<PAGE>
TO SHAREHOLDERS
During the period from the Fund's inception on November 4, 1994 until December
31, 1994, EV Classic Stock Fund had a total return of -1.3 percent. That return
was the result of a decline in net asset value to $9.87 per share from $10.00
per share at the time of inception. By comparison, the S&P 500, an unmanaged
index of common stocks, had a total return of 0.1 percent for the same period.
The economy continued to grow solidly throughout the year, although investors
found the period to be extremely difficult. During the year, the stock market
watched nervously for signs of rising inflation as the Federal Reserve increased
short term rates a total of six times. Overall, the interest rate increase was
greater than many analysts anticipated. Inflation remained in the range of 2.7
percent for the year.
The increasing interest rates had a significant negative effect on
interest-sensitive stocks, most notably the stocks of real estate investment
trusts, financial service companies and utilities. The year also was
characterized by great volatility both in the prices of individual stocks and
entire sectors of the market.
Cyclical stocks were among the better performers during the first half of the
year. During the second six months, growth stocks rallied.
PORTFOLIO STRATEGY
EV Classic Stock Fund seeks total return for its shareholders by investing for
both growth and income.
During the year, the Portfolio's performance was buoyed by a number of stocks,
including:
LOCTITE. This company manufactures sealants and adhesives. It was a strong
performer in 1994 and has significant international business that should help
its earnings in the future.
GILLETTE. This consumer products company should benefit from its prominent
international presence.
KODAK. This internationally known company has reorganized with new top
management and seems poised to take advantage of business opportunities in 1995.
EV CLASSIC STOCK FUND
THE PORTFOLIO'S 10 LARGEST HOLDINGS*
Eastman Kodak Co...............Photographic products
Exxon Corp........................Petroleum products
J.C. Penney...................................Retail
Pepsico Inc......................Beverages, consumer
Texas Instruments.....................Semiconductors
Harcourt General Inc......................Publishing
General Motors............................Automotive
Loctite Corp.....................Specialty chemicals
Sears Roebuck.................................Retail
McGraw-Hill Inc...........................Publishing
*as of 12/31/94
Of course, past performance is no guarantee of future returns, but we believe
that a combination of income-producing and growth stocks will provide a
satisfactory long-term total return.
Sincerely,
/s/James B. Hawkes
James B. Hawkes
President
February 21, 1995
<PAGE>
MANAGEMENT REPORT
An interview with Duncan W. Richardson, Vice President and manager of the Stock
Portfolio.
Q. DUNCAN, HOW WOULD YOU CHARACTERIZE THE PAST YEAR FOR EQUITY INVESTORS?
A. To say it was a difficult year would be an understatement. The Fed's
greater-than-expected moves to increase interest rates -- six times in all
-- depressed stock prices in many sectors. As a result, you could almost
describe the year as schizophrenic. During the first half of the year,
cyclicals were popular, while during the second half, growth stocks rallied.
The market also was nervous, with investors focusing much more on the "bad
news" than on good earnings.
Q. IN TERMS OF THE HOLDINGS IN THE STOCK PORTFOLIO, WHAT KINDS OF STOCKS WERE
AFFECTED BY RISING INTEREST RATES?
A. Utilities are often cited as an example of interest rate-sensitive stocks.
Our portfolio was underweighted with utility stocks, but it still suffered
as the prices of utility stocks fell throughout the year. The Portfolio also
contains stocks of real estate investment trusts (REITs) and financial
service companies, all of which can react to changes in interest rates.
Q. DOES THAT MEAN THAT IF INTEREST RATES PEAK, THESE STOCK PRICES COULD
IMPROVE?
A. Yes. Obviously, no one can predict what's going to happen to interest rates,
if they are near or at their peak, as some believe, prices of
interest-sensitive stocks could potentially rebound.
Q. YOU DESCRIBE THE MARKET AS NERVOUS. HOW DID THIS AFFECT INDIVIDUAL STOCKS?
A. The market was quick to punish companies for the least bit of disappointing
news. In some cases, companies were punished for only meeting expectations.
In other cases, bad news about one company caused investors to flee an
entire market segment, depressing the prices of many stocks within it. In
the Portfolio, we had a number of consumer services stocks, a segment that
includes retail, and 1994 was not a good year for retail stocks. Automotive
stocks also declined as the year progressed, despite strong earnings gains.
The sustainability of these and other cyclical earnings gains in a higher
interest rate, slower growth economy, was increasingly suspect.
Q. WHAT IS THE INVESTMENT STRATEGY OF THE PORTFOLIO?
A. The basic strategy is two-pronged and is designed to provide the investor
with substantial total return over time. We generally invest in blue chip
companies that we believe demonstrate superior growth prospects. We also
invest in stocks that pay high yields -- integrated oils, utilities and
REITs, for instance. All of the investment ideas are generated from the
"bottom up" fundamental research performed by our analysts.
<PAGE>
Q. WHAT ARE SOME OF THE PORTFOLIO'S SUCCESS STORIES THIS YEAR?
A. A number of stocks performed well for us. Gillette Co. is one. It's a well
known company with a tremendous international presence. It did well in 1994
and is positioned to take advantage of international growth opportunities in
1995. Eastman Kodak is another large, well-known company with a terrific
base of business on which to build. The company is benefiting from a
restructuring and a change in top leadership. Its a story that we believe
will get better in 1995.
Q. ARE THERE OTHER STOCKS IN THE PORTFOLIO FOR WHICH YOU HAVE HIGH HOPES?
A. Yes. One is Exxon. It's a large petroleum products company with a proven
record of growth, and it's expected to benefit from the end of litigation
over the Exxon Valdez supertanker incident.
There are a number of publishing stocks in the Portfolio -- Harcourt
General, McGraw Hill and Houghton Mifflin. The educational publishing
business goes through distinct cycles, and we're now at the beginning of a
time when states are making major purchases of textbooks. We are looking for
the business of these companies to be very strong starting in 1995, somewhat
independent of changes in the economy. The time to own these stocks is
before this spending boom begins, and that's why they're in the Portfolio
right now.
Q. HAVE YOU SET GOALS FOR THE PORTFOLIO IN 1995?
A. It could very well be a second year of less-than-historical returns for the
equity market. Still, our goal is to consistently outperform the market
returns. This stage of the economic cycle argues for some conservatism. We
want to intelligently take market risks based on our assessment of
valuations and fundamentals.
Q. THERE ARE THOSE ANALYSTS WHO BELIEVE THAT WE'RE ABOUT TO ENTER A PERIOD WHEN
GROWTH STOCKS ARE STRONGER. ARE YOU AMONG THEM?
A. We could see conditions under which the year-end rally in growth stocks
continues into 1995. For example, if higher interest rates successfully slow
the economy, the focus of investors will stay on steady earnings gains that
many of these growth companies deliver in a sluggish economy. I feel we are
unlikely to have more than a modest slowdown in 1995 and that the worldwide
economic expansion will resume in 1996 and beyond.
Q. HOW WILL THAT PHILOSOPHY AFFECT THE INVESTMENTS THAT YOU MAKE?
A. We're keeping a somewhat higher than normal cash reserve that we'll use to
take advantage of any opportunities that we might see as the year
progresses. Our purchases of growth stocks will be opportunistic ones, but
we'll be keeping a substantial weighting in more economically sensitive
sectors.
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV CLASSIC STOCK FUND
AND THE S&P 500 STOCK INDEX
From December 1, 1994, through December 31, 1994
CUMULATIVE TOTAL RETURN
Life of fund* -1.3%
C. Stock S&P 500
11/94 10,000 10,000
12/94 10,154 10,197
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
*Investment operations commenced on 11/4/94.
THE FUND'S PERFORMANCE
In accordance with guidelines issued by the Securities and Exchange Commission,
the above chart compares the Fund's total return with that of a broad-based
securities market index. The lines on the chart represent the total returns of
$10,000 hypothetical investments in the Fund and the S&P 500 Stock Index.
TOTAL RETURN FIGURES
The solid line on the chart represents the Fund's performance. The Fund's total
return figure reflects Fund expenses, fees and Portfolio transaction costs, and
assumes the reinvestment of income dividends and capital gain distributions.
The dotted line represents the performance of the S&P 500 Stock Index, a
broad-based, widely recognized unmanaged index of 500 common stocks. The Index's
total return does not reflect any commissions or expenses that would be incurred
if an investor individually purchased or sold the securities represented in the
Index.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------
EV CLASSIC STOCK FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------------------------------------
December 31, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investment in Stock Portfolio (Portfolio), at value (Note 1A) $144,544
Deferred organization expenses (Note 1D) 36,777
Receivable from administrator (Note 5) 3,165
--------
Total assets $184,486
LIABILITIES:
Accrued organizational expense $37,995
Accrued expenses 854
------
Total liabilities $ 38,849
--------
NET ASSETS for 14,749 shares of beneficial interest outstanding $145,637
========
SOURCES OF NET ASSETS:
Proceeds from sales of shares, less cost of shares redeemed $140,845
Undistributed net investment income 84
Unrealized appreciation of investments 4,708
--------
Total net assets $145,637
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($145,637 / 14,749 shares of beneficial interest) $ 9.87
======
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------------
For the period from the start of business November 4, 1994 to December 31, 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Dividend income allocated from Portfolio $ 179
Interest income allocated from Portfolio 37
Expenses allocated from Portfolio (53)
------
Total investment income $ 163
Expenses --
Distribution fees (Note 4) $ 59
Custodian fees 250
Registration fees 350
Amortization of organization expenses (Note 1D) 1,218
Miscellaneous 1,367
------
Total expenses $3,244
Deduct --
Allocation of expenses to the administrator (Note 5) 3,165
------
Net expenses 79
------
Net investment income $ 84
REALIZED AND UNREALIZED GAIN FROM PORTFOLIO:
Net realized gain on investments (identified cost basis) $ 15
Change in unrealized appreciation of investments 4,708
------
Net realized and unrealized gain on investments 4,723
------
Net increase in net assets resulting from operations $4,807
======
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------------
For the period from the start of business November 4, 1994 to December 31, 1994
- --------------------------------------------------------------------------------------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 84
Net realized gain from Portfolio 15
Change in unrealized appreciation from Portfolio 4,708
--------
Net increase in net assets resulting from operations $ 4,807
Net increase in net assets resulting from Fund share
transactions (Note 2) 140,820
--------
Net increase in net assets $145,627
--------
NET ASSETS:
At beginning of period 10
--------
At end of period (including undistributed net investment income
of $84) $145,637
========
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (continued)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For the period from the start of business November 4, 1994 to December 31, 1994
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (for a share outstanding
throughout the period):
NET ASSET VALUE -- Beginning of period $10.00
------
Income from investment operations:
Net investment income $ --
Net realized and unrealized gain on investments (0.13)
------
Total income from investment operations $(0.13)
======
NET ASSET VALUE -- End of period $ 9.87
======
TOTAL RETURN*** (1.30)%
RATIOS/SUPPLEMENTAL DATA: (to average daily net assets)**
Expenses 1.59%+
Net investment income 1.01%+
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 146
+Computed on an annualized basis.
*Includes the Fund's share of Stock Portfolio's allocated expenses for the
period from November 4, 1994 to December 31, 1994.
**The expenses related to the operation of the fund reflect an assumption 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 39.84 %+
Net investment income (37.23)%+
***Total return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the
last day of each period reported. Dividends and distributions, if
any, are assumed to be reinvested at the net asset value on the
record date.
The accompanying notes are an integral part of the financial statements
<PAGE>
------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Classic 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 (0.17% at December 31, 1994). 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.
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. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of Fund
shares and other distribution costs are charged to operations. For tax purposes,
commissions paid were charged to paid-in capital prior to November 23, 1994 and
subsequently charged to operations. The change in the tax accounting practice
was prompted by a recent Internal Revenue Service ruling and has no effect on
either the Fund's current yield or total return (Note 4).
G. 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.
<PAGE>
- --------------------------------------------------------------------------------
(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 from the start of business, November 4, 1994, to
December 31, 1994 were as follows:
SHARES AMOUNT
----- -------
Sales 14,749 $140,820
Issued to shareholders electing to
receive payment of distribution in
Fund shares -- --
Redemptions -- --
------ --------
Net increase 14,749 $140,820
====== ========
- ------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$140,820 and $1,172, respectively.
<PAGE>
------------------------------------------------------------------------------
(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 pay the
principal underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to
1/365th of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 6.25% of
the aggregate amount received by the Fund for shares sold plus, (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of EVD,
reduced by amounts theretofore paid to EVD.
The amount payable to EVD with respect to each day is accrued on such day as a
liability of the Fund and, accordingly, reduces the Fund's net assets. 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 $59 for the period
from the start of business, November 4, 1994 to December 31, 1994 representing
0.75% (annualized) of average daily net assets. At December 31, 1994, the amount
of Uncovered Distribution Charges of EVD calculated under the Plan was
approximately $8,794.
In addition, the Plan provides that the Fund may 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 of the Fund have initially implemented this provision of the Plan by
authorizing the Fund to make payments of service fees to the Principal
Underwriter, Authorized Firms and other persons in each fiscal year of the Fund
in amounts not exceeding 0.25% (per annum) of the Fund's average daily net
assets. Provision for service fee payments for the period from the start of
business, November 4, 1994, to December 31, 1994 amounted to $20. Certain of the
officers and Trustees of the Fund are officers or directors of EVD.
- --------------------------------------------------------------------------------
(5) ADMINISTRATOR
The administrator assumed $3,165 of the Fund's expenses for the period from the
start of business, November 4, 1994, to December 31, 1994. 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.
- --------------------------------------------------------------------------------
(6) SUBSEQUENT EVENT
Shares purchased on or after January 30, 1995 and redeemed during the first year
after purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge
at a rate of one percent of redemption proceeds, exclusive of all reinvestments
and capital appreciation in the account. No contingent deferred sales charge is
imposed on exchanges for shares of other funds in the Eaton Vance Classic Group
of Funds or Eaton Vance Money Market Fund which are distributed with a
contingent deferred sales charge.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of
EV Classic Stock Fund, a series of Eaton Vance Securities Trust:
We have audited the accompanying statement of assets and liabilities of EV
Classic Stock Fund, a series of Eaton Vance Securities Trust, as of December 31,
1994, the related statements of operations, changes in net assets and financial
highlights for the period from November 4, 1994 (start of business) to December
31, 1994. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1994 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of EV
Classic Stock Fund, a series of Eaton Vance Securities Trust, as of December 31,
1994, the results of its operations, changes in its net assets and financial
highlights for the period from November 4, 1994 (start of business) to December
31, 1994, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 3, 1995
<PAGE>
- --------------------------------------------------------------------------------
STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
COMMON STOCKS -- 83.6%
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
ADVERTISING - 0.6%
10,000 Omnicom Group, Inc. $ 517,500
-----------
AEROSPACE & DEFENSE - 1.2%
30,000 General Motors Corp. Class H $ 1,046,250
-----------
AUTOMOTIVE - 3.4%
10,400 Chrysler Corp. $ 509,600
16,800 Ford Motor Co. 470,400
45,000 General Motors Corp. 1,901,250
-----------
$ 2,881,250
-----------
BANKS - 2.5%
40,000 Bank of Boston Corp. $ 1,035,000
8,500 Michigan National Corp. 635,375
30,000 Shawmut National Corp. 491,250
-----------
$ 2,161,625
-----------
BUSINESS PRODUCTS & SERVICES - 1.6%
25,000 Dun & Bradstreet Corp. $ 1,375,000
-----------
CAPITAL GOODS - 2.6%
30,000 Caterpillar Inc. $ 1,653,750
25,000 Greenfield Industries, Inc. 600,000
-----------
$ 2,253,750
-----------
CHEMICALS - 1.8%
20,000 DuPont (E.I.) deNemours & Co., Inc. $ 1,125,000
35,000 Methanex Corp.* 455,000
-----------
$ 1,580,000
-----------
COMPUTER SERVICES - 1.6%
35,000 General Motors Corp. Class E $ 1,347,500
-----------
CONSUMER GOODS & SERVICES - 9.2%
60,000 Eastman Kodak Co. $ 2,865,000
10,000 Gillette Co. 747,500
60,000 Pepsico, Inc. 2,175,000
12,100 Procter & Gamble Co. 750,200
120,000 Stride Rite Corp. 1,335,000
-----------
$ 7,872,700
-----------
ENVIRONMENTAL SERVICES - 1.8%
60,000 Wheelabrator Technologies, Inc. $ 885,000
25,000 WMX Technologies, Inc. 656,250
-----------
$ 1,541,250
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
- --------------------------------------------------------------------------------
COMMON STOCKS (Continued)
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
FINANCE & INSURANCE - 6.7%
50,000 American General Corp. $ 1,412,500
12,175 American International Group, Inc. 1,193,150
25,000 Eagle Financial Corp. 518,750
14,500 Federal National Mortgage Association 1,056,688
34,500 MGIC Investment Corp. Wisc. 1,142,813
10,000 UNUM Corp. 377,500
-----------
$ 5,701,401
-----------
HEALTH CARE - 0.5%
10,000 U.S. Healthcare, Inc. $ 412,500
-----------
INTEGRATED OIL - 9.1%
10,000 Amerada Hess Corp. $ 456,250
40,000 ELF Acquitaine ADR 1,410,000
40,000 Exxon Corp. 2,430,000
7,000 Royal Dutch Petroleum Co. 752,500
20,000 Total American Dep. Rcpts. Petro. ADR 590,000
49,000 Unocal Corp. 1,335,250
40,000 YPF Sociedad Anonima ADR 855,000
-----------
$ 7,829,000
-----------
MANUFACTURING - DIVERSIFIED - 1.9%
25,000 Illinois Tool Works, Inc. $ 1,093,750
20,000 Roper Industries, Inc. 505,000
-----------
$ 1,598,750
-----------
METALS & MINING - 2.7%
40,000 CasTech Aluminum Group, Inc.* $ 610,000
85,000 J & L Specialty Steel, Inc. 1,668,125
-----------
$ 2,278,125
-----------
PAPER & FOREST PRODUCTS - 1.9%
35,000 Williamette Industries, Inc. $ 1,662,500
-----------
PUBLISHING - 5.8%
55,000 Harcourt General, Inc. $ 1,938,750
20,000 Houghton Mifflin Co. 907,500
25,000 McGraw-Hill, Inc. 1,671,875
20,000 New York Times Co. Class A 442,500
-----------
$ 4,960,625
-----------
<PAGE>
- --------------------------------------------------------------------------------
COMMON STOCKS (Continued)
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
REITS - 5.0%
25,200 Chateau Properties, Inc. $ 551,250
16,000 Chelsea GCA Realty, Inc. 436,000
26,000 Columbus Realty Trust 481,000
20,000 Equity Residential Properties Trust 600,000
20,000 Nationwide Health Properties, Inc. 715,000
20,000 Post Properties, Inc. 630,000
20,000 ROC Communities, Inc. 420,000
14,200 Trinet Corporate Realty Trust, Inc. 415,350
-----------
$ 4,248,600
-----------
RETAILING - 5.8%
30,000 Gap Inc. $ 915,000
50,000 Penney (J.C.) Co. Inc. 2,231,250
40,000 Sears Roebuck & Co. 1,840,000
-----------
$ 4,986,250
-----------
SAVINGS & LOAN - 1.8%
95,000 Great Western Financial Corp. $ 1,520,000
-----------
SEMICONDUCTORS - 4.4%
25,000 Intel Corp. $ 1,596,875
29,000 Texas Instruments, Inc. 2,171,375
-----------
$ 3,768,250
-----------
SPECIALTY CHEMICALS - 3.8%
25,000 Great Lakes Chemical Corp. $ 1,425,000
40,000 Loctite Corp. 1,860,000
-----------
$ 3,285,000
-----------
TELECOMMUNICATIONS - 2.5%
30,000 Intelcom Group, Inc.* $ 397,500
30,000 Paging Network, Inc.* 1,020,000
25,000 Sprint Corp. 690,625
-----------
$ 2,108,125
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
- --------------------------------------------------------------------------------
COMMON STOCKS (Continued)
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
UTILITIES - ELECTRIC - 0.6%
25,000 Sierra Pacific Resources $ 471,875
-----------
UTILITIES - NATURAL GAS - 0.8%
22,000 Enron Corp. $ 671,000
-----------
UTILITIES - TELEPHONE - 3.4%
50,000 Alltel Corp. $ 1,506,250
24,000 Southwestern Bell Corp. 969,000
10,000 Telefonos de Mexico Sponsored ADR 410,000
-----------
$ 2,885,250
-----------
UTILITIES - OTHER - 0.6%
35,000 Washington Water Power Corp. $ 476,874
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $65,616,719) $71,440,950
-----------
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 7.6%
- --------------------------------------------------------------------------------
15,000 Beverly Enterprises, 5.5s $ 885,000
40,000 Citicorp, $1.217, Series 15 765,000
30,000 Conagra Inc., Series E 982,500
10,000 Ford Motor Co., 8.4s 920,000
30,000 Freeport McMoRan Copper & Gold, 5% 622,500
28,000 Philippine Long Distance Telephone, 7% 1,515,500
10,000 Tejas Gas Corp., 5.25s 427,500
10,000 Valero Energy Corp., 6.5s 420,000
-----------
$ 6,538,000
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST, $6,388,025) $ 6,538,000
-----------
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS - 4.2%
- --------------------------------------------------------------------------------
FACE AMOUNT
(000 OMITTED)
- ------------------------------------------------------------------------------
$ 500 Beverly Enterprises, 7.625s, 3/15/03 $ 475,000
920 INCO Ltd., 5.75s, 7/1/04 1,016,600
800 Lowes Companies, 3s, 7/22/03 1,064,000
2,000 Office Depot Lyons, 0s, 11/1/08 1,075,000
-----------
$ 3,630,600
-----------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST, $3,269,143) $ 3,630,600
<PAGE>
-----------
- --------------------------------------------------------------------------------
CORPORATE BOND - 0.0%
- --------------------------------------------------------------------------------
FACE AMOUNT
(000 OMITTED) SECURITY VALUE
- ------------------------------------------------------------------------------
$ 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 $ 53,573
-----------
TOTAL U.S. TREASURY OBLIGATION -
(IDENTIFIED COST, $55,077) $ 53,573
-----------
- --------------------------------------------------------------------------------
SHORT TERM INVESTMENTS - 4.2%
- --------------------------------------------------------------------------------
$1,994 American Express Credit Corp.,
5.875s, 1/3/95 $ 1,993,349
1,608 CXC Inc., 5.95s, 1/3/95 1,607,469
-----------
TOTAL SHORT TERM INVESTMENTS
AT AMORTIZED COST $ 3,600,818
-----------
TOTAL INVESTMENTS - 99.7%
(IDENTIFIED COST, $78,979,782) $85,303,341
OTHER ASSETS, LESS LIABILITIES - 0.3% 215,694
-----------
NET ASSETS - 100% $85,519,035
===========
*Non-income producing security.
The accompanying Notes are an integral part
of the financial statements
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------------
December 31, 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (identified cost, $78,979,782) $85,303,341
Cash 285
Dividends receivable 197,420
Interest receivable 49,785
Deferred organization expenses (Note 1E) 14,967
-----------
Total assets $85,565,798
LIABILITIES:
Demand note payable $44,000
Custodian fee payable 2,763
-------
Total liabilities 46,763
-----------
NET ASSETS applicable to investors' interest in Portfolio $85,519,035
===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $79,195,476
Net unrealized appreciation of investments (computed on the
basis of identified cost) 6,323,559
-----------
Total net assets $85,519,035
===========
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------------
For the period from the start of business, August 1, 1994, to December 31, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,049,185
Interest 128,279
-----------
Total income $ 1,177,464
Expenses --
Investment adviser fee (Note 3) $ 230,928
Custodian fee (Note 3) 28,656
Legal and audit fees 7,381
Printing fees 378
Miscellaneous 1,955
-----------
Total expenses 269,298
-----------
Net investment income $ 908,166
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (identified cost basis) $(2,035,741)
Change in unrealized appreciation on investments (1,601,217)
-----------
Net realized and unrealized loss on investments (3,636,958)
-----------
Net decrease in net assets resulting from operations $(2,728,792)
===========
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period from the start of business, August 1, 1994, to December 31, 1994
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 908,166
Net realized loss on investment transactions (2,035,741)
Decrease in unrealized appreciation of investments (1,601,217)
-----------
Net decrease in net assets resulting from operations $(2,728,792)
-----------
Capital transactions --
Contributions $ 2,390,694
Withdrawals (5,494,445)
-----------
Decrease in net assets resulting from capital
transactions $(3,103,751)
-----------
Total increase in net assets $(5,832,543)
NET ASSETS:
At beginning of period 91,351,578
-----------
At end of period $85,519,035
===========
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
RATIOS (As a percentage of average net assets):
Expenses 0.73%+
Net investment income 2.45%+
PORTFOLIO TURNOVER 28%
+Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
-------------------------------------------------------------------------------
(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.
Investment operations began on August 1, 1994, with the acquisition of net
assets of $91,351,578 in exchange for an interest in the Portfolio by one of the
Portfolio's investors. 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.
- --------------------------------------------------------------------------------
(2) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregated $24,023,691 and $28,283,045, respectively.
<PAGE>
- --------------------------------------------------------------------------------
(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
manage- ment 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 period
from the start of business, August 1, 1994 to December 31, 1994, the fee
amounted to $230,928. 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 service 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.
- --------------------------------------------------------------------------------
(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 December 31, 1994, the Fund
did not have an outstanding balance pursuant to the line of credit.
- --------------------------------------------------------------------------------
(5) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at December 31, 1994, as computed on a federal income tax basis, are as
follows:
Aggregate cost $78,949,996
===========
Gross unrealized appreciation $ 9,092,097
Gross unrealized depreciation 2,740,912
-----------
Net unrealized appreciation $ 6,351,185
===========
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Trustees and Investors of
Stock Portfolio:
We have audited the accompanying statement of assets and liabilities of Stock
Portfolio, including the portfolio of investments, as of December 31, 1994, the
related statement of operations, changes in net assets and supplementary data
for the period from August 1, 1994 (commencement of operations) to December 31,
1994. These financial statements and supplementary data are the responsibility
of the Portfolio's management. Our responsibility is to express an opinion on
these financial statements and supplementary data based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and supplementary data are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1994 by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and supplementary data referred to
above present fairly, in all material respects, the financial position of Stock
Portfolio as of December 31, 1994, the results of its operations, changes in its
net assets and supplementary data for the period from August 1, 1994
(commencement of operations) to December 31, 1994, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 3, 1995
<PAGE>
-----------------------------------------------
INVESTMENT MANAGEMENT
EV CLASSIC OFFICERS TRUSTEES
STOCK FUND M. DOZIER GARDNER DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight
Boston, MA 02110 LANDON T. CLAY Partners, Inc.
Vice President, Chairman,
Trustee Newspapers of
EDWIN W. BRAGDON New England, Inc.
Vice President JAMES B. HAWKES
A. WALKER MARTIN Executive Vice
Vice President President,
JAMES L. O'CONNOR Eaton Vance
Treasurer Management
THOMAS OTIS SAMUEL L. HAYES, III
Secretary Jacob H. Schiff
WILLIAM J. AUSTIN, JR. Professor of
Assistant Treasurer Investment Banking,
JANET E. SANDERS Harvard University Graduate
Assistant Treasurer School of Business
and Administration
Assistant Secretary NORTON H. REAMER
President and Director,
United Asset Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary
Trust Company
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
PETER F. KIELY Partners, Inc.
Vice President, Chairman,
Trustee Newspapers of
A. WALKER MARTIN New England, Inc.
Vice President SAMUEL L. HAYES, III
JAMES L. O'CONNOR Jacob H. Schiff
Treasurer Professor of
THOMAS OTIS Investment Banking,
Secretary Harvard
WILLIAM J. AUSTIN, JR.University Graduate
Assistant Treasurer School of
JANET E. SANDERS Business
Assistant Treasurer Administration
and NORTON H. REAMER
Assistant Secretary President and
Director,
PORTFOLIO MANAGER United Asset
DUNCAN W. RICHARDSON Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary
Trust Company
JACK L. TREYNOR
Investment Adviser
and Consultant
<PAGE>
INVESTMENT ADVISER OF
STOCK PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV CLASSIC
STOCK FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
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
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 CLASSIC STOCK FUND
24 FEDERAL STREET
BOSTON, MA 02110
C-STSRC
EV CLASSIC
STOCK
FUND
ANNUAL SHAREHOLDER REPORT
DECEMBER 31, 1994
