<PAGE>
TO SHAREHOLDERS
For the six months that ended June 30, 1995, EV Marathon Stock Fund had a total
return of 15.7 percent. That return reflected a change in net asset value per
share from $9.61 on December 31, 1994 to $11.12 on June 30, 1995. By comparison,
the Standard & Poor's 500, an unmanaged index of common stocks, had a total
return of 20.1 percent and the Lipper Growth and Income Fund Index, an unmanaged
index of 342 growth and Income mutual funds, had a total return of 16.9 percent
for the same period.
The Federal Reserve raised short-term interest rates seven times between
February 1994 and February 1995. However, fearing that the economy had slowed to
a halt or even contracted, the Fed lowered the rate by a quarter percentage
point in early July.
During the first six months of 1995, the stock market generally treated
investors well. It was an especially good period for investments in large cap
stocks and companies with a strong international presence.
The decline of the dollar against world currencies caused some investor concern.
However, if the dollar stabilizes, investors are likely to become more confident
and the market may be buoyed by a surge in foreign investment.
The stock market's strong performance in 1995 has been led by stocks in the
technology sector. The Fund's positive performance during this period has been
helped by several technology holdings.
During the first six months of 1995, we have also continued the process, begun
last year, of reducing the number of stocks in the Portfolio. While past
performance is no guarantee of future results, we believe this strategy already
has proved helpful in strengthening the Portfolio's performance.We expect to
continue pruning underperforming investments in the future.
-------------------------------------------------------------------
THE PORTFOLIO'S TOP 10
EQUITY HOLDINGS*
Eastman Kodak Co. ......................... Photographic products
Texas Instruments ......................... Semiconductors
Intel Corp. ............................... Semiconductors
Comcast Corp. ............................. Cable television
Corning Inc. .............................. Consumer products
Exxon ..................................... Oil, gas products
Progressive Corp. ......................... Insurance
Praxair Inc. .............................. Gases
Home Depot ................................ Building material
Frontier Corp. ............................ Telecommunications
*By market value as of June 30, 1995
-------------------------------------------------------------------
Analysts remain uncertain whether the Fed will continue to lower interest rates
in its attempt to achieve a "soft landing" or perhaps even a rebound for the
economy. Regardless of the direction of these changes, we believe that the
Portfolio's combination of income-producing and growth stocks can perform well
for shareholders. We believe that this two-pronged approach, emphasizing stocks
that are chosen through a fundamental investment process, should produce a
winning total return combination over the long term for patient investors.
Sincerely,
/s/James B. Hawkes
James B. Hawkes
President
August 4, 1995
<PAGE>
MANAGEMENT REPORT
An interview with Duncan W. Richardson, Vice President and Manager of the
Stock Portfolio.
Q. DUNCAN, HOW HAVE THE FIRST SIX MONTHS OF 1995 SHAPED UP IN TERMS OF EQUITY
INVESTMENTS?
A. This has been a good period for most stocks. The stocks of large companies
have performed very well, while those of mid- and small-size companies are
up but have generally underperformed the market averages. In terms of
sectors, technology stocks have dominated the market, with many financial
stocks turning in strong performances as well.
Q. HOW DOES THAT TRANSLATE INTO PERFORMANCE FOR EV MARATHON STOCK FUND
A. We've done well during this six-month period. As you can see in the figures
on the previous page, we've not quite matched the S&P 500 average. The S&P
is heavily skewed toward stocks of large companies. In a market such as this
one, in which large company stocks are pacing the market, the average is
quite difficult to match. In terms of our Portfolio, we've seen strong
performance because we've owned a large number of technology and financial
stocks. We've also managed to avoid major problems. The market has been
brutal to the stocks of companies whose fundamentals have fallen. Our
analysts have been great at identifying problems early and getting us out of
these stocks. That's not to say we haven't had some losses, but we've used a
strong selling discipline to avoid large losses.
Q. IN TERMS OF ITS OVERALL HOLDINGS, HOW WOULD YOU DESCRIBE THE PORTFOLIO?
A. It's really a mixture of several components. First, there is a significant
proportion of stocks of large corporations that display growth
characteristics. There is also a significant proportion of income-producing
stocks, such as convertible stocks. Finally, we have what I call special
situations.
Q. WHAT ARE SPECIAL SITUATION STOCKS?
A. As the name implies, these are companies in which we believe that, because
of some unusual situation, additional value in the stock will be realized.
One of the best examples is the Portfolio's largest holding, Eastman Kodak.
This is a well-known company with a strong global franchise whose stock had
not performed well over many years. Now it's doing quite well as the company
reaps the benefits of a major restructuring initiated by its new chief
executive, George Fisher.
Q. WHAT HOLDINGS IN TECHNOLOGY AND FINANCE HAVE PERFORMED WELL?
A. In technology, Intel rose 98 percent for the six-month period, while Texas
Instruments was up more than 78 percent. Both of these are well-known,
strong growth companies that have shown remarkable earnings gains. Of
course, past performance is no guarantee of future returns.
In the financial sector, all of our holdings were helped when interest rates
stopped rising. There are several stocks that were helped along for other
reasons, too. Shawmut National Bank was acquired by Fleet National, MGIC,
the Mortgage Guaranty Investment Corporation, saw a rise in stock price
because the strength of its earnings had been underappreciated. Bank of
Boston's stock price rose as the market started to recognize the growth
prospects for the company's extensive international banking operation.
Q. HOW HAVE THE PORTFOLIO'S HOLDINGS IN OTHER SECTORS PERFORMED?
A. It's hard to generalize, so let's look at some specifics. Overall, the
retail sector of the market was generally poor during this period. In the
Portfolio, our retail stocks generally did better. Our shares in Sears
Roebuck performed well as investors anticipated the spin off of Allstate
Insurance. In the energy sector, Exxon was a strong performer for us, rising
16 percent.
Q. WHAT TYPE OF SELLING DISCIPLINE DO YOU USE IN THE FUND?
A. We first try to be sensitive to price levels before we even purchase a
stock. We then carefully track its performance versus our expectations. If
it underperforms, we revisit the investment case and either sell, if
warranted, or recommit to the shares.
Q. HAS THERE BEEN A RECENT CASE WHERE YOUR FAITH IN A STOCK HAS BEEN JUSTIFIED?
A. The best example is Bank of Boston. The bank does a significant volume of
business in South and Latin America. Its stock price fell in concert with
nearly all Latin American investments when the Mexican peso was devalued. On
our analyst's recommendation, we increased our holdings.
We believed most of Bank of Boston's operations would be unaffected by the
problems in Mexico. The stock became so inexpensive on fundamentals that we
also felt it could resurface as an acquisition candidate as the banking
industry consolidated. As it turned out, we were right about the stock's
value, and its price has risen nearly 45 percent during the period.
Q. DO YOU HOLD ON TO ALL THE STOCKS WHOSE PRICES HAVE BEEN RISING?
A. While we'd love to never have to take any capital gains, at some point, we
have to decide whether a stock's price has reached its full potential. If
so, it may well be time to sell. The most recent six-month period provides a
good example. Many technology and financial stocks have become fully valued
on any fundamental earnings progress they are likely to make over the next
few years. We've been taking some profits and investing in areas that may
have more potential.
Q. HAVING SOLD THOSE STOCKS, WHAT ARE YOU BUYING IN THIS RECORD-SETTING MARKET?
A. Recently, we have been acquiring some more stable "defensive" stocks,
particularly companies whose stock we believe to be undervalued. In
addition, we're continuing to balance the needs of our investors for both
growth and income. To increase income, we're buying stocks in such
industries as oil and chemicals and we've been buying some convertible
shares in the metal and mining companies. We've also acquired some food and
food processing stock, ConAgra and Archer-Daniels-Midland Co.
I am a bit wary about some of the valuations that I see in the stock market
right now. I think some estimates of corporate earnings are too optimistic
given the slowdown in the economy and if they are, we could see some
disappointment in the second half of the year. At a time like this, it's
important to be somewhat conservative and for us to be extra diligent on
stock valuations.
We've adopted some other strategies that allow us to be less dependent on
the U.S. economy. We're in some stocks that have an international presence.
Gains overseas could offset any declines in U.S. earnings. We're also in
some stocks whose fundamentals have a different cycle than that of the U.S.
economy, for example, publishing.
Q. WHAT DO YOU THINK THE ECONOMY IS GOING TO BE DOING DURING THE REST OF 1995?
A. We don't spend a great deal of time forecasting the economy, but the Federal
Reserve seems to have been successful for the time being in curbing
inflation and slowing the economy. While we could see two consecutive
quarters of negative growth in the gross domestic product, technically a
"recession," I think any slowdown or recession would be mild. Our analysts
don't report many signs of inflation from their industries.
Q. IF AN INVESTOR IS LOOKING FOR BOTH GROWTH AND INCOME, WHAT IS THE BEST WAY
TO PROCEEd?
A. The objective of the Portfolio is to achieve both growth and income. While
the current dividend yield of the market is at a historic low, total return
opportunities are constantly surfacing. We believe that selection of a
combination of income-producing and growth stocks should produce a
satisfactory long-term total return.
<PAGE>
EV MARATHON STOCK FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
ASSETS:
Investment in Stock Portfolio (Portfolio) at value (Note 1A) $3,129,595
Receivable for Fund shares sold 105,486
Deferred organization expenses (Note 1D) 38,790
Receivable from administrator (Note 6) 23,500
----------
Total assets 3,297,371
LIABILITIES:
Payable for fund shares redeemed $43,961
Payable to affiliates --
Trustees 63
Custodian 483
Accrued expenses 3,068
-------
Total liabilities 47,575
----------
NET ASSETS for 292,279 shares of beneficial interest
outstanding $3,249,796
==========
SOURCES OF NET ASSETS:
Proceeds from sales of shares (including shares
issued to shareholders electing to receive payment
of distributions in shares), less cost of shares
redeemed $2,986,422
Accumulated net realized gain on investments 100,913
Unrealized appreciation of investments 164,889
Undistributed net investment loss (2,428)
----------
Total net assets $3,249,796
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($3,249,796 / 292,279 shares of beneficial interest) $11.12
======
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------
For the Six Months Ended June 30, 1995 (Unaudited)
--------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Dividend income allocated from Portfolio (net of
foreign withholding taxes of $194) $ 24,484
Interest income allocated from Portfolio 4,353
Expenses allocated from Portfolio (7,372)
--------
Total investment income $ 21,465
Expenses --
Compensation of Trustees not members of the
Investment advisers organization $ 63
Distribution fees (Note 4) 7,186
Custodian fee 1,900
Registration fees 9,688
Legal and accounting services 7,859
Transfer agent and dividend disbursing agent fees 1,041
Printing and postage fees 15,547
Amortization of organization expenses (Note 1D) 3,973
Miscellaneous 247
--------
Total expenses 47,504
Deduct --
Preliminary allocation of expenses to the
administrator (Note 6) 23,500
--------
Net expenses 24,004
--------
Net investment loss $ (2,539)
REALIZED AND UNREALIZED GAIN FROM PORTFOLIO:
Net realized gain on investments (identified cost
basis) $111,330
Change in unrealized appreciation of investments 181,577
--------
Net realized and unrealized gain on investments 292,907
--------
Net increase in net assets resulting from operations $290,368
========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994*
------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment loss $ (2,539) $ (444)
Net realized gain (loss) from
Portfolio 111,330 (12,295)
Change in unrealized appreciation
(depreciation) from Portfolio 181,577 (16,688)
---------- ----------
Net increase (decrease) in net
assets resulting from operations $ 290,368 $ (29,427)
Net increase in net assets from
Fund share transactions (Note 2) 1,893,618 1,095,227
---------- ----------
Net increase in net assets $2,183,986 $1,065,800
NET ASSETS:
At beginning of period 1,065,810 10
---------- ----------
At end of period $3,249,796 $1,065,810
========== ==========
*For the period from the start of business, August 17, 1994 to December 31,
1994.
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994*
------------- ------------
FINANCIAL HIGHLIGHTS (for a share
outstanding throughout the period):
NET ASSET VALUE -- Beginning of period $ 9.60 $10.00
------ ------
Income from investment operations:
Net investment loss $(0.01) $(0.01)
Net realized and unrealized gain
(loss) on investments 1.53 (0.39)
------ ------
Total gain (loss) from
investment operations $ 1.52 $(0.40)
------ ------
NET ASSET VALUE -- End of period $11.12 $ 9.60
====== ======
TOTAL RETURN** 15.71% (3.9)%
RATIOS/SUPPLEMENTAL DATA: (to
average daily net assets)***
Expenses 3.25%+ 3.25%+
Net investment income (0.26)%+ (0.74)%+
NET ASSETS AT END OF PERIOD (000'S
OMITTED) $3,250 $1,066
Note: Per share amounts have been computed using average shares outstanding
during the period.
+ Computed on an annualized basis.
* For the period from the start of business, August 17, 1994 to December
31, 1994.
** Total return is calculated assuming a purchase at the net asset value
on the first day and a sale at the net asset value of the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the record date.
*** The expenses related to the operation of the Fund reflect a preliminary
allocation of expenses by the administrator. Had such action not been
taken, the ratios would have been as follows:
RATIOS (to average daily net assets):
Expenses 5.69%+ 3.81%
Net investment income (2.70)%+ (0.18)%
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Marathon Stock Fund (the Fund) a Massachusetts business trust is registered
under the Investment Company Act of 1940, as amended, as a diversified open-end
management investment company. The Fund is a series in the Eaton Vance
Securities Trust. The Fund invests all of its investable assets in interests in
the Stock Portfolio (the Portfolio), a New York Trust, having the same
investment objective as the Fund. The value of the Fund's investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio (3.2% at June 30, 1995). 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 -- Valuations of securities by the Portfolio is
discussed in Note 1 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.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its 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. At
December 31, 1994, the Fund, for federal income tax purposes, had a capital loss
carryover of $10,417, which will reduce the Fund's taxable income arising from
future net realized gain on investment transactions, if any, to the extent
permitted by the Internal Revenue Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve the
Fund of any liability for federal income or excise tax. Such capital loss
carryover will expire on December 31, 2002.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over five
years.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Distributions to shareholders are recorded on
the ex-dividend date.
F. DISTRIBUTIONS -- Generally accepted accounting principles require that
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.
G. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
June 30, 1995 and for the period then ended have not been audited by independent
certified public accountants, but in the opinion of the Fund's management,
reflect all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
(2) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994*
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
Sales 240,700 $2,521,137 111,812 $1,103,506
Issued to shareholders
electing to receive
payment of distribution in
Fund shares -- -- -- --
Redemptions (59,353) (627,519) (880) (8,279)
------- ---------- ------- ----------
Net increase 181,347 $1,893,618 110,932 $1,095,227
======= ========== ======= ==========
*From the start of business, August 17, 1994 to December 31, 1994.
--------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$2,428,301 and $663,437, respectively.
------------------------------------------------------------------------------
(4) 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 accrue
amounts daily to the principal underwriter, Eaton Vance Distributors, Inc.
(EVD), equal to 1/365th of 0.75% of the Fund's average daily net assets, for
providing ongoing distribution services and facilities to the Fund. The Fund
will automatically discontinue accruals to EVD during any period in which
there are no outstanding Uncovered Distribution Charges, which are
approximately equivalent to the sum of (i) 5% of the aggregate amount received
by the Fund for shares sold plus (ii) distribution fees calculated by applying
the rate of 1% over the prevailing prime rate to the outstanding balance of
Uncovered Distribution Charges of EVD, reduced by the aggregate amount of
contingent deferred sales charges (see Note 5) 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. Such
payments would cease upon termination of the distribution agreement (unless made
in accordance with another distribution agreement). As a result, the Fund does
not accrue amounts which may become payable to EVD in the future because the
conditions for recording any contingent liability under generally accepted
accounting principles have not been satisfied. EVD earned $7,186 for the six
months ended June 30, 1995, representing 0.75% of average daily net assets. At
June 30, 1995, the amount of Uncovered Distribution Charges of EVD calculated
under the Plan was approximately $108,067.
In addition, the Plan authorizes the Fund to make payments of service fees
to the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have implemented the Plan by authorizing the Fund to make quarterly
payments of service fees to the Principal Underwriter and Authorized Firms in
amounts not expected to exceed 0.25% of the Fund's average daily net assets for
each fiscal year based on the value of Fund shares sold by such persons and
remaining outstanding for at least twelve months, and that payments of these
service fees shall commence with the quarter ending September 30, 1995. 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 where there are no outstanding Uncovered Distribution Charges of
EVD.
Certain of the officers of the Fund and Directors of the Corporation are
officers and directors of EVD.
<PAGE>
------------------------------------------------------------------------------
(5) CONTINGENT DEFERRED SALES CHARGES
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon the
lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by reinvestment of dividends or capital gain
distributions. The CDSC is imposed at declining rates that begin at 5% in the
first and second year of redemption after purchase, declining one percentage
point each year. No CDSC is levied on shares which have been sold to EVM or its
affiliates or to their respective employees or clients. CDSC charges are paid to
EVD to reduce the amount of Uncovered Distribution Charges calculated under the
Fund's Distribution Plan. CDSC charges received when no Uncovered Distribution
Charges exist will be retained by the Fund. EVD received approximately $7,474 of
CDSC paid by shareholders for the six months ended June 30, 1995.
------------------------------------------------------------------------------
(6) ADMINISTRATOR
The administrator assumed $23,500 of the Funds expenses on a preliminary basis
for the six months ended June 30, 1995. Investment adviser fee and other
transactions with affiliates is discussed in Note 3 of the Portfolio's Notes to
Financial Statements which are included elsewhere in this report.
<PAGE>
--------------------------------------------------------------------------
STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995
(UNAUDITED)
--------------------------------------------------------------------------
COMMON STOCKS -- 84.3%
--------------------------------------------------------------------------
SHARES SECURITY VALUE
--------------------------------------------------------------------------
ADVERTISING - 1.9%
30,000 Omnicom Group, Inc. $ 1,818,750
---------------
AEROSPACE & DEFENSE - 1.6%
40,000 General Motors Corp. Class H $ 1,580,000
---------------
AUTOMOTIVE - 1.0%
31,800 Ford Motor Co. $ 946,050
---------------
BANKS - 3.1%
45,000 Bank of Boston Corp. $ 1,687,500
6,853 Citicorp 396,646
30,000 Shawmut National Corp. 956,250
---------------
$ 3,040,396
---------------
BROADCASTING - 5.7%
35,000 CBS Inc. $ 2,345,000
170,000 Comcast Corp. Class A 3,155,625
---------------
$ 5,500,625
---------------
CAPITAL GOODS - 1.6%
25,000 Caterpillar Inc. $ 1,606,250
---------------
CHEMICALS - 5.1%
15,000 Dow Chemical Co. $ 1,078,125
20,000 DuPont (E.I.) deNemours & Co., Inc. 1,375,000
100,000 Praxair Inc. 2,500,000
---------------
$ 4,953,125
---------------
CONSUMER GOODS & SERVICES - 8.7%
40,000 American Brands, Inc. $ 1,590,000
55,000 Eastman Kodak Co. 3,334,375
40,000 PepsiCo, Inc. 1,825,000
12,100 Procter & Gamble Co. 869,688
25,000 Seagram Co. Ltd. 865,625
---------------
$ 8,484,688
---------------
DRUGS & MEDICAL - 3.6%
25,000 Abbott Laboratories, Inc. $ 1,012,500
15,000 Johnson & Johnson Co. 1,014,375
40,000 Upjohn Co. 1,515,000
---------------
$ 3,541,875
---------------
<PAGE>
--------------------------------------------------------------------------
COMMON STOCKS (Continued)
--------------------------------------------------------------------------
SHARES SECURITY VALUE
--------------------------------------------------------------------------
ENVIRONMENTAL SERVICES - 0.7%
25,000 WMX Technologies, Inc. $ 709,375
---------------
FINANCE & INSURANCE - 7.8%
50,000 American General Corp. $ 1,687,500
30,000 Block (H. & R.), Inc. 1,233,750
15,000 Kansas City Southern Industries 558,750
30,000 MGIC Investment Corp. Wisc. 1,406,250
70,000 Progressive Corp. 2,686,250
---------------
$ 7,572,500
---------------
FOOD - 1.4%
75,000 Archer Daniels Midland Co. $ 1,396,875
---------------
FOREST PRODUCTS - 1.1%
30,000 Rayonier Inc. $ 1,065,000
---------------
INTEGRATED OIL - 4.5%
40,000 Exxon Corp. $ 2,825,000
7,000 Royal Dutch Petroleum Co. 853,125
25,000 Unocal Corp. 690,625
---------------
$ 4,368,750
---------------
MANUFACTURING - DIVERSIFIED - 1.4%
25,000 Illinois Tool Works, Inc. $ 1,375,000
---------------
OIL & GAS EXPLORATION - 3.5%
35,000 Anadarko Petroleum Corp. $ 1,509,375
40,000 Triton Energy Corp. 1,855,000
---------------
$ 3,364,375
---------------
PUBLISHING - 5.5%
20,000 Harcourt General, Inc. $ 850,000
40,000 Houghton Mifflin Co. 2,110,000
25,000 McGraw-Hill, Inc. 1,896,875
20,000 New York Times Co. Class A 470,000
---------------
$ 5,326,875
---------------
REITS - 3.0%
16,000 Chelsea GCA Realty, Inc. $ 432,000
20,000 Equity Residential Properties Trust 557,500
20,000 Nationwide Health Properties, Inc. 780,000
10,000 Post Properties, Inc. 302,500
20,000 ROC Communities, Inc. 442,500
14,200 Trinet Corporate Realty Trust, Inc. 397,600
---------------
$ 2,912,100
---------------
RESTAURANTS & LODGING - 1.1%
30,000 Circus Circus Enterprises, Inc. $ 1,057,500
---------------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
--------------------------------------------------------------------------
COMMON STOCKS (Continued)
--------------------------------------------------------------------------
SHARES SECURITY VALUE
--------------------------------------------------------------------------
RETAILING - 3.7%
60,000 Home Depot, Inc. $ 2,437,500
20,000 Sears Roebuck & Co. 1,197,500
---------------
$ 3,635,000
---------------
SAVINGS & LOAN - 1.1%
50,000 Great Western Financial Corp. $ 1,031,250
---------------
SEMICONDUCTORS - 6.6%
50,000 Intel Corp. $ 3,165,625
24,000 Texas Instruments, Inc. 3,213,000
---------------
$ 6,378,625
---------------
SPECIALTY CHEMICALS - 5.4%
90,000 Corning Inc. $ 2,947,500
20,000 Loctite Corp. 910,000
50,000 Wellman Inc. 1,368,750
---------------
$ 5,226,250
---------------
TELECOMMUNICATIONS - 1.8%
25,000 Chipcom Inc. $ 593,750
30,000 Sprint Corp. 1,008,750
3,000 Telecom Corp. of New Zealand Ltd. ADR 181,875
---------------
$ 1,784,375
---------------
UTILITIES - NATURAL GAS - 0.9%
50,000 Western Gas Resources $ 862,500
---------------
UTILITIES - TELEPHONE - 2.5%
100,000 Frontier Corp. $ 2,400,000
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $66,589,023) $ 81,938,109
---------------
--------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 8.6%
--------------------------------------------------------------------------
15,000 Beverly Enterprises, 5.5s $ 783,750
24,370 Citicorp, $1.217, Series 15 493,493
60,000 Conagra Inc., Series E 2,122,500
10,000 Ford Motor Co., 8.4s 971,250
140,000 Freeport McMoRan Copper & Gold, 5% 3,027,500
10,000 Tejas Gas Corp., 5.25s 453,750
10,000 Valero Energy Corp., 6.5s 460,000
---------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST, $8,052,947) $ 8,312,243
---------------
<PAGE>
--------------------------------------------------------------------------
CONVERTIBLE BONDS - 2.7%
--------------------------------------------------------------------------
FACE
AMOUNT
(000
OMITTED) SECURITY VALUE
--------------------------------------------------------------------------
$ 500 Beverly Enterprises, 7.625s, 3/15/03 $ 477,500
1,920 INCO Ltd., 5.75s, 7/1/04 2,179,200
---------------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST, $2,488,750) $ 2,656,700
---------------
--------------------------------------------------------------------------
CORPORATE BOND - 0.0%
--------------------------------------------------------------------------
$ 50 H.P. Hood & Son, 7.50s, 2/1/01 $ 39,400
---------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST, $50,000) $ 39,400
---------------
--------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 0.1%
--------------------------------------------------------------------------
$ 55 U.S. Treasury Note, 4.25s, 11/30/95 $ 54,708
---------------
TOTAL U.S. TREASURY OBLIGATIONS -
(IDENTIFIED COST, $55,077) $ 54,708
---------------
--------------------------------------------------------------------------
SHORT TERM INVESTMENTS - 4.5%
--------------------------------------------------------------------------
$2,413 Ford Motor Credit Co., 5.95s, 7/10/95 $ 2,409,410
1,976 Melville Corp., 6.23s, 7/3/95 1,975,315
---------------
TOTAL SHORT TERM INVESTMENTS
AT AMORTIZED COST $ 4,384,725
---------------
TOTAL INVESTMENTS - 100.2%
(IDENTIFIED COST, $81,620,522) $ 97,385,885
OTHER ASSETS, LESS LIABILITIES - -0.2% (208,910)
---------------
NET ASSETS - 100% $ 97,176,975
===============
The accompanying notes are an integral part
of the financial statements
<PAGE>
STOCK PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$81,620,522) $97,385,885
Cash 1,234
Receivable for investments sold 830,972
Dividends receivable 223,575
Interest receivable 68,187
Deferred organization expenses (Note 1C) 13,357
-----------
Total assets $98,523,210
LIABILITIES:
Payable for investments purchased $ 176,940
Written options outstanding, at value (premiums
received, $296,672) (Note 1E) 1,160,000
Payable to affiliates --
Trustees fees 2,500
Custodian fees 2,984
Accrued expenses 3,811
----------
Total liabilities 1,346,235
-----------
NET ASSETS applicable to investors' interest in Portfolio $97,176,975
===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $82,274,940
Net unrealized appreciation of investments and
written options
(computed on the basis of identified cost) 14,902,035
-----------
Total net assets $97,176,975
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
------------------------------------------------------------------------------
For the six months ended June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$8,355) $ 1,138,155
Interest 210,344
-----------
Total income 1,348,499
Expenses --
Investment adviser fee (Note 3) $ 282,322
Compensation of directors, not members of the
Investment Adviser Organization (Note 3) 5,676
Custodian fee (Note 3) 34,046
Legal and audit fees 16,522
Amortization of organizational expenses
(Note 1C) 1,610
Miscellaneous 3,092
----------
Total expenses 343,268
-----------
Net investment income 1,005,231
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments (identified cost
basis) $4,922,340
----------
Change in unrealized appreciation/(depreciation) on:
Investment securities 9,441,804
Written option transactions (863,328)
----------
Net unrealized gain 8,578,476
Net realized and unrealized gain on
investments 13,500,816
-----------
Net increase in net assets resulting from operations $14,506,047
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 1995 1994*
------------- ------------
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,005,231 $ 908,166
Net realized gain/(loss) on investment
transactions 4,922,340 (2,035,741)
Increase/(decrease) in unrealized
appreciation of investments and
written options 8,578,476 (1,601,217)
------------ -----------
Net increase/(decrease) in net assets
resulting from operations $ 14,506,047 $(2,728,792)
------------ -----------
Capital transactions--
Contributions $ 6,262,463 $ 2,390,694
Withdrawals (9,110,570) (5,494,445)
------------ -----------
Decrease in net assets resulting from
capital transactions $ (2,848,107) $(3,103,751)
------------ -----------
Total increase/(decrease) in net assets $ 11,657,940 $(5,832,543)
NET ASSETS:
At beginning of period 85,519,035 91,351,578
------------ -----------
At end of period $ 97,176,975 $85,519,035
============ ===========
------------------------------------------------------------------------------
SUPPLEMENTARY DATA
------------------------------------------------------------------------------
RATIOS (As a percentage of average net assets):
Expenses 0.77%+ 0.73%+
Net investment income 2.24%+ 2.45%+
PORTFOLIO TURNOVER 62% 28%
+Computed on an annualized basis.
*For the period from the start of business, August 1, 1994 to December 31, 1994.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Stock Portfolio (the Portfolio) is registered under the Investment Company Act
of 1940 as a diversified open-end investment company which was organized as a
trust under the laws of the State of New York on May 1, 1992. The Declaration of
Trust permits the Trustees to issue beneficial interests in the Portfolio. The
following is a summary of significant accounting policies of the Portfolio. The
policies are in conformity with generally accepted accounting principles.
A. SECURITY VALUATIONS -- Investments in securities traded on a national
securities exchange or in the NASDAQ National Market are valued on the basis of
the last reported sales prices on the last business day of the period. If no
sale is reported on that date, a security is valued, if quoted on such a day, at
not lower than the old bid price nor higher than the asked prices. Prices on
such exchanges will not be used for valuing debt securities if in the Trustees
judgment, some other valuation method more accurately reflects the fair market
value of such a security. Securities for which over-the-counter market
quotations are readily available are valued on the basis of the mean between the
last bid and asked prices. Short-term securities are valued at cost, which
approximates market value. All other securities and assets are appraised to
reflect their fair value as determined in good faith by the Trustees.
B. INCOME TAXES -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. 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 Code) in order for its investors to satisfy them. The Portfolio will
allocate at least annually among its investors each investors' distributive
share of the Portfolio's net investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit.
C. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
D. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the ex-
dividend date. Realized gains and losses on the sale of investments are
determined on the identified cost basis.
E. WRITTEN OPTIONS -- The Fund may write call or put options for which premiums
are received and are recorded as liabilities, and are subsequently adjusted to
the current value of the options written. Premiums received from writing options
which expire are treated as realized gains. Premiums received from writing
options which are exercised or are closed are offset against the proceeds or
amount paid on the transaction to determine the realized gain or loss. If a put
option is exercised, the premium reduces the cost basis of the securities
purchased by the Fund. The Fund as a writer of an option may have no control
over whether the underlying securities may be sold (call) or purchased (put) and
as a result bears the market risk of an unfavorable change in the price of the
securities underlying the written option.
F. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
June 30, 1995 and for the six month period then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregrated $53,626,239 and $56,700,885, respectively.
------------------------------------------------------------------------------
(3) 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 at the annual rate of 5/8 of 1% of average daily net assets. For the six
months ended June 30, 1995, the fee amounted to $282,322. Except as to
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. Investors Bank & Trust Company (IBT), an
affiliate of EVM and BMR, 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. 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 Compensation Plan. For the six months ended June 30,
1995, no significant amounts have been deferred.
------------------------------------------------------------------------------
(4) 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 bank. The line of credit consists of a $20 million committed facility and a
$100 million discretionary facility. Borrowings will be made by the Portfolio
solely to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Interest is charged to each portfolio based on its borrowings
at an amount above either the bank's adjusted certificate of deposit rate, a
variable adjusted certificate of deposit rate, or a federal funds effective
rate. In addition, a fee computed at an annual rate of 1/4 of 1% on the $20
million committed facility and on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds and portfolios
at the end of each quarter. The Portfolio did not have any significant
borrowings or allocated fees during the period. At June 30, 1995, the Fund did
not have an outstanding balance pursuant to the line of credit.
<PAGE>
------------------------------------------------------------------------------
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value
of the investments owned at June 30, 1995, as computed on a federal income tax
basis, are as follows:
Aggregate cost $81,620,522
===========
Gross unrealized appreciation $16,194,207
Gross unrealized depreciation 428,844
-----------
Net unrealized appreciation $15,765,363
===========
------------------------------------------------------------------------------
(6) FINANCIAL INSTRUMENTS
The Fund regularly trades in financial instruments with off-balance-sheet risk
in the normal course of its investing activities and to assist in managing
exposure to market risks such as interest rates and foreign currency exchange
rates. These financial instruments include written options. The notational or
contractual amounts of these instruments represent the investment the Fund has
in particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered. A summary of obligations under these
financial instruments at June 30, 1995 is as follows:
Written Option Transactions
Transactions in written options for the period ended June 30, 1995 were as
follows:
PRINCIPAL AMOUNTS
OF CONTRACTS
(000 OMITTED) PREMIUMS
----------------- --------
Outstanding, beginning of period -- --
Options written 990 $296,672
Options exercised -- --
Options expired -- --
--- --------
Outstanding, end of period 990 $296,672
=== ========
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT
<S> <C> <C>
EV MARATHON OFFICERS TRUSTEES
STOCK FUND JAMES B. HAWKES DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 DUNCAN W. RICHARDSON Chairman, Newspapers of
Vice President New England, Inc.
JAMES L. O'CONNOR SAMUEL L. HAYES, III
Treasurer Jacob H. Schiff Professor of
THOMAS OTIS Investment Banking, Harvard
Secretary University Graduate School of
Business Administration
NORTON H. REAMER
President and Director,
United Asset Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
---------------------------------------------------------------------------
STOCK PORTFOLIO OFFICERS TRUSTEES
24 Federal Street JAMES B. HAWKES DONALD R. DWIGHT
Boston, MA 02110 President, Trustee President, Dwight Partners, Inc.
DUNCAN W. RICHARDSON Chairman, Newspapers of
Vice President and New England, Inc.
Portfolio Manager SAMUEL L. HAYES, III
JAMES L. O'CONNOR Jacob H. Schiff Professor of
Treasurer Investment Banking, Harvard
THOMAS OTIS University Graduate School of
Secretary Business Administration
NORTON H. REAMER
President and Director,
United Asset Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
</TABLE>
<PAGE>
INVESTMENT ADVISER OF
STOCK PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV MARATHON STOCK FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
[LOGO]
EV MARATHON
STOCK
FUND
SEMI-ANNUAL
SHAREHOLDER REPORT
JUNE 30, 1995
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.
EV MARATHON STOCK FUND
24 FEDERAL STREET
BOSTON, MA 02110
M-STSRC
