------------------------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, 1997 August 31, 1996
-----------------------------------------------------------------------------
<S> <C> <C>
Sales 373,615 366,590
Issued to shareholders electing to
receive payment of distribution in
Fund shares 2,219,161 516,484
Redemptions (1,553,297) (1,649,722)
-----------------------------------------------------------------------------
Net Increase (Decrease) 1,039,479 (776,648)
-----------------------------------------------------------------------------
</TABLE>
4 Transactions with Affiliates
-----------------------------------------------------------------------------
Eaton Vance Management (EVM) serves only as the Administrator of the Fund,
but receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services.
See Note 2 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report. Except as to Trustees of the Fund and
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to the Fund out of such
investment adviser fee. Certain of the officers and Trustees of the Fund and
Portfolio are officers and directors/trustees of the above organizations.
5 Service Plan
-----------------------------------------------------------------------------
The Fund has adopted a Service plan (the "Plan") on July 7, 1993 pursuant to
Rule 12b-1 under the Investment Company Act of 1940 and the service fee
requirements of the revised sales charge rule of The National Association of
Securities Dealers, Inc. The Service Plan replaced the Fund's distribution
plan which became effective on June 12, 1989. The Service Plan provides that
the Fund may make payments of service fees to the Principal Underwriter,
Eaton Vance Management, Authorized Firms, or other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for any fiscal year.
The Trustees have implemented the Plan by authorizing the Fund to make
quarterly service fee payments to the Principal Underwriter and Authorized
Firms in amounts not expected to exceed 0.25% of that portion of the Fund's
average daily net assets for any fiscal year which is attributable to shares
of the Fund sold by such persons and remaining outstanding for at least
twelve months. During the year ended August 31, 1997, the Fund paid or
accrued $164,595 under the Service Plan to the Principal Underwriter and
Authorized Firms.
6 Investment Transactions
-----------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio aggregated
$4,161,863 and $20,741,005, respectively.
7 Subsequent Event
-----------------------------------------------------------------------------
Effective September 1, 1997, the EV Traditional Growth Fund will change its
name to Eaton Vance Growth Fund and shares of the Fund will be designated
Class A shares. Two additional classes of shares will also be offered.
10
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of EV Traditional Growth Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of EV
Traditional Growth Fund, a series of Eaton Vance Growth Trust, as of August 31,
1997, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period
ended August 31, 1997. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities held as of August
31, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of EV
Traditional Growth Fund, a series of Eaton Vance Growth Trust, as of August 31,
1997, the results of its operations for the year then ended, and the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years then ended, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND LLP
Boston, Massachusetts
September 25, 1997
11
<PAGE>
Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Common Stocks -- 94.5%
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Aerospace and Defense -- 2.4%
- --------------------------------------------------------------------------------
Boeing Co. 80,000 $ 4,355,000
Makes the Boeing 737, 747,
757, 767, and 777 jets,
which represent a variety of
passenger and cargo
configurations and
capabilities. Boeing's Defense
& Space Group has jointly
developed the F22 fighter
(with Lockheed Martin),
the V-22 Osprey tiltrotor
aircraft (Bell Helicopter
Textron) and the RAH-66
Comanche helicopter (with
Sikorsky)
- --------------------------------------------------------------------------------
$ 4,355,000
- --------------------------------------------------------------------------------
Auto and Parts -- 2.2%
- --------------------------------------------------------------------------------
Magna International, Inc. Class A 60,000 $ 3,975,000
Based in Canada, Magna
International is a diversified
supplier of advanced
automotive systems
- --------------------------------------------------------------------------------
$ 3,975,000
- --------------------------------------------------------------------------------
Banks - International -- 0.8%
- --------------------------------------------------------------------------------
Banco Latinoamericano de 30,000 $ 1,361,250
Exportaciones
This specialized
multinational bank, based in
Panama City, primarily
provides short-term,
trade related financing to
stockholder banks
from 22 member countries in
Latin America and
the Caribbean
- --------------------------------------------------------------------------------
$ 1,361,250
- --------------------------------------------------------------------------------
Banks - Regional -- 2.6%
- --------------------------------------------------------------------------------
Norwest Corp. 80,000 $ 4,595,000
Provides community banking
through more than 700
branches in a 16 state
region
- --------------------------------------------------------------------------------
$ 4,595,000
- --------------------------------------------------------------------------------
Beverages -- 2.3%
- --------------------------------------------------------------------------------
PepsiCo, Inc. 115,000 $ 4,140,000
Global soft drink producer
with businesses in snack
foods and fast food
restaurants
- --------------------------------------------------------------------------------
$ 4,140,000
- --------------------------------------------------------------------------------
Chemicals -- 3.9%
- --------------------------------------------------------------------------------
Monsanto Corp. 100,000 $ 4,393,750
Produces a range of products
for the agricultural,
home furnishings, automobile,
construction and personal
care markets
Praxair, Inc. 50,000 2,671,875
The largest producer of
industrial gases in North
and South America
- --------------------------------------------------------------------------------
$ 7,065,625
- --------------------------------------------------------------------------------
Computers and Business Equipment -- 3.3%
- --------------------------------------------------------------------------------
Hewlett Packard Co. 40,000 $ 2,452,500
One of the world's most
successful high tech
companies. Products include
servers, computers and
workstations for home and
business
Xerox Corp. 45,000 3,397,500
The dominant producer of
high end document processing
machines
- --------------------------------------------------------------------------------
$ 5,850,000
- --------------------------------------------------------------------------------
Drugs -- 11.3%
- --------------------------------------------------------------------------------
American Home Products Corp. 40,000 $ 2,880,000
Leading manufacturer of
prescription drugs, medical
supplies and diagnostics, as
well as agricultural
herbicides, consumer
medications and branded
food products
Astra AB Class A 213,333 3,410,175
Swedish based international
pharmaceutical firm with
drugs for the control of
ulcers and asthma
Elan Corp., PLC ADR* 95,000 4,322,500
Develops drug delivery systems
designed to improve and control
the absorption and utilization
of pharmaceutical compounds
Eli Lilly & Co. 50,000 5,231,250
A major U.S. drug company,
researches, produces and
markets pharmaceuticals
spanning the entire drug
spectrum
Pfizer, Inc. 80,000 4,430,000
A large international ethical
pharmaceutical manufacturer
with important positions in
hospital products and
animal health
- --------------------------------------------------------------------------------
$20,273,925
- --------------------------------------------------------------------------------
Electronics - Semiconductors -- 3.6%
- --------------------------------------------------------------------------------
Intel Corp. 70,000 $ 6,448,750
A manufacturer of
semiconductors and other
microcomputer components and
systems which comprise the
heart of the personal
computer
- --------------------------------------------------------------------------------
$ 6,448,750
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
12
<PAGE>
Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
Financial - Miscellaneous -- 8.4%
- --------------------------------------------------------------------------------
<S> <C> <C>
Federal National Mortgage 120,000 $ 5,280,000
Association
U.S. Government sponsored
mortgage lender and provider
of secondary mortgage
market
MBNA Corp. 112,500 4,324,219
Dominant issuer of
MasterCard/Visa credit cards
to affinity groups
MGIC Investment Corp. 110,000 5,534,375
The leading provider of
private mortgage
insurance coverage to U.S.
banks and other mortgage
suppliers
- --------------------------------------------------------------------------------
$15,138,594
- --------------------------------------------------------------------------------
Foods -- 1.9%
- --------------------------------------------------------------------------------
Unilever ADR 17,000 $ 3,421,250
One of the world's largest
packaged consumer goods
companies
- --------------------------------------------------------------------------------
$ 3,421,250
- --------------------------------------------------------------------------------
Health Services -- 0.3%
- --------------------------------------------------------------------------------
Covance, Inc.* 21,250 $ 387,813
The second largest contract
research organization in the
world offering a full range
of drug development services
to pharmaceutical and
biotechnology companies
worldwide
Quest Diagnostics, Inc.* 10,625 198,555
A major provider of clinical
labratory testing services
in the U.S. with over 30
regional and branch
laboratories that process
more than 60 million patient
requisitions each year
- --------------------------------------------------------------------------------
$ 586,368
- --------------------------------------------------------------------------------
Information Services -- 4.4%
- --------------------------------------------------------------------------------
Automatic Data Processing, 80,000 $ 3,645,000
Inc.
The leading independent
computing and payroll
processing services firm in
the U.S.
Reuters Holdings, PLC ADR 70,000 4,261,250
Worldwide provider of
proprietary financial data
and information
- --------------------------------------------------------------------------------
$ 7,906,250
- --------------------------------------------------------------------------------
Insurance -- 8.6%
- --------------------------------------------------------------------------------
Allstate Corp. 95,000 $ 6,940,937
Leading underwriter of
automotive and homeowners
insurance as well as a life
insurance carrier
General Re Corp. 25,000 $ 4,846,875
Is the parent company of
General Reinsurance, the
largest property/casualty
reinsurer in the U.S. and
one of the 3 largest in the
world
Mutual Risk Management Ltd. 80,000 3,700,000
Provides risk management
services to clients seeking
an alternative to traditional
commercial insurance,
particularly for workers'
compensation
- --------------------------------------------------------------------------------
$15,487,812
- --------------------------------------------------------------------------------
Investment Services -- 3.2%
- --------------------------------------------------------------------------------
Franklin Resources, Inc. 75,000 $ 5,803,125
Provides investment
management and related
services to a family of
equity and fixed income
mutual funds
- --------------------------------------------------------------------------------
$ 5,803,125
- --------------------------------------------------------------------------------
Machinery -- 1.9%
- --------------------------------------------------------------------------------
Deere & Co. 60,000 $ 3,360,000
The largest agricultural
equipment company and also
producer of earthmoving and
forestry machinery
- --------------------------------------------------------------------------------
$ 3,360,000
- --------------------------------------------------------------------------------
Medical Products -- 9.6%
- --------------------------------------------------------------------------------
Baxter International, Inc. 85,000 $ 4,520,938
Leading U.S. maker and
distributor of health
care products used in
hospitals and other
medical facilities
Boston Scientific Corp.* 65,000 4,582,500
Medical device manufacturer
focusing primarily on
disposable products in less
invasive surgery procedures
Sofamor Danek Group, Inc.* 170,000 8,149,374
The dominant supplier of
spinal implant devices
used in surgical treatment
of spinal diseases
and deformities
- --------------------------------------------------------------------------------
$17,252,812
- --------------------------------------------------------------------------------
Metals and Minerals -- 4.5%
- --------------------------------------------------------------------------------
Freeport McMoran Copper & 100,000 $ 2,675,000
Gold, Inc.
Operator of third largest
copper mine in the world
with world's largest gold
reserves
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
13
<PAGE>
Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Metals and Minerals (continued)
- --------------------------------------------------------------------------------
J & L Specialty Steel, Inc. 190,000 $2,375,000
Manufactures flat rolled
stainless steel. The company's
products are used in a variety
of industrial, commercial and
consumer products including
chemical and refining equipment,
cargo containers & beer kegs.
Potash Corp. of Saskatchewan, Inc./1/ 40,000 2,957,500
The global leader of potash production and
number three in phosphates, two of the
three components of fertilizer nutrients.
- --------------------------------------------------------------------------------
$8,007,500
- --------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 4.2%
- --------------------------------------------------------------------------------
Anadarko Petroleum Corp. 60,000 $4,406,250
Leading independent natural gas and crude
oil production company.
Triton Energy Ltd.* 80,000 3,080,000
Independent oil and gas producer with major
developments in Colombia and Thailand.
- --------------------------------------------------------------------------------
$7,486,250
- --------------------------------------------------------------------------------
Publishing -- 1.8%
- --------------------------------------------------------------------------------
McGraw-Hill, Inc. 53,500 $3,280,219
Supplies informational products and services
for businesses, education and industry through
a broad range of media.
- --------------------------------------------------------------------------------
$3,280,219
- --------------------------------------------------------------------------------
Retail - Food and Drug -- 2.5%
- --------------------------------------------------------------------------------
CVS Corp. 80,000 $4,510,000
The largest drugstore chain in the Northeast.
- --------------------------------------------------------------------------------
$4,510,000
- --------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 2.9%
- --------------------------------------------------------------------------------
Home Depot, Inc. 75,000 $ 3,539,063
A chain of do-it-yourself warehouse style
stores.
Lowes Companies 50,000 1,728,125
Operator of discount stores that cater to home
building and the home improvement market.
- --------------------------------------------------------------------------------
$ 5,267,188
- --------------------------------------------------------------------------------
Specialty Chemicals and Materials -- 6.2%
- --------------------------------------------------------------------------------
Corning, Inc. 85,000 $ 4,494,375
Manufactures specialty glass. Its consumer
products division makes Corelle dinnerware,
Corning Ware cookware, Pyrex glassware,
Serengeti sunglasses, and Steuben crystal.
Millipore Corp. 40,000 1,980,000
Products use membrane separations technology
to analyze and purify fluids for a variety
of high tech industries.
Sealed Air Corp.* 90,000 4,668,750
Global manufacturer of a broad line of
protective and specialty packaging
materials and systems.
- --------------------------------------------------------------------------------
$ 11,143,125
- --------------------------------------------------------------------------------
Transportation -- 1.7%
- --------------------------------------------------------------------------------
Southwest Airlines, Inc. 110,000 $ 3,080,000
Discount airline expanding throughout the U.S.
- --------------------------------------------------------------------------------
$ 3,080,000
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $106,915,521) $169,795,043
- --------------------------------------------------------------------------------
Commercial Paper -- 3.1%
<CAPTION>
Principal
Amount
(000 omitted) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Ford Motor Credit Co., 5.53%, 9/3/97 $ 4,194 $ 4,192,712
General Electric Capital Corp., 5.60%, 9/2/97 1,449 1,448,773
- --------------------------------------------------------------------------------
Total Commercial Paper
(identified cost $5,641,485) $ 5,641,485
- --------------------------------------------------------------------------------
Total Investments -- 97.6%
(identified cost $112,557,006) $175,436,528
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 2.4% $ 4,348,218
- --------------------------------------------------------------------------------
Net Assets -- 100% $179,784,746
- --------------------------------------------------------------------------------
</TABLE>
ADR -- American Depositary Receipt
* Non-income producing security.
/1/ Foreign Security.
See notes to financial statements
14
<PAGE>
Growth Portfolio as of August 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of August 31, 1997
Assets
- --------------------------------------------------------------------------------
<S> <C>
Investments, at value (Note 1A)
(identified cost, $112,557,006) $175,436,528
Cash 259,134
Receivable for investments sold 3,906,712
Dividends and interest receivable 185,082
Tax reclaim receivable 11,635
Deferred organization expenses (Note 1D) 6,255
- --------------------------------------------------------------------------------
Total assets $179,805,346
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Accrued expenses $ 20,600
- --------------------------------------------------------------------------------
Total liabilities $ 20,600
- --------------------------------------------------------------------------------
Net Assets applicable to investors'
interest in Portfolio $179,784,746
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Net proceeds from capital
contributions and withdrawals $116,906,433
Net unrealized appreciation of
investments (computed on the basis
of identified cost) 62,878,313
- --------------------------------------------------------------------------------
Total $179,784,746
- --------------------------------------------------------------------------------
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
August 31, 1997
Investment Income
- --------------------------------------------------------------------------------
<S> <C>
Dividends (net of foreign taxes, $8,164) $ 1,729,718
Interest 254,117
- --------------------------------------------------------------------------------
Total income $ 1,983,835
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 1,038,600
Compensation of Trustees not members of the
Administrator's organization (Note 2) 10,651
Custodian fee (Note 1C) 97,178
Legal and accounting services 35,655
Amortization of organization expenses (Note 1D) 3,285
Miscellaneous 5,828
- --------------------------------------------------------------------------------
Total expenses $ 1,191,197
- --------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee (Note 1C) $ 659
- --------------------------------------------------------------------------------
Total expense reductions $ 659
- --------------------------------------------------------------------------------
Net expenses $ 1,190,538
- --------------------------------------------------------------------------------
Net investment income $ 793,297
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 13,698,771
Foreign currency transactions 87
- --------------------------------------------------------------------------------
Net realized gain on investment transactions $ 13,698,858
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)--
Investments (identified cost basis) $ 32,474,116
Foreign currency transactions (2,617)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments $ 32,471,499
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 46,170,357
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 46,963,654
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
15
<PAGE>
Growth Portfolio as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Statement 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 income $ 793,297 $ 1,045,595
Net realized gain on
investments 13,698,858 15,075,037
Net change in unrealized
appreciation
(depreciation) 32,471,499 4,390,133
- --------------------------------------------------------------------------------
Net increase in net assets
from operations $ 46,963,654 $ 20,510,765
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 12,015,988 $ 12,571,319
Withdrawals (25,926,786) (20,352,794)
- -------------------------------------------------------------------------------
Net decrease in net assets
from capital transactions $ (13,910,798) $ (7,781,475)
- --------------------------------------------------------------------------------
Net increase in net assets $ 33,052,856 $ 12,729,290
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $ 146,731,890 $ 134,002,600
- --------------------------------------------------------------------------------
At end of year $ 179,784,746 $ 146,731,890
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
16
<PAGE>
Growth Portfolio as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Year Ended August 31,
----------------------------------------------------
1997 1996 1995 1994*
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratios to average daily net assets
- ----------------------------------------------------------------------------------------------------------
Expenses 0.72% 0.72% 0.73% 0.73%+
Net investment income 0.48% 0.73% 0.67% 0.66%+
Portfolio Turnover 28% 62% 84% 4%
- ----------------------------------------------------------------------------------------------------------
Average commission rate (per share)/(1)/ $ 0.0599 $ 0.0595 -- --
- ----------------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $179,785 $146,732 $134,003 $131,536
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, August 2, 1994, to August 31,
1994.
/(1)/Average commission rate paid is computed 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
17
<PAGE>
Growth Portfolio as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-----------------------------------------------------------------------------
Growth Portfolio (the "Portfolio") is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company which
was organized as a trust under the laws of the State of New York on August 2,
1994, with the acquisition of investments with a value of $127,122,709,
including unrealized appreciation of $6,444,330 in exchange for an interest
in the Portfolio by one of the Portfolio's investors. The following is a
summary of the significant accounting policies of the Portfolio. The policies
are in conformity with generally accepted accounting principles.
A Investment Valuations -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement prices. Unlisted or
listed securities for which 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 taxable (if any) and tax-exempt investment income, net
realized capital gains, and any other items of income, gain, loss, deduction
or credit. Withholding taxes on foreign dividends and capital gains have been
provided for in accordance with the Trust's understanding of the applicable
countries' tax rules and rates.
C Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the respective custodian agreements,
IBT receives a fee reduced by the credits which are determined based on the
average daily cash balances each Portfolio maintains with IBT. All
significant credit balances used to reduce the Portfolio's custodian fees are
reflected as a reduction of operating expenses on the Statement of
Operations.
D Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E Other -- Investment transactions are accounted for on a trade date basis.
Dividend income is recorded on the ex-dividend date. However, if the
ex-dividend date has passed, certain dividends from foreign securities are
recorded as the Portfolio is informed of the ex-dividend date. Interest
income is recorded on the accrual basis.
F Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results
could differ from those estimates.
2 Investment Adviser Fee and Other Transactions with Affiliates
-----------------------------------------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to the Portfolio.
The fee is based upon a percentage of average daily net assets. For the year
ended August 31, 1997, the fee was equivalent to 0.625% of the Portfolio's
average daily net assets for such period and amounted to $1,038,600. Except
as to the Trustees of the Portfolio, who are not members of EVM's or BMR's
organization, officers and Trustees receive remuneration for their services
to the Portfolio out of such investment adviser fee. Certain of the officers
and Trustees of the Portfolio are officers and directors/trustees of the
above organizations. Trustees of the Portfolio that are not affiliated with
the Investment Adviser may elect to defer receipt of all or a percentage of
their annual fees in accordance with the terms of the Trustees Deferred
18
<PAGE>
Growth Portfolio as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
Compensation Plan. For the year ended August 31, 1997, no significant amounts
have been deferred.
3 Investment Transactions
-----------------------------------------------------------------------------
Purchase and sales of investments, other than short-term obligations,
aggregated $45,231,299 and $58,692,399, 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 $112,557,006
--------------------------------------------------------------------------
Gross unrealized appreciation $65,138,733
Gross unrealized depreciation (2,259,211)
--------------------------------------------------------------------------
Net unrealized appreciation $62,879,522
--------------------------------------------------------------------------
</TABLE>
5 Line of Credit
-----------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $120 million unsecured line of credit agreement
with a 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
ended August 31, 1997.
19
<PAGE>
Growth Portfolio as of August 31, 1997
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of Growth Portfolio:
- -------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Growth
Portfolio, including the Portfolio of investments, as of August 31, 1997, the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the supplementary data for each of the three years in the period ended and for
the period from August 2, 1994 (start of business) to August 31, 1994. These
financial statements and supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities held as of August
31, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and supplementary data referred to
above present fairly, in all material respects, the financial position of Growth
Portfolio as of August 31, 1997, the results of its operations for the year then
ended, and the changes in its net assets for each of the two years in the period
then ended, and the supplementary data for each of the three years then ended,
and for the period from August 2, 1994 (start of business) to August 31, 1994,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND LLP
Boston, Massachusetts
September 25, 1997
20
<PAGE>
EV Traditional Growth Fund as of August 31, 1997
INVESTMENT MANAGEMENT
EV Traditional Growth Fund
Officers Independent Trustees
James B. Hawkes Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
M. Dozier Gardner Samuel L. Hayes, III
Vice President Jacob H. Schiff Professor of Investment
William D. Burt Banking, Harvard University Graduate
Vice President School of Business Administration
Barclay Tittmann Norton H. Reamer
Vice President President and Director, United Asset
Management Corporation
James L. O'Connor John L. Thorndike
Treasurer Formerly Director, Fiduciary Company
Incorporated
Alan R. Dynner Jack L. Treynor
Secretary Investment Adviser and Consultant
Growth Portfolio
Officers Independent Trustees
James B. Hawkes Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
M. Dozier Gardner
Vice President Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Thomas E. Faust, Jr. Banking, Harvard University Graduate
Vice President and School of Business Administration
Portfolio Manager
Norton H. Reamer
James L. O'Connor President and Director, United Asset
Treasurer Management Corporation
Alan R. Dynner John L. Thorndike
Secretary Formerly Director, Fiduciary
Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
21
<PAGE>
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<PAGE>
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<PAGE>
Investment Adviser of Growth Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator of EV Traditional Growth Fund
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617)482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
EV Traditional 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 sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
J-GFSRC-10/97
