<PAGE>
Investment Adviser of
Tax-Managed Growth Portfolio
Boston Management and Research
24 Federal Street, Boston, MA 02110
Administrator of
EV Classic Tax-Managed Growth Fund
Eaton Vance Management
24 Federal Street, Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street, Boston, MA 02110
(617) 482-8260
Custodian
Investors Bank & Trust Company
89 South Street, P.O. Box 1537
Boston, MA 02205-1537
Transfer Agent
First Data Investor Services Group, Inc.
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
C-TGSRC-6/97
[LOGO] Investing
for the
21st
Century
EV CLASSIC
TAX-MANAGED
GROWTH FUND
[graphic omitted]
-------------------------------
Semi-Annual Shareholder Report
April 30, 1997
-------------------------------
EV Classic Tax-Managed Growth Fund
24 Federal Street
Boston, MA 02110
TO SHAREHOLDERS
For the six months ended April 30, 1997, EV Classic Tax-Managed Growth Fund had
a total return of 12.1%. This return, which does not include the 1% contingent
deferred sales charge (CDSC), was the result of the increase in net asset value
to $12.08 per share on April 30, 1997 from $10.78 per share on October 31, 1996.
The Fund's return compares quite favorably to the 7.15% average annual total
return for mutual funds in the Lipper Growth Funds Category over the same time
period.*
GROWTH OF THE U.S. ECONOMY HAS CONTINUED UNABATED IN 1997...
After experiencing moderate growth in the fourth quarter of 1996, the U.S.
economy in the first quarter of 1997 was marked by stronger-than-expected
growth, a tightening labor market, and uneasiness over inflation. First quarter
Gross Domestic Product (GDP) grew at a remarkably fast 5.8% annualized rate, the
strongest quarterly growth in over a decade. Unemployment dropped to 4.9% in
April, the lowest since 1973. Inflation remained low during the period.
Producer, or wholesale, prices declined 0.6% during the month of April, while
consumer prices showed a modest increase of 0.1%. A report on a surging
productivity increase of 2.0% in April, the highest monthly rise in three years,
may help explain why the continued economic strength has not yet led to a rise
in inflation.
...WHILE THE STOCK MARKET HAS SHOWN INCREASED VOLATILITY...
The stock market has shown increased volatility in 1997, responding to a robust
economy, an increase in short-term interest rates in March, and concerns over
further rate hikes by the Federal Reserve.Within a six-week period in March and
April, the Dow Jones Industrial Average declined almost 10% and then fully
recovered to reach new record highs. High-quality, blue chip stocks have
generally continued to perform well, while the performance of small
capitalization stocks has lagged.
THE TAX-MANAGED GROWTH PORTFOLIO: MAXIMIZING AFTER-TAX SHAREHOLDER RETURNS...
The Fund's tax-efficient management strategies provide shareholders with an
effective investment vehicle for maximizing after-tax returns. These strategies
include low turnover, deferring gain recognition whenever possible, and matching
realized gains with losses.
[Photo of M. Dozier Gardner] Sincerely,
/s/ M. Dozier Gardner
M. Dozier Gardner
President
June 9, 1997
- -------------------------------------------------------------------------------
Fund shares are not guaranteed by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- -------------------------------------------------------------------------------
*It is not possible to invest in a Lipper Category.
MANAGEMENT REPORT
An interview with Duncan W. Richardson, Vice President and Portfolio Manager of
the Tax-Managed Growth Portfolio.
Q. DUNCAN, HOW WOULD YOU CHARACTERIZE THE STOCK MARKET DURING THE PAST SIX
MONTHS?
A. In the final quarter of 1996, high-quality blue chip stocks led the market
to record highs. Small capitalization stocks did not perform as well,
producing a two-tiered market. This trend has continued into 1997 but with
an increase in volatility. In March, we experienced a nearly 10% correction
in the Dow Jones Industrial Average and a more severe correction in the
small and mid-capitalization stocks. Now almost all of the market indexes
are achieving new highs.
Q. HOW HAS THE INCREASE IN VOLATILITY AFFECTED THE PERFORMANCE OF THIS FUND?
A. No one likes too much volatility, but we have been able to take advantage of
the market's turbulence by building up existing positions and adding new
positions - at advantageous prices - in companies we believe have strong
long-term growth prospects.
Q. HAVE YOU INCREASED POSITIONS IN ANY PARTICULAR SECTORS OR HOLDINGS?
A. Yes. Over the last six months, we have increased positions in the oil and
gas exploration, health care, and financial sectors where we believe the
growth prospects remain quite strong. Oil and gas exploration companies were
added on the recent weakness in this sector, while the back-up in interest
rates allowed us to increase the financial sector weighting where some
stocks had been hit pretty hard. We have also added to Home Depot and Boeing
on weakness earlier this year. We like both companies for the long term. In
health care we have added some companies in the medical product and service
areas.
[Photo of Duncan W. Richardson]
DUNCAN W. RICHARDSON
Q. WHAT TECHNIQUES DO YOU USE TO MINIMIZE THE TAX CONSEQUENCES FOR THIS FUND'S
INVESTORS?
A. We use every means at our disposal to avoid having taxable distribu-tions to
shareholders. That starts with investing in high-quality, low
dividend-paying growth stocks and holding them for a sustained period. We
have found that long-term holding of blue chip companies is a very
tax-efficient way to build wealth in the equity markets. The objective of
this Fund is to generate unrealized capital gains in the Portfolio and then
let shareholders decide when to take their gains.
Q. HAVE YOU SOUGHT OPPORTUNITIES FOR GROWTH IN OVERSEAS ECONOMIES?
A. Yes, we have -- mostly through investing in U.S. companies with
multinational operations. We like multinationals, especially since the
dollar has stopped working against them. Many of these large companies have
the best resources to compete in international markets. Their success in
emerging markets should raise the overall corporate growth rates and
valuations. A small percentage of the Fund is invested in large
capitalization foreign companies which compete globally.
Q. WHAT IS YOUR CURRENT ASSESSMENT OF THE ECONOMY?
A. The economy is quite healthy. Both inflation and interest rates are low and
should remain that way. Interest rates may even trend downward. And growth
has been robust enough to keep earnings high. These conditions have been
very good for the stock market.
Q. WHICH INVESTMENT OBJECTIVES WOULD BE BEST SERVED BY THIS FUND?
A. This Fund would be appropriate for a wide variety of investment objectives.
Examples might include: saving for college education; an alternative to a
variable annuity or UGMA investment; or simply dollar-cost averaging in
order to gradually increase exposure to the equity market. It would be a
great vehicle for any taxable investors seeking high-quality U.S. equity
exposure, as well as for those looking for more control over the timing of
their capital gains and/or losses.
A CONTINUING EMPHASIS ON WITH A DIVERSIFIED REPRESENTATION
ABOVE-AVERAGE EARNINGS GROWTH... OF ECONOMIC SECTORS...
THE PORTFOLIO'S 10 LARGEST HOLDINGS* PORTFOLIO SECTOR WEIGHTING*
Intel Corp. 3.00% Health Care 16.4%
PepsiCo, Inc. 2.50% Business Products & Services 14.1%
American Int'l. Group, Inc. 2.33% Financial 12.9%
Pfizer Inc. 2.24% Technology 12.3%
Johnson & Johnson 2.20% Consumer Non-Durables 11.0%
Coca-Cola Company (The) 2.20% Cash & Other 7.7%
Reuters Holdings PLC 1.75% Energy 6.9%
Monsanto Company 1.74% Capital Goods 6.0%
Merck &Co., Inc. 1.73% Media & Leisure 5.4%
Home Depot, Inc. (The) 1.72% Retail 3.8%
Basic Materials 3.7%
- -------------------------------------------------------------------------------
*Top 10 holdings and sector weighting are as of 4/30/97 and may not be
representative of the Portfolio's current or future investments. Top 10
holdings account for 21.41% of the Portfolio's investments, determined by
dividing the total market value of the holdings by the total net assets of
the Portfolio.
- -------------------------------------------------------------------------------
<PAGE>
EV CLASSIC TAX-MANAGED GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment in Tax-Managed Growth Portfolio (Portfolio), at
value (Note 1A) (identified cost, $50,439,072) $52,741,121
Receivable for Fund shares sold 13,501
Deferred organization expenses (Note 1D) 29,176
-----------
Total assets $52,783,798
LIABILITIES:
Payable for Fund shares redeemed $325,209
Payable to affiliate --
Trustees' fees 13
Accrued expenses 12,790
--------
Total liabilities 338,012
-----------
NET ASSETS for 4,341,836 shares of beneficial interest
outstanding $52,445,786
===========
SOURCES OF NET ASSETS:
Paid-in capital $49,231,252
Accumulated net realized gain from Portfolio
(computed on the basis of identified cost) 960,750
Accumulated net investment loss (48,265)
Unrealized appreciation from Portfolio (computed on
the basis of identified cost) 2,302,049
-----------
Total $52,445,786
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
(NOTE 6)
($52,445,786 / 4,341,836 shares of beneficial interest
outstanding) $12.08
======
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Six Months Ended April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Income --
Dividend income allocated from Portfolio (net of
foreign taxes withheld of $2,873) $ 224,492
Interest income allocated from Portfolio 39,137
Expenses allocated from Portfolio (98,620)
----------
Net investment income from Portfolio $ 165,009
Expenses --
Compensation of Trustees not members of the
Administrator's organization (Note 3) $ 94
Distribution fees (Note 5) 156,261
Printing and postage 19,612
Transfer and dividend disbursing agent fees 16,357
Registration fees 9,025
Legal and accounting services 5,257
Amortization of organization expenses (Note 1D) 3,159
Custodian fee 1,584
Miscellaneous 1,925
----------
Total expenses 213,274
----------
Net investment loss $ (48,265)
----------
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized gain from Portfolio
(identified cost basis) $ 966,509
Increase in unrealized appreciation (depreciation) --
Investment transactions $1,884,117
Securities sold short 2,151
----------
Net increase in unrealized appreciation 1,886,268
----------
Net realized and unrealized gain $2,852,777
----------
Net increase in net assets from operations $2,804,512
==========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, 1997 PERIOD ENDED
(UNAUDITED) OCTOBER 31, 1996*
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
<S> <C> <C>
Net investment loss $ (48,265) $ (10,530)
Net realized gain 966,509 (5,759)
Increase in unrealized appreciation 1,886,268 415,781
------------ -----------
Net increase in net assets from operations $ 2,804,512 $ 399,492
------------ -----------
Transactions in shares of beneficial interest (Note 4) --
Proceeds from sale of shares $ 40,814,749 $11,069,340
Cost of shares redeemed (1,989,658) (652,659)
------------ -----------
Net increase in net assets from Fund share
transactions $ 38,825,091 $10,416,681
------------ -----------
Net increase in net assets $ 41,629,603 $10,816,173
NET ASSETS:
At beginning of period 10,816,183 10
----------- -----------
At end of period $52,445,786 $10,816,183
=========== ===========
ACCUMULATED NET INVESTMENT LOSS INCLUDED IN NET ASSETS:
At end of period $ (48,265) $ --
========== ===========
*For the period from the start of business, August 2, 1996, to October 31, 1996.
</TABLE>
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
APRIL 30, ENDED
1997 OCTOBER 31,
(UNAUDITED) 1996*
------------ -----------
NET ASSET VALUE, beginning of period $ 10.780 $10.000
--------- -------
INCOME FROM OPERATIONS:
Net investment loss $ (0.011) $ (0.010)
Net realized and unrealized gain 1.311 0.790
--------- -----------
Total income from operations $ 1.300 $ 0.780
--------- -----------
NET ASSET VALUE, end of period $ 12.080 $10.780
========= =======
TOTAL RETURN(1) 12.06% 7.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $ 52,446 $10,816
Ratio of net expenses to average net assets(2) 1.98%+ 2.15%+
Ratio of net investment loss to average net
assets (0.31)%+ (0.84)%+
+ Annualized.
* For the period from the start of business, August 2, 1996, to October 31,
1996.
(1) Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of each period
reported. Dividends and distributions, if any, are assumed to be reinvested
at the net asset value on the payable date. Total return is not computed on
an annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Classic Tax-Managed Growth Fund (the Fund) is a diversified series of Eaton
Vance Mutual Funds Trust (the Trust). The Trust is an entity of the type
commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund invests all of its investable assets in interests
in Tax-Managed Growth Portfolio (the Portfolio), a New York Trust, having the
same investment objective as the Fund. The value of the Fund's investment in
the Portfolio reflects the Fund's proportionate interest in the net assets of
the Portfolio (4.2% at April 30, 1997). The performance of the Fund is
directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements. 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 VALUATION -- Valuation 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 determined in accordance with generally accepted
accounting principles.
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 net investment income and net
realized capital gains. Accordingly, no provision for federal income or excise
tax is necessary. At October 31, 1996, the Fund, for federal income tax
purposes, had a capital loss carryover $8,841 which will reduce taxable income
arising from future net realized gains, if any, to the extent permitted by the
Internal Revenue Code, and thus will reduce the amount of 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 October 31, 2004.
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. USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
F. EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as
custodian to the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based
on the average cash balances the Fund or the Portfolio maintain with IBT. All
significant credit balances used to reduce the Fund's custodian fees are
reported as a reduction of expenses on the Statement of Operations.
G. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating
to April 30, 1997 and for the six months 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.
- ------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
It is the present policy of the Fund to make at least one distribution
annually (normally in December) of all or substantially all of the investment
income allocated to the Fund by the Portfolio, less the Fund's direct and
allocated expenses and at least one distribution annually of all or
substantially all of the net realized capital gains (reduced by any available
capital loss carryforwards from prior years) allocated by the Portfolio to the
Fund, if any.
Shareholders may reinvest all distributions in shares of the Fund without a
sales charge at the net asset value per share as of the close of business on
the record date. The Fund distinguishes between distributions on a tax basis
and a financial reporting basis. Generally accepted accounting principles
require that only distributions in excess of tax basis earnings and profits be
reported in the financial statements as a return of capital. Differences in
the recognition or classification of income between the financial statements
and tax earnings and profits which result in temporary over distributions for
financial statement purposes are classified as distributions in excess of net
investment income or accumulated net realized gains. Permanent differences
between book and tax accounting relating to distributions are reclassified to
paid-in capital.
- ------------------------------------------------------------------------------
(3) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, as its investment adviser. See Note 2 of
the Portfolio's Notes to Financial Statements which are included elsewhere in
this report. Except as to Trustees of the Fund who are not members of EVM's
organization, officers and Trustees receive remuneration for their services to
the Fund out of such management fee. Certain officers and Trustees of the Fund
and the Portfolio are officers and directors/trustees of the above
organizations (Note 5).
- ------------------------------------------------------------------------------
(4) 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
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996*
----------------- ------------------
Sales 3,510,628 1,066,787
Redemptions (172,539) (63,040)
-------- --------
Net increase (decrease) 3,338,089 1,003,747
========= =========
*For the period from the start of business, August 2, 1996 to October 31,
1996.
- ------------------------------------------------------------------------------
(5) DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the Plan) pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay
the Principal Underwriter, Eaton Vance Distributors, Inc. (EVD) amounts equal
to 1/365 of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no
outstanding Uncovered Distribution Charges, which are equivalent to the sum of
(i) 6.25% of the aggregate amount received by the Fund for shares sold plus,
(ii) distribution fees calculated by applying the rate of 1% over the
prevailing prime rate to the outstanding balance of Uncovered Distribution
Charges of EVD reduced by the aggregate amount of contingent deferred sales
charges (see Note 6) and daily amounts theretofore paid to EVD. The amount
payable to EVD with respect to each day is accrued on such day as a liability
of the Fund and, accordingly, reduces the Fund's net assets. For the six
months ended April 30, 1997, the Fund paid or accrued $117,196, to or payable
to EVD representing 0.75% (annualized) of average daily net assets. At April
30, 1997, the amount of Uncovered Distribution Charges of EVD calculated under
the Plan was approximately $2,949,000.
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 any fiscal year.
The Trustees have initially implemented the Plan by authorizing the Fund to
make monthly payments of service fees to the Principal Underwriter and
Authorized Firms in amounts not expected to exceed 0.25% per annum of the
Fund's average daily net assets for any fiscal year. EVD currently expects to
pay an Authorized Firm a service fee at the time of sale equal to 0.25% of the
purchase price of the shares sold by such Firm and monthly payments of service
fees in amounts not expected to exceed 0.25% per annum of the Fund's average
daily net assets based on the value of Fund shares sold by such Firm and
remaining outstanding for at least one year. For the six months ended April
30, 1997, the Fund paid service fees to EVD of $39,065. Service fee payments
are made for personal services and/or the maintenance of shareholder accounts.
During the first year after a purchase of Fund shares, EVD will retain the
service fee as reimbursement for the service fee payment made to the
Authorized Firm at the time of sale.
Certain officers and Trustees of the Fund are officers or directors of EVD.
- ------------------------------------------------------------------------------
(6) CONTINGENT DEFERRED SALES CHARGE
Shares purchased and redeemed within the first year of their purchase (except
shares acquired through the reinvestment of distributions) generally will be
subject to a contingent deferred sales charge (CDSC) 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. EVD received approximately $11,000 of CDSC for the six
months ended April 30, 1997.
- ------------------------------------------------------------------------------
(7) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended April 30, 1997, aggregated $40,876,563 and $1,932,635,
respectively.
<PAGE>
TAX-MANAGED GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
- -------------------------------------------------------------------------------
COMMON STOCKS - 94.7%
- -------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
ADVERTISING 1.3%
Interpublic Group Companies., Inc. 131,000 $ 7,417,875
Omnicom Group, Inc. 170,000 9,010,000
----------------
$ 16,427,875
----------------
AEROSPACE AND DEFENSE - 2.0%
Boeing Company (The) 155,370 $ 15,323,366
Raytheon Co. 226,544 9,882,982
----------------
$ 25,206,348
----------------
BANKS - REGIONAL - 1.2%
BankAmerica Corporation 20,812 $ 2,432,403
First Chicago NBD Corporation 43,007 2,419,139
Norwest Corporation 210,000 10,473,750
----------------
$ 15,325,292
----------------
BANKS AND MONEY SERVICES - 1.1%
Citicorp 115,000 $ 12,951,875
Wells Fargo & Co. 4,265 1,137,689
----------------
$ 14,089,564
----------------
BEVERAGES - 5.4%
Anheuser-Busch Cos., Inc. 210,260 $ 9,014,898
Coca-Cola Co. 430,883 27,414,930
PepsiCo, Inc. 896,292 31,258,183
----------------
$ 67,688,011
----------------
BROADCASTING AND CABLE - 0.2%
Cox Communications Inc., Class A* 93,319 $ 1,819,721
----------------
BUILDING MATERIALS - 0.3%
Masco Corporation 55,540 $ 2,096,635
Stanley Works (The) 40,490 1,574,049
----------------
$ 3,670,684
----------------
BUSINESS SERVICES - MISCELLANEOUS - 0.8%
ACNielson Corp. 45,669 $ 685,030
Cognizant Corp. 137,006 4,469,821
Manpower, Inc. 110,000 4,413,750
----------------
$ 9,568,601
----------------
CHEMICALS - 2.5%
Bayer AG Sponsored American
Depositary Receipt ADR 40,000 $ 1,591,528
Dow Chemical Co. (The) 25,248 2,142,924
E.I. Du Pont de Nemours & Co., Inc. 44,800 4,754,400
Illinois Tool Works, Inc. 10,000 913,750
Monsanto Co. 506,680 21,660,569
----------------
$ 31,063,171
----------------
COMMUNICATIONS EQUIPMENT - 2.0%
L.M. Ericsson Telephone Co. ADR 66,000 $ 2,219,250
Nokia Corp. ADR Class A 280,000 18,094,999
Northern Telecom Ltd. 55,870 4,057,559
----------------
$ 24,371,808
----------------
COMPUTER SOFTWARE - 2.1%
Computer Associates International, Inc. 195,000 $ 10,140,000
Digital Equipment Corp.* 37,680 1,125,690
Microsoft Corp.* 40,000 4,860,000
Oracle Corp.* 250,000 9,937,500
----------------
$ 26,063,190
----------------
COMPUTERS AND BUSINESS EQUIPMENT - 3.5%
Hewlett-Packard Co. 479,528 $ 25,175,219
Imation Corporation* 2,628 62,087
International Business Machines Corp. 53,051 8,527,948
Xerox Corp. 160,000 9,840,000
----------------
$ 43,605,254
----------------
CONTAINERS AND PACKAGING - 0.9%
Crown Cork & Seal Co., Inc. 215,000 $ 11,771,250
----------------
DISTRIBUTION - 0.9%
Supervalu, Inc. 51,506 $ 1,577,371
Sysco Corp. 277,760 9,860,480
----------------
$ 11,437,851
----------------
DRUGS - 10.4%
Allegiance Corporation* 22,661 $ 501,375
Amgen, Inc. 80,000 4,710,000
Astra AB Class A 420,000 17,184,384
Astra AB Class B 60,000 2,382,252
Bristol-Myers Squibb Co. 113,720 7,448,660
Elan Corp., PLC ADR* 330,000 11,220,000
Genentech, Inc.* 80,000 4,690,000
Genzyme Corp. 380,000 8,787,500
Merck & Co., Inc. 239,075 21,636,287
Pfizer, Inc. 290,752 27,912,191
Schering-Plough Corp. 138,120 11,049,600
Smithkline Beecham PLC ADR 37,520 3,025,050
Warner-Lambert Co. 94,644 9,275,112
----------------
$ 129,822,411
----------------
ELECTRIC UTILITIES - 0.1%
Citizens Utilities Corp., Class A* 57,198 $ 664,931
----------------
ELECTRICAL EQUIPMENT - 1.4%
Emerson Electric Co. 150,948 $ 7,660,611
General Electric Co. 74,114 8,217,390
Lincoln Electric Co. 19,700 758,450
Lincoln Electric Co. Class A 19,700 630,400
----------------
$ 17,266,851
----------------
ELECTRONICS - INSTRUMENTS - 1 0%
AMP Inc. 112,340 $ 4,030,198
Thermo Electron Corp. 250,000 8,625,000
----------------
$ 12,655,198
----------------
ELECTRONICS - SEMICONDUCTORS - 4.8%
Intel Corp. 343,948 $ 52,667,037
Texas Instruments, Inc. 84,390 7,531,808
----------------
$ 60,198,845
----------------
ENTERTAINMENT - 0.2%
Walt Disney Company (The) 26,600 $ 2,181,200
----------------
ENVIRONMENTAL SERVICES - 0.3%
Gilbert Associates, Inc. Class A 78,125 $ 1,035,156
WMX Technologies, Inc. 77,930 2,289,194
----------------
$ 3,324,350
----------------
FINANCIAL - MISCELLANEOUS - 2 5%
American Express Co. 76,798 $ 5,059,068
Federal National Mortgage Association 428,820 17,635,223
MGIC Investment Corp. 105,000 8,531,250
----------------
$ 31,225,541
----------------
FOODS - 1.5%
Earthgrains Company (The) 4,204 $ 240,679
McCormick & Co., Inc., Non-voting 229,298 5,417,165
Pioneer Hi-Bred International, Inc. 107,000 7,556,875
Unilever ADR 25,000 4,906,250
----------------
$ 18,120,969
----------------
HEALTH SERVICES - 0.1%
Covance, Inc. 31,250 $ 460,938
Medpartners, Inc.* 17,696 322,952
Quest Diagnostics, Inc. 15,625 275,391
----------------
$ 1,059,281
----------------
HOUSEHOLD PRODUCTS - 1.4%
Colgate-Palmolive Co. 21,826 $ 2,422,686
Gillette Company 90,400 7,684,000
Kimberley-Clark Corp. 114,620 5,874,275
Rubbermaid, Inc. 78,920 1,894,080
----------------
$ 17,875,041
----------------
INDUSTRIAL EQUIPMENT - 2.2%
Dover Corp. 164,580 $ 8,722,740
General Signal Corp. 68,600 2,692,550
Goulds Pumps, Inc. 110,539 4,034,674
Parker-Hannifin Corp. 76,099 3,785,925
Tecumseh Products Co. Class A 135,290 7,305,660
Tecumseh Products Co. Class B 5,000 260,000
----------------
$ 26,801,549
----------------
INFORMATION SERVICES - 3.6%
Automatic Data Processing, Inc. 326,040 $ 14,753,310
Dun & Bradstreet Corp. (The) 132,196 3,255,327
Electronic Data Systems Corp. 180,000 6,007,500
Reuters Holdings PLC, ADR 355,090 21,882,420
----------------
$ 45,898,557
----------------
INSURANCE - 8.7%
American International Group, Inc. 226,633 $ 29,122,340
Berkshire Hathaway Inc. Class A 50 1,900,000
Berkshire Hathaway Inc. Class B 21 26,691
Chubb Corporation 101,050 5,835,638
General RE Corp. 112,446 18,806,593
Highlands Insurance Group, Inc.* 5,070 89,359
Kansas City Life Insurance Co. 35,400 2,389,500
Marsh & McLennan Cos., Inc. 137,172 16,529,226
Mutual Risk Management Ltd. 165,000 6,063,750
Progressive Corp. 170,000 12,941,250
Provident Companies, Inc. 9,599 536,344
Providian Corp. 46,794 2,702,354
Seafield Capital Corp. 35,960 1,141,730
St. Paul Companies, Inc. (The) 130,280 8,728,760
Torchmark Corp. 31,425 1,952,278
----------------
$ 108,765,813
----------------
MEDICAL PRODUCTS - 6.3%
Abbott Laboratories 80,000 $ 4,880,000
Bausch & Lomb Inc. 145,574 5,877,550
Baxter International, Inc. 265,828 12,726,516
Boston Scientific Corporation* 255,000 12,303,750
Johnson & Johnson 449,040 27,503,699
Medtronic, Inc. 122,000 8,448,500
Sofamor Danek Group, Inc.* 173,000 6,747,000
----------------
$ 78,487,015
----------------
METALS - INDUSTRIAL - 0.5%
Inco Ltd 124,000 $ 3,968,000
Nucor Corp. 40,000 1,990,000
----------------
$ 5,958,000
----------------
METALS AND MINERALS - 0.7%
Potash Corp. of Saskatchewan 120,000 $ 9,225,000
----------------
OIL AND GAS - EQUIPMENT AND SERVICES - 2.4%
Baker Hughes, Inc. 39,234 $ 1,353,573
Chevron Corporation 55,600 3,808,600
Dresser Industries, Inc. 79,800 2,384,025
Halliburton Company 50,700 3,580,688
Schlumberger Ltd. 168,203 18,628,481
----------------
$ 29,755,367
----------------
OIL AND GAS - EXPLORATION AND PRODUCTION - 2.3%
Anadarko Petroleum Corp. 211,000 $ 11,578,625
Apache Corporation 156,440 5,318,965
Louisiana Land & Exploration Corp. 25,000 1,250,000
Triton Energy Ltd.* 230,000 8,452,500
Union Pacific Resources Co. 79,795 2,164,439
----------------
$ 28,764,529
----------------
OIL AND GAS - INTEGRATED - 2.5%
Amoco Corporation 47,928 $ 4,007,979
Atlantic Richfield Company 20,883 2,842,698
Enron Oil & Gas 100,000 1,862,500
Exxon Corp. 164,318 9,304,507
Mobil Corp. 74,333 9,663,290
Murphy Oil Corporation 29,700 1,291,950
Sonat Inc. 27,200 1,553,800
----------------
$ 30,526,724
----------------
PAPER AND FOREST PRODUCTS - 0 9%
Champion International Corp. 41,484 $ 1,929,006
Deltic Timber Corp. 8,486 215,325
Minnesota Mining & Manufacturing Co. 26,288 2,287,056
Union Camp Corp. 80,309 3,905,025
Weyerhauser Co. 61,630 2,819,573
----------------
$ 11,155,985
----------------
PHOTOGRAPHY - 1.0%
Eastman Kodak Co. 152,181 $ 12,707,114
----------------
PRINTING AND BUSINESS PRODUCTS - 0.8%
American Business Products, Inc. 146,497 $ 3,515,928
Bowne & Company 91,770 2,431,905
Deluxe Corporation 51,750 1,584,844
Donnelley & Sons 47,896 1,640,438
John H. Harland Co. 51,540 1,063,013
----------------
$ 10,236,128
----------------
PUBLISHING - 3.0%
Dow Jones & Co. 180,000 $ 7,290,000
Gannett Co., Inc. 130,450 11,381,763
Harcourt General Inc. 90,000 4,162,500
Houghton Mifflin Co. 63,700 3,575,163
McGraw-Hill Companies, Inc. (The) 60,608 3,083,432
Times Mirror Co. Class A 151,670 8,379,768
----------------
$ 37,872,626
----------------
REAL ESTATE INVESTMENT TRUST - 0.0%
SLH Corp. 8,990 $ 395,560
----------------
RESTAURANTS - 0.7%
McDonald's Corp. 168,100 $ 9,014,363
----------------
RETAIL - FOOD AND DRUG - 0.9%
Albertson's, Inc. 341,048 $ 11,254,584
----------------
RETAIL - GENERAL - 2.3%
Procter & Gamble Co. 166,600 $ 20,949,949
Wal-Mart Stores, Inc. 294,390 8,316,518
----------------
$ 29,266,467
----------------
RETAIL - SPECIALTY AND APPAREL - 2.2%
Home Depot, Inc. (The) 370,000 $ 21,459,999
Toys "R" Us, Inc.* 201,605 5,745,743
----------------
$ 27,205,742
----------------
SPECIALTY CHEMICALS AND MATERIALS - 5.3%
Corning, Inc. 125,000 $ 6,031,250
Dexter Corp. 47,829 1,428,891
Dionex Corp.* 181,070 8,849,796
Ecolab Inc. 132,620 5,404,265
Great Lakes Chemical Corp. 62,780 2,660,303
International Flavors & Fragrances, Inc. 148,101 6,238,755
International Specialty Products Inc.* 59,000 767,000
Memtec Ltd. ADR 77,500 1,792,188
Millipore Corporation 256,440 9,680,610
Nalco Chemical Co. 196,020 7,056,720
Sealed Air Corp.* 325,000 15,031,250
----------------
$ 64,941,028
----------------
TOBACCO - 0.0%
Schweitzer-Mauduit International, Inc. 5,731 $ 186,974
----------------
TRANSPORTATION - 0.5%
CSX Corp. 15,270 $ 711,964
Union Pacific Corp. 94,210 6,005,888
----------------
$ 6,717,852
----------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $423,651,466) $ 1,181,640,215
----------------
<PAGE>
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 5.1%
- --------------------------------------------------------------------------------
FACE AMOUNT
NAME OF COMPANY (000 OMITTED) VALUE
- -------------------------------------------------------------------------------
American General Finance Commercial
Paper, 5.65%, $ 20,000 $ 20,000,000
Cit Group Holdings Commercial Paper,
5.62%, 5/1/97 11,369 11,369,000
Ford Motor Credit Company Commercial
Paper, 5.50%, 5/7/97 13,000 12,988,083
Prudential Funding Commercial Paper,
5.50%, 5/7/97 20,000 19,981,667
----------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $64,338,750) $ 64,338,750
----------------
TOTAL INVESTMENTS - 99.8%
(identified cost $487,990,216) $1,245,978,965
----------------
- -------------------------------------------------------------------------------
LESS SECURITIES SOLD SHORT - 1.6%
- --------------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
Intel Corp. 100,000 $ (15,312,500)
Hewlett-Packard Co. 100,000 (5,250,000)
----------------
TOTAL SECURITIES RECEIVED SOLD SHORT
(proceeds $20,873,654) $ (20,562,500)
----------------
OTHER ASSETS, LESS LIABILITIES
EXCLUDING SECURITIES SOLD SHORT - 1.8% $ 22,661,229
----------------
NET ASSETS - 100% $ 1,248,077,694
================
*Non-income producing security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
- -------------------------------------------------------------------------------
April 30, 1997 (Unaudited)
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$487,990,216) $1,245,978,965
Cash 40,630
Deposits with brokers for securities sold
short (Note 1E) 20,873,654
Receivable for investments sold 13,500
Dividends and interest receivable 1,713,885
Tax reclaim receivable 68,444
Deferred organization expenses (Note 1C) 7,800
--------------
Total assets $1,268,696,878
LIABILITIES:
Payable to affiliate --
Trustees' fees $ 1,912
Securities sold short, at value (proceeds
received of $20,873,654) (Note 1E) 20,562,500
Accrued expenses 54,772
-----------
Total liabilities 20,619,184
--------------
NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $1,248,077,694
==============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and
withdrawals $ 489,773,690
Unrealized appreciation of investments
(computed on the basis of identified cost) 758,304,004
--------------
Total $1,248,077,694
==============
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the Six Months Ended April 30, 1997 (Unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Income --
Dividends (net of foreign taxes withheld of,
$73,293) $ 7,748,085
Interest 1,233,595
------------
Total income $ 8,981,680
Expenses --
Investment adviser fee (Note 2) $ 3,154,717
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 12,632
Custodian fee 150,883
Legal and accounting services 41,163
Dividends on securities sold short 17,000
Amortization of organization expenses (Note 1C) 1,079
Miscellaneous 7,692
-----------
Total expenses 3,385,166
------------
Net investment income $ 5,596,514
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions
(identified cost basis) $ 41,834,150
Increase in unrealized appreciation --
Investments (identified cost basis) $78,269,110
Securities sold short 311,154
-----------
Net change in unrealized appreciation 78,580,264
------------
Net realized and unrealized gain $120,414,414
------------
Net increase in net assets from
operations $126,010,928
============
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996*
------------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 5,596,514 $ 3,104,708
Net realized gain 41,834,150 9,582,500
Increase in unrealized appreciation 78,580,264 70,637,961
-------------- ------------
Net increase in net assets from operations $ 126,010,928 $ 83,325,169
-------------- ------------
Capital transactions --
Contributions $ 244,553,683 $871,076,582
Withdrawals (59,286,487) (17,702,191)
-------------- ------------
Net increase in net assets from capital
transactions $ 185,267,196 $853,374,391
-------------- ------------
Total increase in net assets $ 311,278,124 $936,699,560
NET ASSETS:
At beginning of period 936,799,570 100,010
-------------- ------------
At end of period $1,248,077,694 $936,799,570
============== ============
* For the period from the start of business, December 1, 1995, to October 31, 1996.
</TABLE>
- -------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996*
-------------- -----------
RATIOS (AS A PERCENTAGE OF NET ASSETS):
Expenses 0.62%+ 0.66%+
Net investment income gain 1.03%+ 0.91%+
PORTFOLIO TURNOVER 3% 6%
AVERAGE COMMISSION RATE (PER SHARE)(1) $0.0589 $0.0585
* For the period from the start of business, December 1, 1995, to October
31, 1996.
+ Annualized.
(1) Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the fiscal year by the total number
of shares purchased and sold during the fiscal year for which
commissions were charged.
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- -------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Tax-Managed Growth Portfolio (the Portfolio) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Portfolio, which was organized as a trust under the laws
of the State of New York on December 1, 1995, seeks to provide long-term
after-tax returns by investing in a diversified portfolio of equity securities.
The Declaration of Trust permits the Trustees to issue interests in the
Portfolio. The following is a summary of significant accounting policies
consistently followed by the Portfolio in the preparation of its financial
statements. The polices are in conformity with generally accepted accounting
principles.
A. INVESTMENT VALUATIONS -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National Market
System are valued at closing sale prices, on the exchange where such securities
are principally traded. Futures positions on securities or currencies are
generally valued at closing settlement prices. Unlisted or listed securities for
which closing sale prices are not available are valued at the mean between the
latest bid and asked prices. Short-term debt securities with a remaining
maturity of 60 days or less are valued at amortized cost, which approximates
value. Other fixed income and debt securities, including listed securities and
securities for which price quotations are available, will normally be valued on
the basis of valuations furnished by a pricing service. Investments for which
valuations or market quotations are unavailable are valued at fair value using
methods determined in good faith by or at the direction of the Trustees.
B. INCOME 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 on its share of such income.
Since some of the Portfolio's investors are regulated investment companies that
invest all or substantially all of their assets in the Portfolio, the Portfolio
normally must satisfy the applicable source of income and diversification
requirements (under the Internal Revenue Code) in order for its investors to
satisfy them. The Portfolio will allocate, at least annually among its
investors, each investor's distributive share of the Portfolio's net 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. FUTURES CONTRACTS -- Upon the entering of a financial futures contract, the
Portfolio is required to deposit either in cash or securities an amount
("initial margin") equal to a certain percentage of the purchase price indicated
in the financial futures contract. Subsequent payments are made or received by
the Portfolio ("margin maintenance") each day, dependent on daily fluctuations
in the value of the underlying security, and are recorded for book purposes as
unrealized gains or losses by the Portfolio. The Portfolio's investment in
financial futures contracts is designed to hedge against anticipated future
changes in price of current or anticipated portfolio positions. Should prices
move unexpectedly, the Portfolio may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss.
E. SECURITIES SOLD SHORT -- The Portfolio may sell securities short where it
owns an equal amount of the security sold short or another security convertible
or exchangeable for an equal amount of the security sold short (a short sale
against-the-box). The Portfolio may do this in anticipation of a decline in the
market price of the securities or in order to hedge portfolio positions. The
Portfolio will generally borrow the security sold in order to make delivery to
the buyer. Upon executing the transaction, the Portfolio records the proceeds as
deposits with brokers in the Statement of Assets and Liabilities and establishes
an offsetting payable for securities sold short for the securities due on
settlement. The security sold short is segregated as collateral for the short
position. The liability is marked to market and the Portfolio is required to pay
the lending broker any dividend or interest income earned while the short
position is open. A gain or loss is realized when the security is delivered to
the broker. The Portfolio may recognize a loss on the transaction if the market
value of the securities sold increases before the securities are delivered.
F. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the ex-
dividend date. However, if the ex-dividend date has passed, certain dividends
from foreign securities are recorded as the Portfolio is informed of the ex-
dividend date. Interest income is recorded on the accrual basis.
G. USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
H. EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash balances
the Portfolio maintains with IBT. All significant credit balances used to reduce
the Portfolio's custodian fees are reflected as a reduction of expenses on the
Statement of Operations.
I. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
April 30, 1997 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 the fair presentation of the financial statements.
- -------------------------------------------------------------------------------
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to the Portfolio. Under the
advisory agreement, BMR receives a monthly advisory fee of 5/96 of 1% (0.625%
annually) of the average daily net assets of the Portfolio up to $500,000,000,
and at reduced rates as daily net assets exceed the level. For the six months
ended April 30, 1997 the adviser fee was 0.58% of the Portfolio's average net
assets (annualized). 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. 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 April
30, 1997, no significant amounts have been deferred. Certain of the officers and
Trustees of the Portfolio are officers or directors/trustees of the above
organizations.
- -------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short-term obligations,
aggregated $225,853,920 and $36,084,420, respectively.
- -------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENT
The cost and unrealized appreciation (depreciation) in value of the investments
owned at April 30, 1997, as computed on a federal income tax basis, are as
follows:
Aggregate cost $487,990,216
============
Gross unrealized appreciation $762,365,329
Gross unrealized depreciation (4,376,580)
------------
Net unrealized appreciation $757,988,749
============
- -------------------------------------------------------------------------------
(5) FINANCIAL INSTRUMENTS
The Portfolio may trade in financial instruments with off-balance sheet risk in
the normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts and financial futures contracts and
may involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment the Portfolio 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.
The Portfolio had no obligations under these financial instruments at April
30, 1997.
- -------------------------------------------------------------------------------
(6) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $120 million unsecured line of credit agreement with
a group of banks. 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 or fund based on its borrowings at the
bank's base rate or an amount above either the bank's adjusted certificate of
deposit rate, a Eurodollar rate, or federal funds rate. In addition, a fee
computed at an annual rate of 0.15% on the daily unused portion of the line of
credit is allocated among the participating portfolios and funds at the end of
each quarter. The Portfolio did not have any significant borrowings or allocated
fees during the six months ended April 30, 1997.
<PAGE>
INVESTMENT MANAGEMENT
<TABLE>
<CAPTION>
<S> <C> <C>
EV CLASSIC OFFICERS INDEPENDENT TRUSTEES
TAX-MANAGED
GROWTH FUND M. DOZIER GARDNER DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 Chairman, Newspapers of New England, Inc.
JAMES B. HAWKES
Vice President, Trustee SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
WILLIAM H. AHERN, JR. Investment Banking, Harvard University
Vice President Graduate School of Business Administration
MICHAEL B. TERRY NORTON H. REAMER
Vice President President and Director, United Asset
Management Corporation
JAMES L. O'CONNOR
Treasurer JOHN J. THORNDIKE
Formerly Director, Fiduciary Company
THOMAS OTIS Incorporated
Secretary
JACK L. TREYNOR
Investment Adviser and Consultant
-------------------------------------------------------------------
TAX-MANAGED OFFICERS INDEPENDENT TRUSTEES
GROWTH PORTFOLIO
24 Federal Street LANDON T. CLAY DONALD R. DWIGHT
Boston, MA 02110 President, Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
JAMES B. HAWKES
Vice President, Trustee SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
DUNCAN W. RICHARDSON Investment Banking, Harvard University
Vice President and Graduate School of Business Administration
Portfolio Manager
NORTON H. REAMER
JAMES L. O'CONNOR President and Director, United Asset
Treasurer Management Corporation
THOMAS OTIS JOHN L. THORNDIKE
Secretary Formerly Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
</TABLE>
