<PAGE>
[LOGO OF EATON VANCE MUTUAL FUNDS APPEARS HERE]
Investing
for the [PHOTO OF NEWSPAPER APPEARS HERE]
21st
Century
Annual Report August 31, 1997
EV
[PHOTO OF FLAG AT NY STOCK CLASSIC
EXCHANGE BUILDING APPEARS HERE]
GROWTH
FUND
Eaton Vance
Global Management-Global Distribution
Classic
[PHOTO OF TRADING FLOOR AT NYSE APPEARS HERE]
<PAGE>
EV Classic 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 Classic Growth Fund had a total return
of 28.6%./1/ This return resulted from an increase in net asset value to $14.94
per share on August 31, 1997 from $12.48 per share on August 31, 1996 and the
reinvestment of distributions totaling $0.995 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/
- -------------------------------------
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DATE VALUE
---- -----
<S> <C>
8/31/95 10,000
9/30/95 10,180
10/31/95 9,974
11/30/95 10,334
12/31/95 10,605
1/31/96 10,838
2/29/96 11,088
3/31/96 11,151
4/30/96 11,419
5/31/96 11,687
6/30/96 11,482
7/31/96 10,793
8/31/96 11,160
9/30/96 11,616
10/31/96 11,607
11/30/96 12,259
12/31/96 12,070
1/31/97 12,874
2/28/97 12,836
3/31/97 12,247
4/30/97 12,874
5/31/97 13,734
6/30/97 14,239
7/31/97 15,202
8/31/97 14,355
</TABLE>
<TABLE>
<CAPTION>
Ten Largest Holdings/3/
- ---------------------------------------------
<S> <C>
As a percentage of total net assets
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 1% contingent deferred sales
charge (CDSC).
/2/ For illustration purposes only. Chart reflects a hypothetical investment on
8/31/95 at net asset value and includes reinvestment of all distributions.
Chart does not include 1% contingent deferred sales charge (CDSC) which is
deducted for redemptions made within the first 12 months of purchase.
/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 Classic 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 Classic 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
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Five Largest Sectors - 8/31/97*
- ---------------------------------------
As a percentage of total net assets
<S> <C>
Drugs 11.3%
Medical Products 9.6%
Insurance 8.6%
Financial 8.4%
Specialty Chemicals &
Materials 6.7%
</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.
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.
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 Classic 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]
Comparison of Change in Value of a $10,000
Investment in the Fund vs. the Standard
& Poor's 500 Index*
From November 30, 1994, through August 31, 1997
<TABLE>
<CAPTION>
EV Classic S&P 500
Date Growth Fund Index
---- ----------- -------
<S> <C> <C>
11/30/94 $10,000 $10,000
12/31/94 $10,010 $10,197
1/31/95 $10,050 $10,444
2/28/95 $10,464 $10,821
3/31/95 $10,737 $11,186
4/30/95 $10,787 $11,499
5/31/95 $11,019 $11,917
6/30/95 $11,352 $12,251
7/31/95 $11,625 $12,640
8/31/95 $11,786 $12,636
9/30/95 $11,998 $13,221
10/31/95 $11,756 $13,155
11/30/95 $12,180 $13,695
12/31/95 $12,499 $14,015
1/31/96 $12,773 $14,472
2/28/96 $13,068 $14,572
3/31/96 $13,142 $14,766
4/30/96 $13,458 $14,964
5/31/96 $13,775 $15,306
6/30/96 $13,532 $15,427
7/31/96 $12,721 $14,721
8/31/96 $13,153 $14,998
9/30/96 $13,690 $15,901
10/31/96 $13,680 $16,316
11/30/96 $14,449 $17,513
12/31/96 $14,225 $17,224
1/31/97 $15,173 $18,280
2/28/97 $15,129 $18,389
3/31/97 $14,435 $17,689
4/30/97 $15,173 $18,722
5/31/97 $16,187 $19,819
6/30/97 $16,782 $20,770
7/31/97 $17,917 $22,393
8/31/97 $16,919 $21,107
</TABLE>
<TABLE>
<CAPTION>
Performance+
- --------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------
<S> <C>
One Year 28.6%
Life of Fund (11/7/94) 20.1
<CAPTION>
SEC Average Annual Total Returns
(including applicable contingent deferred sales charge)
- --------------------------------------------------------
<S> <C>
One Year 27.6%
Life of Fund (11/7/94) 20.1
</TABLE>
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced
11/7/94. Index information is available only at month-end; therefore, the
line comparison begins at the next month-end following the commencement of
the Fund's investment operations. Past performance is no guarantee of future
results. Investment return and principal value will fluctuate so that shares,
when redeemed, may be worth more or less 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.
+ Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC Return for one year
reflects 1% contingent deferred sales charge (CDSC).
5
<PAGE>
EV Classic 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, $1,668,641) $2,102,998
Receivable for Fund shares sold 25,539
Receivable from Administrator (Note 4) 34,757
Deferred organization expenses (Note 1E) 19,205
- --------------------------------------------------------------------------------
Total assets $2,182,499
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Accrued expenses $ 8,186
- --------------------------------------------------------------------------------
Total liabilities $ 8,186
- --------------------------------------------------------------------------------
Net Assets for 145,569 shares of
beneficial interest outstanding $2,174,313
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $1,739,435
Accumulated undistributed net realized gain on
investments (computed on basis of identified cost) 521
Net unrealized appreciation of investments (computed
on basis of identified cost) 434,357
- --------------------------------------------------------------------------------
Total $2,174,313
- --------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share (Note 6)
- --------------------------------------------------------------------------------
($2,174,313 / 145,569 shares of
beneficial interest outstanding) $ 14.94
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended
August 31, 1997
Investment Income (Note 1B)
- --------------------------------------------------------------------------------
Dividend income allocated from Portfolio
(net of foreign taxes, $71) $ 14,258
Interest income allocated from Portfolio 2,181
Expenses allocated from Portfolio (9,830)
- --------------------------------------------------------------------------------
Total investment income $ 6,609
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Custodian fee $ 4,785
Distribution and service fees (Note 5) 14,188
Transfer and dividend disbursing agent fees 1,133
Printing and postage 15,165
Legal and accounting services 14,384
Registration fees 16,061
Amortization of organization expenses (Note 1E) 8,942
- --------------------------------------------------------------------------------
Total expenses $ 74,658
- --------------------------------------------------------------------------------
Deduct --
Allocation of expenses to the Administrator (Note 4) $ 34,757
- --------------------------------------------------------------------------------
Total expense reductions $ 34,757
- --------------------------------------------------------------------------------
Net expenses $ 39,901
- --------------------------------------------------------------------------------
Net investment loss $ (33,292)
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 79,390
- --------------------------------------------------------------------------------
Net realized gain on investment transactions $ 79,390
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ 280,052
Foreign currency transactions (21)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 280,031
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 359,421
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 326,129
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
6
<PAGE>
EV Classic 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 loss $ (33,292) $ (18,679)
Net realized gain on investments 79,390 79,134
Net change in unrealized
appreciation (depreciation) 280,031 28,593
- --------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 326,129 $ 89,048
- --------------------------------------------------------------------------------------------
Distributions to shareholders --
From net realized gain on investments $ (79,390) $ (32,944)
In excess of net realized gain (30,982) --
- --------------------------------------------------------------------------------------------
Total distributions to shareholders $ (110,372) $ (32,944)
- --------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Note 3)--
Proceeds from sale of shares $ 1,802,915 $ 747,448
Net asset value of shares issued to
shareholders in payment of
distributions declared 100,850 26,341
Cost of shares redeemed (912,909) (462,892)
- --------------------------------------------------------------------------------------------
Net increase in net assets from
Fund share transactions $ 990,856 $ 310,897
- --------------------------------------------------------------------------------------------
Net increase in net assets $ 1,206,613 $ 367,001
- --------------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------
At beginning of year $ 967,700 $ 600,699
- --------------------------------------------------------------------------------------------
At end of year $ 2,174,313 $ 967,700
- --------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE>
EV Classic Growth Fund as of August 31, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Year Ended August 31,
----------------------------------------------
1997 1996 1995*
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value -- Beginning of year $ 12.480 $11.680 $10.000
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------
Net investment loss $ (0.229) $(0.241) $(0.214)
Net realized and unrealized gain on investments 3.684 1.551 1.894
- ------------------------------------------------------------------------------------------------------------------------------
Total income from operations $ 3.455 $ 1.310 $ 1.680
- ------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments $ (0.716) $(0.510) $ --
In excess of net realized gain on investments (0.279) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.995) $(0.510) $ --
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 14.940 $12.480 $11.680
- ------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 28.63% 11.68% 16.80%
- ------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data++
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000 omitted) $ 2,174 $ 968 $ 601
Ratio of net expenses to average net assets/(2)/ 3.50% 3.51% 3.47%+
Ratio of net investment loss to average net assets (2.34)% (2.15)% (2.17)%+
</TABLE>
++ The operating expenses of the Funds and the Portfolios may reflect a
reduction of the Investment Adviser fee, an allocation of expenses to the
Administrator, or both. Had such actions not been taken, the ratios and net
investment income (loss) per share would have been as follows:
<TABLE>
<CAPTION>
<C> <C> <C>
Ratio/Supplemental Data:
<S>
Expenses/(2)/ 5.94% 8.69% 12.21%+
Net investment loss (4.79)% (7.33)% (10.90)%+
Net investment loss per share $ (0.469) $(0.823) $(0.648)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, November 7, 1994, to August 31,
1995.
/(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.
See notes to financial statements
8
<PAGE>
EV Classic Growth Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-----------------------------------------------------------------------------
EV Classic 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, (1.2% 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 Traditional
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 will occur after the close of business, August 31, 1997.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuations -- Valuation of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements, which
are included elsewhere in this report.
B Income -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund determined in accordance with generally
accepted accounting principles.
C Expense Reduction -- 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 $110,372
as a long-term capital gain distribution for its taxable year ended August
31, 1997.
E Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on
the straight-line basis over five years.
F Other -- Investment transactions are accounted for on a trade-date basis.
G 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 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
9
<PAGE>
EV Classic Growth Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
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 127,043 60,508
Issued to shareholders
electing to receive payment
of distribution in Fund shares 7,217 2,294
Redemptions (66,208) (36,725)
----------------------------------------------------------------------------
Net Increase 68,052 26,077
----------------------------------------------------------------------------
</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. To reduce the net operating loss of
the Fund, $34,757 of expenses related to the operation of the Fund were
allocated to EVM as Administrator. Certain of the officers and Trustees of
the Fund and Portfolio are officers and directors/trustees of the above
organizations. Except as to Trustees of the Fund and the Portfolio who are
not members of EVM's or BMR's organizations, officers and Trustees receive
remuneration for their services to the Fund out of such investment adviser
fee.
5 Distribution Plan
----------------------------------------------------------------------------
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay
the principal underwriter, Eaton Vance Distributors, Inc. (EVD) amounts
equal to 1/365 of 0.75% of the Fund's daily net assets, for providing
ongoing distribution services and facilities to the Fund. The Fund will
automatically discontinue payments to EVD during any period in which there
are no outstanding Uncovered Distribution Charges, which are equivalent to
the sum of (i) 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 the aggregate amount of contingent
deferred sales charges (see Note 6) and amounts theretofore paid to EVD. The
amount payable to EVD with respect to each day is accrued on such day as a
liability of the Fund and, accordingly, reduces the Fund's net assets. For
the year ended August 31, 1997, the Fund paid or accrued $10,641 to or
payable to EVD 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 $206,000.
In addition, the Plan permits the Fund to make payments of service fees to
the Principal Underwriter in amounts not expected to exceed 0.25% of the
Fund's average daily net assets for any fiscal year. The Trustees have
implemented the Plan by authorizing the Fund to make monthly service fee
payments to Authorized Firms in amounts anticipated to be equivalent to
0.25%, annualized, of the assets maintained in the Fund by their customers.
EVD currently expects to pay to 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 fees in amounts not expecting to exceed
0.25% per annum of the Funds' average daily net assets based on a value of
Fund shares sold by such Firm and remaining outstanding for at least one
year. Provisions for service fee payments for the year ended August 31, 1997
amounted to $3,547. 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 on or after January 30, 1995 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 at a rate of one percent of redemption proceeds,
10
<PAGE>
EV Classic Growth Fund as of August 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
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 $0 of CDSC paid by shareholders for the year ended
August 31, 1997.
7 Investment Transactions
-----------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio aggregated
$1,823,036, and $1,018,636, respectively.
11
<PAGE>
EV Classic Growth Fund as of August 31, 1997
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of EV Classic Growth Fund
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of EV
Classic 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 then ended and the
financial highlights for the two years then ended and for the period from
November 7, 1994 (start of business) to August 31, 1995. 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 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
Classic 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 the two years then ended and for the period from
November 7, 1994 (start of business) to August 31, 1995, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND LLP
Boston, Massachusetts
September 25, 1997
12
<PAGE>
Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS
Common Stocks -- 94.5%
<TABLE>
<CAPTION>
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
(BellHelicopter 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 Exportaciones 30,000 $ 1,361,250
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
13
<PAGE>
Growth Portfolio as of August 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Financial - Miscellaneous -- 8.4%
- --------------------------------------------------------------------------------
Federal National Mortgage Association 120,000 $ 5,280,000
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, Inc. 80,000 $ 3,645,000
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 & Gold, Inc. 100,000 $ 2,675,000
Operator of third largest copper
mine in the world with world's
largest gold reserves.
</TABLE>
See notes to financial statements
14
<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
- --------------------------------------------------------------------------------
</TABLE>
Commercial Paper -- 3.1%
<TABLE>
<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
15
<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
16
<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
17
<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
18
<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
19
<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.
20
<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
21
<PAGE>
EV Classic Growth Fund as of August 31, 1997
INVESTMENT MANAGEMENT
EV Classic Growth Fund
Officers Independent Trustees
James B. Hawkes Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
M. Dozier Gardner
Vice President Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
William D. Burt Harvard University Graduate School of
Vice President Business Administration
Barclay Tittmann Norton H. Reamer
Vice President President and Director, United Asset
Management Corporation
James L. O'Connor
Treasurer John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Alan R. Dynner
Secretary Jack L. Treynor
Investment Adviser and Consultant
Growth Portfolio
Officers Independent Trustees
James B. Hawkes Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
M. Dozier Gardner
Vice President Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Thomas E. Faust, Jr. Harvard University Graduate School of
Vice President and Business Administration
Portfolio Manager
Norton H. Reamer
James L. O'Connor President and Director, United Asset
Treasurer Management Corporation
Alan R. Dynner John L. Thorndike
Secretary Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
22
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<PAGE>
Investment Adviser of Growth Portfolio
Boston Management and Research
24 Federal Street
Boston, MA02110
Administrator of EV Classic 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 Classic Growth Fund
24 Federal Street
Boston, MA 02110
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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.
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C-GFSRC-10/97
