<PAGE>
[LOGO]
[PHOTO]
Annual Report August 31, 1999
EATON VANCE
[PHOTO] GROWTH
FUND
Global Management-Global Distribution
[PHOTO]
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
LETTER TO SHAREHOLDERS
[PHOTO]
James B. Hawkes
President
Eaton Vance Growth Fund, Class A shares, had a total return of 21.14% during the
year ended August 31, 1999. That return was the result of a decrease in net
asset value per share (NAV) from $10.32 on August 31, 1998 to $9.95 on August
31, 1999, and the reinvestment of $0.039 per share in income dividends and
$2.492 per share in capital gains distributions.(1)
Class B shares had a total return of 20.28% for the same period, the result of
an increase in NAV from $16.49 to $17.33, and the reinvestment of $2.492 per
share in capital gains distributions.(1)
Class C shares had a total return of 20.16% for the same period, the result of
an increase in NAV from $14.84 to $15.33, and the reinvestment of $2.492 per
share in capital gains distributions.(1)
While there were some dramatic movements in the stock market in the last year,
the Dow Jones Industrial Average has remained in a narrow trading range since
May, neither gaining nor losing much ground. The Federal Reserve Board has twice
raised the benchmark Federal Funds rate in that time period, a total of 0.50% to
5.25%, in an effort to prevent a resurgence of inflation. Economic data released
at the end of August showed no evidence of an economic slowdown, as
manufacturing activity accelerated and consumer confidence remained high.
However, employment figures made available in early September showed that jobs
and wages slowed significantly in August. A slowing economy would mitigate
inflationary pressures and reduce the risk of another interest rate hike in the
immediate future.
As we look ahead, we can certainly anticipate continued volatility in the stock
market. By historical standards, the valuations of many stocks and certain
market sectors are quite extended.
On the following pages, portfolio manager Tom Faust discusses the past 12 months
and offers his outlook for the year ahead.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
October 12, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Performance(2) Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 21.14% 20.28% 20.16%
Five Years 16.94 N.A. N.A.
Ten Years 11.66 N.A. N.A.
Life of Fund+ 10.45 16.43 15.78
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 14.17% 15.28% 19.16%
Five Years 15.55 N.A. N.A.
Ten Years 11.00 N.A. N.A.
Life of Fund+ 10.31 16.21 15.78
</TABLE>
+Inception Dates - Class A: 8/1/52; Class B: 9/13/94; Class C:11/7/94
<TABLE>
<CAPTION>
Ten Largest Equity Holdings(3)
- ---------------------------------------------
<S> <C>
Sepracor, Inc. 3.9%
Safeway, Inc. 3.4
Associates First Capital Corp. 3.0
Medtronic, Inc. 3.0
American International Group, Inc. 3.0
Millipore Corp. 2.9
Pfizer, Inc. 2.9
GTE Corp. 2.8
Reynolds &Reynolds, Inc. Class A 2.8
Valassis Communications, Inc. 2.7
</TABLE>
(1) These returns do not include the 5.75% maximum sales charge for the Fund's
Class A shares or the applicable contingent deferred sales charges (CDSC) for
Class B and Class C shares. (2) Returns are historical and are calculated by
determining the percentage change in net asset value with all distributions
reinvested. SEC returns for Class A reflect the maximum 5.75% sales charge.
SEC returns for Class B reflect applicable CDSC based on the following
schedule: 5% - 1st and 2nd years; 4% -3rd year; 3% - 4th year; 2% - 5th year;
1% - 6th year. SEC 1-Year return for Class C reflects 1% CDSC. (3) Ten largest
equity holdings accounted for 30.4% of the Portfolio's net assets. Holdings
are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
- --------------------------------------------------------------------------------
MUTUAL FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
- --------------------------------------------------------------------------------
2
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
MANAGEMENT DISCUSSION
AN INTERVIEW WITH THOMAS E. FAUST JR., VICE PRESIDENT AND PORTFOLIO MANAGER OF
GROWTH PORTFOLIO
[PHOTO]
Thomas E. Faust Jr.
Portfolio Manager
Q: Tom, how would you characterize the market environment in the last twelve
months?
A: The strength in the market over the past year has really been dominated by
technology stocks, which now constitute approximately 25% of the S&P 500*. At
the start of our 12-month period on August 31, 1998, the stock market
experienced a minor setback, in which one of the groups most affected was
technology. This set the stage for a strong comeback for technology stocks
over the past year. This group includes semiconductors and semiconductor
equipment, computer hardware and software, data networking,
telecommunications and Internet companies. It's a pretty wide-ranging area.
Stock market performance in the past year was also dominated by the
largest-capitalization growth companies, which overlap the technology area to
a great degree. Four of the five largest-cap stocks today are tech stocks.
This favored sector of the market often performed as if valuation and
earnings didn't matter.
So, the market has really seen a divergence between these large-cap, leading
stocks that dominate the S&P 500 and everything else. We believe that the
technology sector is at significant risk in a market correction, but that the
broader market is much more reasonably valued and is, therefore, less risky.
Q: Did your management strategy change as a result of this view?
A: Although price/earnings ratios didn't seem to have a major impact on many
other investors, that is not the approach we take. We believe that throwing
fundamental investment guidelines like valuation to the wind is not a prudent
course for our shareholders. Our philosophy is to invest in quality growth
companies, but to remain sensitive to valuation and risk. As a result, we
have not been involved in some of the market-leading stocks such as Microsoft
or Cisco. While these are great companies, some of them are trading at
all-time-high multiples, and our investment discipline has kept us out of
those names based on valuation sensitivity. We believe that risk/reward is
far more attractive in the broader market.
Q: How did this affect the performance of the Portfolio?
A: While the Portfolio's performance was well below that of the S&P 500, it
should be placed in context of this market division. It's helpful to bear in
mind that the S&P 500 is heavily weighted by the large-cap tech stocks that
the Portfolio has generally avoided. Our returns were a reflection of the
broader market.
*The S&P 500 Composite Index is an unmanaged index commonly used as a measure of
U.S. stock market performance. It is not possible to invest directly in the
Index.
Five Largest Sector Positions+
- -------------------------------------------------
By total net assets
<TABLE>
<S> <C>
Drugs 13.8%
Financial - Miscellaneous 6.9%
Insurance 6.6%
Retail Food & Drug 5.5%
Specialty Chemicals & Materials 4.8%
</TABLE>
+ Portfolio holdings subject to change due to active management.
3
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
MANAGEMENT DISCUSSION
Q: How did the holdings in the finance and healthcare sectors fare this year?
A: We do have substantial weightings in these areas, but generally speaking we
have selected these stocks based on their individual merits, not as part of a
larger sector play. We believe that risk/reward levels are attractive in some
of these names. For example, Sepracor, the Portfolio's largest holding, was a
strong performer for us, especially through January. Since then, the stock
price has bounced around a bit, but we are still very positive on the stock
and believe that it will be a big winner for us, especially if the product
news over the next year is positive, as we expect.
Q: Would you tell us a little more about some of the Portfolio's other large
holdings?
A: Safeway is one of the biggest grocery stores in the country. It's among the
best-managed retail names, benefiting from consolidations and acquisitions in
the past year. As part of an overall retail downswing, the stock has traded
off of late, but we believe this is a quality growth company with solid
long-term growth prospects.
Associates First Capital has been one of our favorite stocks. It's a
high-quality, diversified financial lending and credit company. Medtronic is
a medical device manufacturer with a dominant industry position, primarily in
the cardiovascular area, and good long-term growth prospects. American
International Group is one of the most powerful financial and insurance
organizations in the world. The company is very well-positioned to benefit
from the cyclicality in the financial services business.
Q: Will you be reconsidering your stance on some of the tech stocks that have
led the market over the past twelve months?
A: Well, it certainly is tempting to participate in some of the more dominant
names. But it's important to understand that this is a very volatile sector.
There are very high highs, and very low lows. We have avoided the stocks that
we feel are overvalued; in many cases, it's hard to rationalize investing in
areas such as, for example, the personal computer market, where there is
tremendous pricing pressure. Personal computers are now moving into the
sub-$500 category and, in several cases, are now being given away as part of
Internet service provider promotions. As a prudent investor, we have to ask
ourselves, Where are the earnings going to come from? Market-leading
companies like Intel and Cisco are being forced to explore terrain away from
their original product lines in order to keep up with the rapidly changing
technology landscape.
Q: What can we expect in the stock market in the near future?
A: In April, the trends in market leadership shifted dramatically from growth to
value and from large-cap to small-cap. However, this leadership change has
not been sustained. The Federal Reserve has raised interest rates twice since
late June, giving rise to concerns that the U.S. economy may start to slow
down. This has sent market leadership back to the less economically-sensitive
growth stocks.
The market is likely to have trouble sustaining the kind of phenomenal
performance it has seen in the past several years. Even though corporate
earnings growth prospects are generally good, price-to-earnings ratios have
gotten so high in the favored market sectors that wethink there is a
significant risk for a correction in valuation there.
Where does this leave Growth Fund? Because we took less risk, we have been
less volatile and tended to do better on the market's down days. We are
encouraged that we are reasonably defensively positioned. The stocks that we
consider wildly overvalued are not stocks that we own.
4
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
PERFORMANCE
Comparison of Change in Value of a $10,000 Investment in Eaton Vance Growth
Fund, Class A vs. the Standard & Poor's 500 Index*
August 31, 1989 - August 31, 1999
<TABLE>
<CAPTION>
August, 1999
<S> <C>
S&P 500 Index $48,426
Eaton Vance Growth Fund Class A $30,125
Fund, including maximum sales charge $28,400
</TABLE>
<TABLE>
<CAPTION>
Performance** Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 21.14% 20.28% 20.16%
Five Years 16.94 N.A. N.A.
Ten Years 11.66 N.A. N.A.
Life of Fund+ 10.45 16.43 15.78
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 14.17% 15.28% 19.16%
Five Years 15.55 N.A. N.A.
Ten Years 11.00 N.A. N.A.
Life of Fund+ 10.31 16.21 15.78
</TABLE>
+Inception Dates - Class A: 8/1/52; Class B: 9/13/94; Class C:11/7/94
* Source: TowersData Systems, Bethesda, MD. Investment operations commenced
8/1/52. 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.
The chart compares the Fund's total return with that of the S&P 500 Index, an
unmanaged index of 500 common stocks commonly used as a measure of U.S. stock
performance. Returns are calculated by determining the percentage change in
net asset value with all distributions reinvested. The lines on the chart
represent the total returns of $10,000 hypothetical investments in the Fund
and in the S&P 500 Index. An investment in the Fund's Class B shares on
9/30/94 at net asset value would have grown to $21,510 on August 31, 1999,
$21,310 including applicable CDSC. An investment in the Fund's Class C shares
on 11/30/94 at net asset value would have grown to $20,452 on August 31,
1999. The Index's total returns do not reflect any commissions or expenses
that would have been incurred if an investor individually purchased or sold
the securities represented in the Index. It is not possible to invest
directly in an Index.
** Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 5.75% sales charge. SEC returns for Class B
reflect applicable CDSC based on the following schedule: 5% - 1st and 2nd
years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC 1-Year
return for Class C reflects 1% CDSC.
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.
5
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF AUGUST 31, 1999
<S> <C>
Assets
- -------------------------------------------------------
Investment in Growth Portfolio, at value
(identified cost, $141,081,915) $193,824,003
Receivable for Fund shares sold 54,553
Prepaid Trustees fees 281
Deferred organization expenses 1,570
- -------------------------------------------------------
TOTAL ASSETS $193,880,407
- -------------------------------------------------------
Liabilities
- -------------------------------------------------------
Payable for Fund shares redeemed $ 228,409
Other accrued expenses 102,593
- -------------------------------------------------------
TOTAL LIABILITIES $ 331,002
- -------------------------------------------------------
NET ASSETS $193,549,405
- -------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------
Paid-in capital $134,667,041
Accumulated undistributed net realized
gain from Portfolio (computed
on the basis of identified cost) 6,140,276
Net unrealized appreciation from
Portfolio (computed on the basis of
identified cost) 52,742,088
- -------------------------------------------------------
TOTAL $193,549,405
- -------------------------------------------------------
Class A Shares
- -------------------------------------------------------
NET ASSETS $171,752,472
SHARES OUTSTANDING 17,253,080
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 9.95
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $9.95) $ 10.56
- -------------------------------------------------------
Class B Shares
- -------------------------------------------------------
NET ASSETS $ 18,552,704
SHARES OUTSTANDING 1,070,630
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 6)
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 17.33
- -------------------------------------------------------
Class C Shares
- -------------------------------------------------------
NET ASSETS $ 3,244,229
SHARES OUTSTANDING 211,686
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 6)
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 15.33
- -------------------------------------------------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31, 1999
<S> <C>
Investment Income
- ------------------------------------------------------
Dividends allocated from Portfolio
(net of foreign taxes, $90,897) $ 1,975,608
Interest allocated from Portfolio 304,934
Expenses allocated from Portfolio (1,465,411)
- ------------------------------------------------------
NET INVESTMENT INCOME FROM PORTFOLIO $ 815,131
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Trustees fees and expenses $ 5,171
Distribution and service fees
Class A 211,227
Class B 184,652
Class C 34,275
Transfer and dividend disbursing agent
fees 254,279
Registration fees 34,376
Printing and postage 33,467
Custodian fee 24,711
Legal and accounting services 20,419
Amortization of organization expenses 16,243
Miscellaneous 10,270
- ------------------------------------------------------
TOTAL EXPENSES $ 829,090
- ------------------------------------------------------
NET INVESTMENT LOSS $ (13,959)
- ------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 6,475,017
- ------------------------------------------------------
NET REALIZED GAIN $ 6,475,017
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments $31,511,267
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $31,511,267
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $37,986,284
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $37,972,325
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Increase (Decrease) YEAR ENDED YEAR ENDED
in Net Assets AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- -----------------------------------------------------------------------------
From operations --
Net investment income (loss) $ (13,959) $ 582,497
Net realized gain 6,475,017 43,962,944
Net change in unrealized
appreciation (depreciation) 31,511,267 (41,647,493)
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 37,972,325 $ 2,897,948
- -----------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (607,094) $ --
From net realized gain
Class A (38,002,001) (3,085,610)
Class B (2,497,085) (167,942)
Class C (491,324) (26,850)
- -----------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $(41,597,504) $ (3,280,402)
- -----------------------------------------------------------------------------
Transactions in shares of beneficial
interest --
Proceeds from sale of shares
Class A $ 7,883,912 $ 6,049,463
Class B 4,533,979 9,422,514
Class C 1,803,734 2,197,911
Issued in reorganization of EV
Marathon and Classic Growth Funds
Class B -- 12,137,415
Class C -- 2,174,313
Net asset value of shares issued to
shareholders in payment of
distributions declared
Class A 32,903,156 2,640,643
Class B 2,234,763 149,425
Class C 489,674 26,724
Cost of shares redeemed
Class A (23,960,578) (15,100,652)
Class B (6,559,676) (3,647,837)
Class C (1,432,477) (2,065,475)
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 17,896,487 $ 13,984,444
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 14,271,308 $ 13,601,990
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
Net Assets AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- -----------------------------------------------------------------------------
At beginning of year $179,278,097 $165,676,107
- -----------------------------------------------------------------------------
AT END OF YEAR $193,549,405 $179,278,097
- -----------------------------------------------------------------------------
Accumulated undistributed
net investment income
included in net assets
- -----------------------------------------------------------------------------
AT END OF YEAR $ -- $ 579,044
- -----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------------------------- ------------------------------- --------- --------- -----------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value --
Beginning of year $ 10.320 $16.490 $14.840 $ 10.360 $16.560 $14.940 $ 9.240 $ 8.330 $ 7.960
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income
(loss) $ 0.008 $(0.135) $(0.109) $ 0.044 $(0.079) $(0.079) $ 0.020 $ 0.043 $ 0.024
Net realized and
unrealized gain 2.153 3.467 3.091 0.111 0.204 0.174 2.845 1.202 1.086
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM
OPERATIONS $ 2.161 $ 3.332 $ 2.982 $ 0.155 $ 0.125 $ 0.095 $ 2.865 $ 1.245 $ 1.110
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment
income $ (0.039) $ -- $ -- $ -- $ -- $ -- $ (0.019) $ (0.035) $ (0.032)
In excess of net
investment income -- -- -- -- -- -- (0.018) -- (0.018)
From net realized gain (2.492) (2.492) (2.492) (0.195) (0.195) (0.195) (0.890) (0.300) (0.083)
In excess of net realized
gain -- -- -- -- -- -- (0.762) -- (0.607)
From paid-in capital -- -- -- -- -- -- (0.056) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (2.531) $(2.492) $(2.492) $ (0.195) $(0.195) $(0.195) $ (1.745) $ (0.335) $ (0.740)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
YEAR $ 9.950 $17.330 $15.330 $ 10.320 $16.490 $14.840 $ 10.360 $ 9.240 $ 8.330
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1) 21.14% 20.28% 20.16% 1.45% 0.72% 0.60% 33.01% 15.38% 15.95%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(000's omitted) $171,752 $18,553 $ 3,244 $159,602 $17,359 $ 2,316 $165,676 $138,252 $130,966
Ratios (As a percentage
of average daily net
assets):
Expenses(2) 1.03% 1.85% 1.91% 1.08% 1.93% 1.94% 1.01% 0.98% 0.98%
Net investment income
(loss) 0.09% (0.74)% (0.80)% 0.37% (0.48)% (0.51)% 0.19% 0.48% 0.42%
Portfolio Turnover of the
Portfolio 34% 34% 34% 55% 55% 55% 28% 62% 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
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Eaton Vance Growth Fund (the "Fund") is a diversified series of Eaton Vance
Growth Trust (the "Trust"). The Trust is an entity of the type commonly known
as a Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company. The Fund offers three classes of shares. Class A shares are
generally sold subject to a sales charge imposed at time of purchase.
Class B and Class C shares are sold at net asset value and are subject to a
contingent deferred sales charge (see Note 6). Each class represents a pro
rata interest in the Fund, but votes separately on class-specific matters and
(as noted below) is subject to different expenses. Realized and unrealized
gains and losses and net investment income, other than class specific
expenses, are allocated daily to each class of shares based on the relative
net assets of each class to the total net assets of the Fund. Each class of
shares differs in its distribution plan and certain other class specific
expenses. The Fund invests all of its investable assets in interests in
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 (approximately 99.999% at August 31, 1999). The performance of the
Fund is directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
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 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.
D Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based
on the average daily cash balances the Fund or the Portfolio maintains with
IBT. All significant credit balances used to reduce the Fund's custodian fees
are reflected as a reduction of operating expenses on the Statement of
Operations.
E 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 capital gains. Accordingly, no provision for federal income or
excise tax is necessary.
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
- -------------------------------------------
It is present policy of the Fund to make at least one distribution annually
(normally in December) of all or substantially all of the net investment
income allocated to the Fund by the Portfolio, less the Fund's direct and
allocated expenses and at least one distribution annually of all or
substantially all of the net realized capital gains (reduced by any available
capital loss carryforwards from prior years) allocated to the Fund by the
Portfolio, if any. Shareholders may reinvest all distributions in shares of
the Fund at the per share net asset value as of the close of business on the
ex-dividend date. The Fund distinguishes between distributions on a tax basis
and a financial reporting basis. Generally accepted accounting principles
require that only distributions in excess of tax basis earnings and profits
be reported in the financial statements as a return of capital. Differences
in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary over
distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. Permanent
9
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
differences between book and tax accounting relating to distributions are
reclassified to paid-in capital. These differences primarily relate to net
operating losses.
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). Such shares may be issued in a number of different series (such as
the Fund) and classes. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
CLASS A AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- ---------------------------------------------------------------------------
Sales 732,661 515,707
Issued to shareholders electing to
receive payment of distribution in Fund
shares 3,332,403 249,827
Redemptions (2,270,205) (1,304,816)
- ---------------------------------------------------------------------------
NET INCREASE (DECREASE) 1,794,859 (539,282)
- ---------------------------------------------------------------------------
<CAPTION>
YEAR ENDED YEAR ENDED
CLASS B AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- ---------------------------------------------------------------------------
Sales 250,516 509,835
Issued to shareholders electing to
receive payment of distribution in Fund
shares 129,548 8,806
Redemptions (362,262) (198,569)
Issued to EV Marathon Growth Fund
shareholders -- 732,756
- ---------------------------------------------------------------------------
NET INCREASE 17,802 1,052,828
- ---------------------------------------------------------------------------
<CAPTION>
YEAR ENDED YEAR ENDED
CLASS C AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- ---------------------------------------------------------------------------
Sales 112,275 134,753
Issued to shareholders electing to
receive payment of distribution in Fund
shares 32,068 1,750
Redemptions (88,754) (125,975)
Issued to EV Classic Growth Fund
shareholders -- 145,569
- ---------------------------------------------------------------------------
NET INCREASE 55,589 156,097
- ---------------------------------------------------------------------------
</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. The Fund was informed that Eaton Vance Distributors,
Inc. (EVD), a subsidiary of EVM and the Fund's principal underwriter,
received $5,270 as its portion of the sales charge on sales of Class A shares
for the year ended August 31, 1999.
Certain officers and Trustees of the Fund and of the Portfolio are officers
of the above organizations.
5 Distribution and Service Plans
- -------------------------------------------
The Fund has adopted distribution plans (Class B Plan and Class C Plan)
pursuant to Rule 12b-1 under the Investment Company Act of 1940 and a service
plan (Class A Plan, collectively the Plans). The Plans require the Fund to
pay EVD amounts equal to 1/365 of 0.75% of the Fund's average daily net
assets attributable to Class B and Class C shares for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no
outstanding Uncovered Distribution Charges, which are equivalent to the sum
of (i) 5% and 6.25% of the aggregate amount received by the Fund for the
Class B and Class C shares sold, respectively, plus (ii) interest calculated
by applying the rate of 1% over the prevailing prime rate to the outstanding
balance of Uncovered Distribution Charges of EVD of each respective class,
reduced by the aggregate amount of contingent deferred sales charges (see
Note 6) and daily amounts theretofore paid to EVD by each respective class.
The Fund paid or accrued $146,815 and $25,706 for Class B and Class C shares,
respectively, to EVD for the year ended August 31, 1999, representing 0.75%
of the average daily net assets for Class B and Class C shares. At
August 31, 1999, the amount of Uncovered Distribution Charges of EVD
calculated under the Plan was approximately $278,000 and $376,000 for
Class B and Class C shares, respectively.
In addition, the Plans also authorize each class to make payments of service
fees to EVD, investment dealers and other persons in amounts not exceeding
0.25% of the
10
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
Fund's average daily net assets attributable to Class A, Class B and Class C
shares for any fiscal year. The Trustees have initially implemented the Plans
by authorizing the Fund to make quarterly payments of service fees to EVD and
investment dealers in amounts not expected to exceed 0.25% per annum of the
Fund's average daily net assets attributable to Class A and Class B shares
based on the value of Fund shares sold by such persons and remaining
outstanding for at least one year. The Class C Plan requires the Fund to make
monthly payments of service fees in amounts not expected to exceed 0.25% of
the Fund's average daily net assets attributable to Class C shares for any
fiscal year. Service fee payments are made for personal services and/or the
maintenance of shareholder accounts. Service fees are separate and distinct
from the sales commissions and distribution fees payable by the Fund to EVD,
and, as such are not subject to automatic discontinuance when there are no
outstanding Uncovered Distribution Charges of EVD. Service fee payments for
the year ended August 31, 1999 amounted to $211,227, $37,837, and $8,569 for
Class A, Class B, and Class C shares, respectively. Certain officers and
Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
- -------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on redemptions
of Class B shares made within six years of purchase and on redemptions of
Class C shares made within one year of purchase. Generally, the CDSC is based
upon the lower of the net asset value at date of redemption or date of
purchase. No charge is levied on shares acquired by reinvestment of dividends
or capital gains distributions. Class B CDSC is imposed at declining rates
that begin at 5% in the case of redemptions in the first and second year
after purchase, declining one percentage point each subsequent year. Class C
shares will be subject to a 1% CDSC if redeemed within one year of purchase.
No CDSC is levied on shares which have been sold to EVM or its affiliates or
to their respective employees or clients and may be waived under certain
other limited conditions. CDSC charges are paid to EVD to reduce the amount
of Uncovered Distribution Charges calculated under the Plans (see Note 5).
CDSC charges received when no Uncovered Distribution Charges exist will be
credited to the Fund. The Fund was informed that EVD received approximately
$50,000 and $2,000 of CDSC paid by shareholders for Class B shares and
Class C shares, respectively, for the year ended August 31, 1999.
7 Investment Transactions
- -------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio aggregated
$15,501,714 and $40,737,098, respectively, for the year ended August 31,
1999.
8 Transfer of Net Assets
- -------------------------------------------
On September 1, 1997, EV Traditional Growth Fund acquired the net assets of
EV Marathon Growth Fund and EV Classic Growth Fund pursuant to an Agreement
and Plan of Reorganization dated June 23, 1997. In accordance with the
agreement, the Fund at the closing, issued 732,756 and 145,569 Class B and
Class C shares, respectively, with an aggregate value of $12,137,415 and
$2,174,313, including unrealized appreciation of $2,779,440 and $434,357, and
a net asset value per share of $16.56 and $14.94, respectively. The
transaction was structured for tax purposes to qualify as a tax free
reorganization under the Internal Revenue Code. Directly after the merger,
the combined net assets of Eaton Vance Growth Fund (formerly "EV Traditional
Growth") were $179,987,835 with a net asset value of $10.36, $16.56 and
$14.94 for Class A, Class B and Class C, respectively.
Tax Information (Unaudited)
- -------------------------------------------
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$38,387,146 as capital gain dividends for the fiscal year ended August 31,
1999.
11
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
INDEPENDENT ACCOUNTANTS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS
OF EATON VANCE GROWTH FUND:
- ---------------------------------------------
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and financial
highlights present fairly, in all material respects, the financial position of
Eaton Vance Growth Fund (the "Fund") at August 31, 1999, and the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 1, 1999
12
<PAGE>
GROWTH PORTFOLIO AS OF AUGUST 31, 1999
PORTFOLIO OF INVESTMENTS
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 98.4%
<CAPTION>
SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Aerospace and Defense -- 2.7%
- -------------------------------------------------------------------------
General Motors Corp., Class H(1) 100,000 $ 5,150,000
Is the telecommunications and space
subsidiary of automaker General Motors.
- -------------------------------------------------------------------------
$ 5,150,000
- -------------------------------------------------------------------------
Auto and Parts -- 1.5%
- -------------------------------------------------------------------------
Magna International, Inc., Class A 60,000 $ 2,981,250
Based in Canada, Magna International is
a diversified supplier of advanced
automotive systems.
- -------------------------------------------------------------------------
$ 2,981,250
- -------------------------------------------------------------------------
Banks - International -- 0.4%
- -------------------------------------------------------------------------
Banco Latinoamericano de Exportaciones 30,000 $ 787,500
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.
- -------------------------------------------------------------------------
$ 787,500
- -------------------------------------------------------------------------
Banks - Regional -- 2.5%
- -------------------------------------------------------------------------
Wells Fargo & Co. 120,000 $ 4,777,500
One of the nation's leading bank holding
companies.
- -------------------------------------------------------------------------
$ 4,777,500
- -------------------------------------------------------------------------
Beverages -- 4.4%
- -------------------------------------------------------------------------
Anheuser-Busch Cos., Inc. 60,000 $ 4,620,000
Produces and distributes beer under
brand names such as Budweiser, Michelob,
and Busch.
PepsiCo, Inc. 115,000 3,924,375
One of the world's two leading soft
drink makers.
- -------------------------------------------------------------------------
$ 8,544,375
- -------------------------------------------------------------------------
Broadcasting and Cable -- 3.6%
- -------------------------------------------------------------------------
MediaOne Group, Inc.(1) 50,000 $ 3,287,500
Engaged in cable and telecommunications
network operations, wireless
communications, and multimedia content
and service operations.
Young Broadcasting Corp.(1) 60,900 $ 3,665,419
Owns and operates television stations in
geographically diverse markets and is a
national television sales representative
firm.
- -------------------------------------------------------------------------
$ 6,952,919
- -------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Chemicals -- 1.2%
- -------------------------------------------------------------------------
Praxair, Inc. 50,000 $ 2,350,000
The largest producer of industrial gases
in North and South America.
- -------------------------------------------------------------------------
$ 2,350,000
- -------------------------------------------------------------------------
Communications Services -- 4.8%
- -------------------------------------------------------------------------
Ameritech Corp. 60,000 $ 3,787,500
Provides a variety of communications
services, including local and long
distance telephone, cellular, paging,
Internet access, security monitoring,
and cable TV.
GTE Corp. 80,000 5,490,000
Telecommunications company that provides
local telephone and wireless services in
29 states and long distance service and
Internet access in all 50 states.
- -------------------------------------------------------------------------
$ 9,277,500
- -------------------------------------------------------------------------
Drugs -- 13.8%
- -------------------------------------------------------------------------
American Home Products Corp. 100,000 $ 4,150,000
Discovers, develops, manufactures,
distributes, and sells pharmaceuticals,
consumer health care products, and
agricultural products.
Elan Corp., PLC ADR(1) 150,000 4,809,375
Develops drug delivery systems designed
to improve and control the absorption
and utilization of pharmaceutical
compounds.
Pfizer, Inc. 150,000 5,662,500
A large international pharmaceutical
manufacturer with important positions in
hospital products and animal health.
Sepracor, Inc.(1) 100,000 7,487,499
Develops and markets drugs designed to
be safer, purer, and more effective
versions of existing pharmaceuticals.
Warner-Lambert Co. 70,000 4,637,500
Manufactures and markets drugs, health
care products, and confectionery.
- -------------------------------------------------------------------------
$ 26,746,874
- -------------------------------------------------------------------------
Electronics - Semiconductors -- 2.5%
- -------------------------------------------------------------------------
Intel Corp. 60,000 $ 4,931,250
A manufacturer of semiconductors and
other microcomputer components which
comprise the heart of the personal
computer.
- -------------------------------------------------------------------------
$ 4,931,250
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
GROWTH PORTFOLIO AS OF AUGUST 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Financial - Miscellaneous -- 6.9%
- -------------------------------------------------------------------------
Associates First Capital Corp. 170,000 $ 5,833,125
Provides finance, leasing, and related
services to individual consumers and
businesses in the United States and
internationally.
Federal National Mortgage Association 35,000 2,174,375
U.S. Government sponsored mortgage
lender and provider of secondary
mortgage market.
MBNA Corp. 40,625 1,002,930
Dominant issuer of MasterCard/Visa
credit cards to affinity groups.
MGIC Investment Corp. 100,000 4,343,750
The leading provider of private mortgage
insurance coverage to U.S. banks and
other mortgage suppliers.
- -------------------------------------------------------------------------
$ 13,354,180
- -------------------------------------------------------------------------
Foods -- 2.2%
- -------------------------------------------------------------------------
Tyson Foods, Inc. 264,600 $ 4,250,138
The nation's top poultry processor,
Tyson Foods operates food production and
distribution facilities in 22 states and
18 countries.
- -------------------------------------------------------------------------
$ 4,250,138
- -------------------------------------------------------------------------
Health Services -- 1.0%
- -------------------------------------------------------------------------
Health Management Associates, Inc.,
Class A(1) 250,000 $ 2,000,000
Acquires and manages general acute care
and psychiatric hospitals in rural
areas.
- -------------------------------------------------------------------------
$ 2,000,000
- -------------------------------------------------------------------------
Household Products -- 2.2%
- -------------------------------------------------------------------------
Unilever ADR 60,714 $ 4,181,677
Manufactures branded and packaged
consumer goods including food,
detergents and personal care products.
- -------------------------------------------------------------------------
$ 4,181,677
- -------------------------------------------------------------------------
Information Services -- 4.4%
- -------------------------------------------------------------------------
Automatic Data Processing, Inc. 80,000 $ 3,145,000
The leading independent computing and
payroll processing services firm in the
U.S.
Reynolds & Reynolds, Inc., Class A 250,000 5,468,750
Produces general business forms and
provides computer software and services.
- -------------------------------------------------------------------------
$ 8,613,750
- -------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Insurance -- 6.6%
- -------------------------------------------------------------------------
American International Group, Inc. 62,218 $ 5,766,831
One of the world's leading insurance
companies, operating in 130 countries.
Berkshire Hathaway, Inc., Class B(1) 1,575 3,154,725
Holding company owning subsidiaries in a
variety of business sectors.
Mutual Risk Management Ltd. 139,600 3,839,000
Provides risk management services to
clients seeking an alternative to
traditional commercial insurance,
particularly for workers' compensation.
- -------------------------------------------------------------------------
$ 12,760,556
- -------------------------------------------------------------------------
Investment Services -- 1.8%
- -------------------------------------------------------------------------
Franklin Resources, Inc. 100,000 $ 3,593,750
Provides investment management and
related services to a family of equity
and fixed income mutual funds.
- -------------------------------------------------------------------------
$ 3,593,750
- -------------------------------------------------------------------------
Medical Products -- 3.0%
- -------------------------------------------------------------------------
Medtronic, Inc. 74,321 $ 5,815,618
A medical technology company which
provides therapeutic, diagnostic, and
monitoring products for cardiac rhythm
management, other cardiovascular, and
neurological markets.
- -------------------------------------------------------------------------
$ 5,815,618
- -------------------------------------------------------------------------
Metals and Minerals -- 2.1%
- -------------------------------------------------------------------------
Freeport McMoran Copper & Gold, Inc. 100,000 $ 1,437,500
Operator of third largest copper mine in
the world with world's largest gold
reserves.
Steel Dynamics Corp.(1) 150,000 2,700,000
Owns and operates a steel minimill that
produces thin-slab/flat-rolled steel.
- -------------------------------------------------------------------------
$ 4,137,500
- -------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 2.3%
- -------------------------------------------------------------------------
Precision Drilling Corp.(1) 200,000 $ 4,550,000
Provides land drilling services and
integrated oilfield and industrial
contract services.
- -------------------------------------------------------------------------
$ 4,550,000
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
GROWTH PORTFOLIO AS OF AUGUST 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Oil and Gas - Exploration and Production -- 2.5%
- -------------------------------------------------------------------------
Anadarko Petroleum Corp. 140,000 $ 4,760,000
Leading independent natural gas and
crude oil production company.
- -------------------------------------------------------------------------
$ 4,760,000
- -------------------------------------------------------------------------
Paper and Forest Products -- 1.9%
- -------------------------------------------------------------------------
Longview Fibre Co. 285,500 $ 3,693,656
A forest products company that produces
lumber, paper, and containers.
- -------------------------------------------------------------------------
$ 3,693,656
- -------------------------------------------------------------------------
Printing and Business Products -- 2.7%
- -------------------------------------------------------------------------
Valassis Communications, Inc.(1) 120,000 $ 5,250,000
A print media company in the field of
sales promotion, generating most of its
revenues by printing and publishing
cents-off coupons and other consumer
purchase incentives primarily for
package goods manufacturers.
- -------------------------------------------------------------------------
$ 5,250,000
- -------------------------------------------------------------------------
Publishing -- 4.0%
- -------------------------------------------------------------------------
Central Newspapers, Inc., Class A 100,000 $ 4,231,250
Publishes the Arizona Republic, the
Arizona Business Gazette, the
Indianapolis Star, the Indianapolis
News, and community newspapers in
Indiana and Louisiana.
McGraw-Hill Companies, Inc. (The) 67,000 3,463,063
Supplies informational products and
services for businesses, education and
industry through a broad range of media.
- -------------------------------------------------------------------------
$ 7,694,313
- -------------------------------------------------------------------------
Retail - Food and Drug -- 5.5%
- -------------------------------------------------------------------------
CVS Corp. 100,000 $ 4,168,750
The largest drugstore chain in the
Northeast.
Safeway, Inc.(1) 140,000 6,518,750
The nation's second-largest food
retailer with over 1,350 stores located
in the western regions of the U.S. and
Canada.
- -------------------------------------------------------------------------
$ 10,687,500
- -------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Retail - Specialty and Apparel -- 7.1%
- -------------------------------------------------------------------------
AutoNation, Inc.(1) 280,000 $ 3,622,500
Retails automobiles across the United
States.
Circuit City Stores, Inc. 120,000 5,160,000
Specialty retailer of brandname consumer
electronics and major appliances.
Home Depot, Inc. (The) 80,000 4,890,000
A chain of do-it-yourself warehouse
style stores.
- -------------------------------------------------------------------------
$ 13,672,500
- -------------------------------------------------------------------------
Specialty Chemicals and Materials -- 4.8%
- -------------------------------------------------------------------------
Corning, Inc. 55,000 $ 3,657,500
One of the world's leading producers of
fiber-optic cable, a product it invented
more than 20 years ago.
Millipore Corp. 150,000 5,662,500
Products use membrane separations
technology to analyze and purify fluids
for a variety of high tech industries.
- -------------------------------------------------------------------------
$ 9,320,000
- -------------------------------------------------------------------------
Total Common Stocks
(identified cost $138,092,219) $190,834,306
- -------------------------------------------------------------------------
COMMERCIAL PAPER -- 1.5%
<CAPTION>
PRINCIPAL
AMOUNT
(000 OMITTED) VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
GE Capital Corp., 5.56%, 9/1/99 $ 2,825 $ 2,825,000
- -------------------------------------------------------------------------
Total Commercial Paper
(amortized cost $2,825,000) $ 2,825,000
- -------------------------------------------------------------------------
Total Investments -- 99.9%
(identified cost $140,917,219) $193,659,306
- -------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.1% $ 164,721
- -------------------------------------------------------------------------
Net Assets -- 100% $193,824,027
- -------------------------------------------------------------------------
</TABLE>
ADR - American Depositary Receipt
(1) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
GROWTH PORTFOLIO AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF AUGUST 31, 1999
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments, at value (identified cost, $140,917,219) $ 193,659,306
Cash 686
Dividends receivable 183,689
Tax reclaim receivable 1,500
Prepaid Trustees fees 1,008
- -----------------------------------------------------------------------------------------------
TOTAL ASSETS $ 193,846,189
- -----------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------
Accrued expenses $ 22,162
- -----------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 22,162
- -----------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $ 193,824,027
- -----------------------------------------------------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $ 141,081,940
Net unrealized appreciation (computed on the basis of identified cost) 52,742,087
- -----------------------------------------------------------------------------------------------
TOTAL $ 193,824,027
- -----------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31, 1999
<S> <C>
Investment Income
- ------------------------------------------------------
Dividends (net of foreign taxes,
$90,897) $ 1,975,609
Interest 304,934
- ------------------------------------------------------
TOTAL INVESTMENT INCOME $ 2,280,543
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Investment adviser fee $ 1,283,177
Trustees fees and expenses 18,040
Custodian fee 118,278
Legal and accounting services 37,012
Amortization of organization expenses 2,934
Miscellaneous 5,972
- ------------------------------------------------------
TOTAL EXPENSES $ 1,465,413
- ------------------------------------------------------
NET INVESTMENT INCOME $ 815,130
- ------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 6,475,018
- ------------------------------------------------------
NET REALIZED GAIN $ 6,475,018
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 31,511,271
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 31,511,271
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 37,986,289
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 38,801,419
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
GROWTH PORTFOLIO AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENT OF CHANGES IN NET ASSET
<TABLE>
<CAPTION>
Increase (Decrease) YEAR ENDED YEAR ENDED
in Net Assets AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- -----------------------------------------------------------------------------
From operations --
Net investment income $ 815,130 $ 1,492,195
Net realized gain 6,475,018 43,962,949
Net change in unrealized appreciation
(depreciation) 31,511,271 (41,647,497)
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 38,801,419 $ 3,807,647
- -----------------------------------------------------------------------------
Capital transactions --
Contributions $ 15,501,714 $ 18,483,169
Withdrawals (40,737,098) (21,817,570)
- -----------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ (25,235,384) $ (3,334,401)
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 13,566,035 $ 473,246
- -----------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------
At beginning of year $ 180,257,992 $ 179,784,746
- -----------------------------------------------------------------------------
AT END OF YEAR $ 193,824,027 $ 180,257,992
- -----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
GROWTH PORTFOLIO AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Ratios to average daily net assets
- -----------------------------------------------------------------------------------------
Expenses 0.71% 0.71% 0.72% 0.72% 0.73%
Net investment income 0.40% 0.73% 0.48% 0.73% 0.67%
Portfolio Turnover 34% 55% 28% 62% 84%
- -----------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR
(000'S OMITTED) $193,824 $180,258 $179,785 $146,732 $134,003
- -----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
GROWTH PORTFOLIO AS OF AUGUST 31, 1999
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 May 1,
1992. The Declaration of Trust permits the Trustees to issue interests in the
Portfolio. The following is a summary of the significant accounting policies
of the Portfolio. The policies are in conformity with generally accepted
accounting principles.
A Investment Valuations -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement prices. Unlisted or
listed securities for which closing sale prices are not available are valued
at the mean between the latest bid and asked prices. Short-term debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost. Other fixed income and debt securities, including listed
securities and securities for which price quotations are available, will
normally be valued on the basis of valuations furnished by a pricing service.
Investments for which valuations or market quotations are unavailable are
valued at fair value using methods determined in good faith by or at the
direction of the Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes. Dividend income is recorded on the ex-dividend date for
dividends received in cash and/or securities. 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. Dividend income may
include dividends that represent returns of capital for federal income tax
purposes.
C 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 one of the Portfolio's investors is a regulated investment
company that invests all or substantially all of its 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.
D Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balances the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reflected as a reduction of
operating expenses on the Statement of Operations.
E Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization were amortized on the straight-line basis
over five years.
F Other -- Investment transactions are accounted for on a trade date basis.
Realized gains and losses are computed based on the specific identification
of the securities sold.
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 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.
Pursuant to the advisory agreement, BMR receives a monthly fee at the annual
rate of 0.625% of the Portfolio's average daily net assets. For the year
ended August 31, 1999, the fee amounted to $1,283,177. 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 officers and
Trustees of the Portfolio are officers of the
19
<PAGE>
GROWTH PORTFOLIO AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
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
Compensation Plan. For the year ended August 31, 1999, no significant amounts
have been deferred.
3 Investment Transactions
- -------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $67,777,037 and $81,742,250, respectively, for the year ended
August 31, 1999.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at August 31, 1999, as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $ 140,917,219
- -------------------------------------------------------
Gross unrealized appreciation $ 64,861,930
Gross unrealized depreciation (12,119,843)
- -------------------------------------------------------
NET UNREALIZED APPRECIATION $ 52,742,087
- -------------------------------------------------------
</TABLE>
5 Line of Credit
- -------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $130 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 eurodollar rate or federal funds rate. In addition, a fee
computed at an annual rate of 0.10% 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, 1999.
20
<PAGE>
GROWTH PORTFOLIO AS OF AUGUST 31, 1999
INDEPENDENT ACCOUNTANTS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS
OF GROWTH PORTFOLIO:
- ---------------------------------------------
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and supplementary data present fairly, in all material
respects, the financial position of Growth Portfolio (the "Portfolio") at August
31, 1999, and the results of its operations, the changes in its net assets and
the supplementary data for the periods indicated in conformity with generally
accepted accounting principles. These financial statements and supplementary
data (hereafter referred to as "financial statements") are the responsibility of
the Portfolio's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 1, 1999
21
<PAGE>
GROWTH PORTFOLIO
Officers
James B. Hawkes
President and Trustee
Thomas E. Faust, Jr.
Vice President and
Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate School of
Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
<PAGE>
EATON VANCE GROWTH FUND AS OF AUGUST 31, 1999
INVESTMENT MANAGEMENT
EATON VANCE GROWTH FUND
Officers
James B. Hawkes
President and Trustee
Thomas E. Faust, Jr.
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate School of
Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
GROWTH PORTFOLIO
Officers
James B. Hawkes
President and Trustee
Thomas E. Faust, Jr.
Vice President and
Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate School of
Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
22
<PAGE>
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<PAGE>
INVESTMENT ADVISER OF GROWTH PORTFOLIO
Boston Management and Research
The Eaton Vance Building
255 State Street
Boston, MA 02109
ADMINISTRATOR OF EATON VANCE GROWTH FUND
Eaton Vance Management
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
EATON VANCE GROWTH FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
- --------------------------------------------------------------------------------
4-2668-10/99 GFSRC-10/99
