-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OrB2C8SnYcCvpttIg2aPLNJpR+JhfKweEU4jc0lQ8Vv8/8Yke6NBjgfJMA2lAB3h 3w/2LZpMuPdT2Z/OVFmNKA== 0000912057-02-039782.txt : 20021025 0000912057-02-039782.hdr.sgml : 20021025 20021025163645 ACCESSION NUMBER: 0000912057-02-039782 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020831 FILED AS OF DATE: 20021025 EFFECTIVENESS DATE: 20021025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EATON VANCE GROWTH TRUST CENTRAL INDEX KEY: 0000102816 IRS NUMBER: 042325690 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01241 FILM NUMBER: 02798903 BUSINESS ADDRESS: STREET 1: 24 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174828260 MAIL ADDRESS: STREET 1: 24 FEDERAL ST STREET 2: 11TH FLOOR CITY: BOSTON STATE: MA ZIP: 02210 FORMER COMPANY: FORMER CONFORMED NAME: BOSTON STOCK FUND INC DATE OF NAME CHANGE: 19730619 FORMER COMPANY: FORMER CONFORMED NAME: VANCE SANDERS COMMON STOCK FUND INC DATE OF NAME CHANGE: 19820915 FORMER COMPANY: FORMER CONFORMED NAME: EATON VANCE GROWTH FUND INC DATE OF NAME CHANGE: 19920703 N-30D 1 a2090729zn-30d.txt N-30D [EATON VANCE LOGO] [PHOTO OF SKYLINE OF CHINA] ANNUAL REPORT AUGUST 31, 2002 [PHOTO OF CHINESE ART] EATON VANCE GREATER CHINA GROWTH FUND [PHOTO OF GREAT WALL OF CHINA] IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS The Securities and Exchange Commission (SEC) permits mutual funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called "householding" and it helps eliminate duplicate mailings to shareholders. EATON VANCE, OR YOUR FINANCIAL ADVISER, MAY HOUSEHOLD THE MAILING OF YOUR DOCUMENTS INDEFINITELY UNLESS YOU INSTRUCT EATON VANCE, OR YOUR FINANCIAL ADVISER, OTHERWISE. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial adviser. Your instructions that householding not apply to delivery of your Eaton Vance documents will be effective within 30 days of receipt by Eaton Vance or your financial adviser. EATON VANCE GREATER CHINA GROWTH FUND as of August 31, 2002 LETTER TO SHAREHOLDERS [PHOTO OF THOMAS E. FAUST JR.] THOMAS E. FAUST JR. PRESIDENT Eaton Vance Greater China Growth Fund Class A shares had a total return of - -3.71% for the year ended August 31, 2002. That return was the result of a decrease in net asset value per share (NAV) from $8.63 on August 31, 2001 to $8.31 on August 31, 2002.(1) Class B shares had a total return of -4.44% for the same period, the result of a decrease in NAV from $7.66 on August 31, 2001 to $7.32 on August 31, 2002.(1) Class C shares had a total return of -4.61% for the same period, the result of a decrease in NAV from $5.21 on August 31, 2001 to $4.97 on August 31, 2002.(1) The Morgan Stanley Capital International All Country Far East Free ex-Japan Index - a broad-based, unmanaged index of common stocks traded in developed and emerging markets of the China region - had a return of 8.84% for the year ended August 31, 2002.(2) FOLLOWING A TUMULTUOUS 2001, SIGNS OF A TENTATIVE RECOVERY IN ASIA ... While global political tensions and a weak U.S. economy had a depressing effect on many Asian economies in 2001, the region has begun to move tentatively toward recovery in 2002. The pace of economic activity gathered some momentum early in the year and has been boosted by a slow climb in exports. Interestingly, while a rise in exports to the west is welcomed - especially by the electronics sector - recent trends have pointed to an Asian economy that is increasingly insulated from export shocks. Local economies continue to benefit from strong domestic demand, a surge in intraregional trade and the increasing importance of China as a regional trade partner. These trends represent very healthy signs for the Asian economy, establishing a growing buffer against economic fluctuations in the U.S. and Europe. TRENDS POINT TO IMPRESSIVE LONG-TERM GROWTH FOR THE CHINA REGION... One positive trend in the market corrections of last year was a return to reasonable valuations. That created a more rational investment climate, a development that should be healthy for investors and for the market over the longer-term. While the pace of the Asian recovery remains uncertain, we remain optimistic about China's long-term potential. Rising wealth levels are resulting in increased standards of living. Meanwhile, the region remains a vital source of technology and innovation. These trends should provide a further boost to the China region's impressive growth. In the following pages, portfolio manager Pamela Chan discusses the past year and provides her thoughts on the Greater China region in the year ahead. Sincerely, /s/ THOMAS E. FAUST JR. Thomas E. Faust Jr. President October 9, 2002 FUND INFORMATION AS OF AUGUST 31, 2002
PERFORMANCE(3) CLASS A CLASS B CLASS C - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS (AT NET ASSET VALUE) - -------------------------------------------------------------------------------- One Year -3.71% -4.44% -4.61% Five Years -14.04 -14.62 -14.64 Life of Fund+ -0.76 -3.19 -7.71 SEC AVERAGE ANNUAL TOTAL RETURNS (INCLUDING SALES CHARGE OR APPLICABLE CDSC) - -------------------------------------------------------------------------------- One Year -9.28% -9.22% -5.56% Five Years -15.06 -14.96 -14.64 Life of Fund+ -1.35 -3.19 -7.71
+ Inception Dates - Class A: 10/28/92; Class B: 6/7/93; Class C: 12/28/93
TEN LARGEST HOLDINGS(4) - -------------------------------------------------------------- ChinaTrust Financial Holding Co. Ltd. 5.4% CLP Holdings Ltd. 5.2 HSBC Holdings PLC 4.8 CNOOC, Ltd. 4.6 Hong Kong Exchange and Clearing 3.8 Global Bio-Chem Technology Group, Ltd. 3.6 Huaneng Power International, Inc. 3.4 Taiwan Semiconductor Manufacturing Co. 3.4 Samsung Electronics 3.1 Fountain Set Holdings Ltd. 2.7
(1) These returns do not include the 5.75% maximum sales charge for the Fund's Class A shares or the applicable contingent deferred sales charges (CDSC) for the Fund's Class B and Class C shares. (2) It is not possible to invest directly in an Index. Calculations for MSCI Index use net dividends, which reflect the deduction of withholding taxes. (3) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. SEC returns for Class A reflect the maximum 5.75% sales charge. Class A shares redeemed within 3 months of purchase, including exchanges, are subject to a 1% redemption fee. SEC returns for Class B reflect applicable CDSC based on the following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC 1-year return for Class C reflects 1% CDSC. (4) Ten largest holdings accounted for 40.0% of the Portfolio's net assets. Holdings are subject to change. Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Mutual fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested. 2 MANAGEMENT DISCUSSION [PHOTO OF PAMELA CHAN] Pamela Chan Portfolio Manager AN INTERVIEW WITH PAMELA CHAN OF LLOYD GEORGE MANAGEMENT, INVESTMENT ADVISER TO GREATER CHINA GROWTH PORTFOLIO. Q: PAMELA, HOW WOULD YOU CHARACTERIZE THE ECONOMIC ENVIRONMENT AND THE MARKETS WITHIN THE CHINA REGION DURING THE PAST YEAR? A: The past year has been quite challenging for investors in many of the China region markets, with Hong Kong and Taiwan posting sharp losses in 2002. The Hong Kong economy has been mired in a recession, as its export-dependent economy has suffered from the global slowdown and the uneven recovery in the U.S. The Hong Kong property market has also been in a slump, which has contributed to a slowdown in retail sales activity. While Taiwan was also affected by weak U.S. export demand, the industrial output has nonetheless been fairly robust in 2002. Taiwan's manufacturing sector has been boosted by rising trade with mainland China, while the nation's regional exports benefited from the strong Japanese yen. GDP growth for Hong Kong and Taiwan is expected to rebound in 2003, although the weak pace of the U.S. economy leaves the timing of the recovery in question. Q: HOW HAVE YOU POSITIONED THE PORTFOLIO IN RECENT MONTHS? A: As of August 31, 63.2% of the Portfolio's investments were in Hong Kong, (28.0% of that in China stocks listed in Hong Hong), 24.8% in Taiwan, 4.1% in Thailand and 3.3% in Korea. We continue to focus on two main themes in China and Hong Kong: the outsourcing trend and domestic demand in China. Within Taiwan we have reduced the weighting in technology and increased the weighting in financials. We believe that the banking sector consolidation will be beneficial for stock prices. In Thailand, we believe that the stocks we hold will benefit from strong domestic consumption. In Korea, we had an investment in Samsung Electronics which we believe is trading on extremely attractive valuations and well positioned to gain market share from the competition. Another major shift was a reduction in diversified operations companies, which were among the Portfolio's largest holdings six months ago. These large companies, which typically have significant real estate and property holdings, have been hurt badly by the unwinding of the property bubble that has occurred since 1998. Amid sagging real estate prices and a downward trend in rental rates, stocks in the property sector moved sharply lower during the year. While we have dramatically reduced or eliminated our positions in this area, the property sector impaired the Fund's performance earlier in the period. [CHART]
FIVE LARGEST INDUSTRY WEIGHTINGS(1) BY TOTAL NET ASSETS - ---------------------------------------------- Banks 14.3% Electric - Generating 8.7% Semiconductors/Circuits 6.7% Foods 6.0% Diversivid Financial Services 5.6%
[CHART]
REGIONAL DISTRIBUTION(1) AS A PERCENTAGE OF COMMON STOCK INVESTMENTS - ---------------------------------------------- Hong Kong 63.2% Taiwan 24.8% Thailand 4.1% Korea 3.3% China 2.5% U.S. 2.1%
(1) Because the Fund is actively managed, Industry Weightings and Regional Distribution are subject to change. All data as of 8/31/02. 3 Q: BANKS CONSTITUTED THE PORTFOLIO'S LARGEST SECTOR WEIGHTING. WHAT KIND OF COMPANIES DID YOU EMPHASIZE? A: The banking industry in Asia is currently undergoing dramatic changes, as structural reforms and mergers are transforming this key sector. These moves are aimed at making the region's banks more efficient as a source of lending and a vehicle for capital formation, and generally more competitive in a global economy. As part of its entry into the World Trade Organization, China has agreed to open its banking sector to foreign competitors by 2006. For the region's premier banks, the China market represents a colossal opportunity. HSBC Holdings Plc maintains the largest branch network among foreign banks in mainland China and has a global reach that features 5,000 offices in 80 countries. Even in a deflationary climate, the company managed an operating profit in line with last year's results. HSBC has cut costs, increased its wealth management business and invested in improved customer services. The results showed the strength of the company's businesses in Hong Kong and the rest of the region. ChinaTrust Financial is one of Taiwan's most profitable banks. The company has registered impressive asset growth in recent years, due, in part, to a prudent acquisition strategy. China-Trust has been aggressive in pursuing new banking outlets for its customers, investing heavily in Internet banking and securities trading. ChinaTrust also has designs on the mainland China market. Q: THE PORTFOLIO ALSO HAD INVESTMENTS IN DIVERSIFIED FINANCIAL SERVICES COMPANIES. COULD YOU GIVE AN EXAMPLE OF A FINANCIAL SERVICES COMPANY HELD BY THE PORTFOLIO? A: Hong Kong Exchange and Clearing (HKEC) was formed in March 2001 by the merger of the Stock Exchange of Hong Kong and the Hong Kong Futures Exchange. HKEC operates the stock exchange and futures exchange in Hong Kong and their related clearing house, providing a trading platform for primary and secondary market trading, derivatives trading, clearing, settlement and custodial activities, as well as maintaining market indices, benchmarks and continues market information. The Exchange has established a goal of becoming the leading full service market in the region and the primary vehicle for capital formation for not only Hong Kong, but also China. The merger has resulted in more liquid markets, lower transaction costs, greater efficiencies of scale and improved transparency. While enjoying strong volume and revenue growth, HKEC has also contributed to an increase in investor confidence in the region's financial markets. Q: ELECTRIC GENERATING COMPANIES WERE ANOTHER MAJOR FOCUS OF THE PORTFOLIO. WHAT COMPANIES DOES THE PORTFOLIO HOLD IN THAT AREA? A: CLP Holdings Ltd is a major Hong Kong-based electric utility and one of the largest power producers in Asia. Its subsidiaries serve 2 million people in Hong Kong. CLP operates under a Scheme-of-Control Agreement, which gives it a guaranteed return on its generating assets until 2008. Scheme-of-Control earnings account for over 70% of the total. We particularly like the earnings certainty that the Scheme-of-Control provides. Huaneng Power International is China's largest independent power producer and is well positioned to benefit from the upcoming reform in the power sector in China. The company's valuation compares well to other regional utilities with an attractive dividend yield. Q: YOU INDICATED THAT, WHILE TECHNOLOGY HAS STRUGGLED RECENTLY, THE PORTFOLIO HAD SOME LARGE HOLDINGS IN SEMICONDUCTOR COMPANIES. COULD YOU GIVE SOME EXAMPLES? A: Yes. Taiwan Semiconductor Manufacturing Co. (TSMC) is the world's largest independent semiconductor foundry. While the global semiconductor industry has battled a slump in the 4 past two years, TSMC has fared relatively well, benefiting from its manufacturing strengths and versatility. In the second quarter of 2002, TSMC enjoyed 68% revenue growth over the same period a year earlier. The company has consistently met its customers' demands for high quality and fast design cycles. Recently, TSMC introduced its new Nexsys technology, which is expected to begin full-scale production in 2003. The new technology will produce high-performance, low power-demand integrated circuits for a broad range of applications. Korea-based Samsung Electronics is a leading supplier of advanced memory chip technology. In recent years, the company has transformed itself into a producer of premier, branded digital consumer electronics and appliances. With its Home VITA product, Samsung is pioneering the concept of home networking: the linking of personal computers, televisions, cameras, refrigerators and other home appliances, providing new conveniences and applications for consumers. Q: YOU SUGGESTED THAT FOOD AND BEVERAGE STOCKS TEND TO DISPLAY DEFENSIVE CHARACTERISTICS IN AN UNCERTAIN ECONOMY. COULD YOU GIVE SOME EXAMPLES OF THE PORTFOLIO'S FOOD HOLDINGS? A: Yes. Global Bio-Chem Technology Group, a Hong Kong-based company, is involved in the research and development, manufacture and sale of corn-based biochemical products in China and other Asian countries. The company has its main production facility in Jilin Province in China and is one of the three largest corn-based biochemical producers in China. Global has generated very impressive sales volumes - 26% growth in the first half of 2002 - as it has expanded its market for food products such as lysine, modified starch and sweeteners used in food and beverage products. The company has increasingly focused on higher-margin products, and toward that end, formed a strategic partnership in August 2001 with the U.S. food giant, Cargill, Inc. The two companies will jointly build a production facility in Shanghai, giving Global Bio-Chem access to Cargill's long-time expertise in supply chain management, distribution channels, food applications and health and nutrition. Elsewhere in the food-related area, Cafe de Coral Holdings runs nearly 400 restaurants around the world, 182 in Hong Kong alone. The company is Hong Kong's leading fast-food restaurant operator and, with its moderately-priced value menus, has benefited significantly from the slower economy. Cafe de Coral's has also been able to selectively renegotiate leases in the weak real estate climate, thus improving its cost structure going forward. Q: WERE THERE ANY OTHER AREAS THAT WERE ESPECIALLY COMPELLING? A: Energy is a sector that we believe holds significant opportunities. While China`s current energy needs are already massive, they are expected to grow exponentially as the economy expands in coming years. Fortunately, China is blessed with enormous oil and natural gas reserves in the South China Sea. CNOOC Ltd. monitors China's offshore oil and gas exploration and production activities, which it conducts in partnership with international oil and gas firms. The company has amassed more than 1.8 billion barrels (of oil equivalent) in proven reserves, primarily in the South China Sea. CNOOC is also engaged in oil refining, natural gas processing, and refined and processed products marketing, and has achieved very impressive volume growth in recent years. CNOOC has aggressively ramped up offshore exploration spending in 2002, while pursuing an ambitious acquisition strategy, giving the company access to production in other parts of Asia. As a result, CNOOC is very well-positioned to meet the growing demand for natural gas in China, especially in the coastal regions. 5 Q: PAMELA, WHAT IS YOUR OUTLOOK FOR THE CHINA REGION IN THE COMING YEAR? A: While the region's economic recovery has been slow, we are positive on the long term outlook. China's industrial production continues to be strong supported by the outsourcing trend, domestic demand, WTO entry and the Olympics. We have witnessed many China-region companies able to maintain impressive revenue and earnings growth, irrespective of the slowdown elsewhere. China's growth continues to outperform the rest of the world. Recent months have seen the irrational selling of stocks. As a result, compelling opportunities are emerging across many sectors. We are confident that, over time, the stock prices of good quality companies with solid earnings growth and good return prospects will reflect their attractive prospects. We believe that the Portfolio is well positioned to take advantage of these opportunities. [CHART] COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE GREATER CHINA GROWTH FUND CLASS A vs. THE MORGAN STANLEY CAPITAL INTERNATIONAL ALL COUNTRY FAR EAST FREE EX-JAPAN INDEX* OCTOBER 31, 1992 - AUGUST 31, 2002
FUND FUND MSCI AC FAR EAST VALUE AT VALUE WITH FREE EX-JAPAN DATE NAV SALES CHARGE INDEX - -------------------------------------------------------------------------------- 10/31/1992 10,000 10,000 10,000 11/30/1992 9,770 9,208 9,639 12/31/1992 9,800 9,237 9,354 1/31/1993 9,910 9,340 9,650 2/28/1993 10,560 9,953 10,224 3/31/1993 10,860 10,236 10,231 4/30/1993 11,860 11,178 11,141 5/31/1993 12,280 11,574 11,793 6/30/1993 11,600 10,933 11,485 7/31/1993 11,610 10,943 11,560 8/31/1993 12,450 11,734 12,528 9/30/1993 12,730 11,998 13,012 10/31/1993 14,570 13,732 15,408 11/30/1993 14,780 13,930 15,304 12/31/1993 17,713 16,695 19,025 1/31/1994 16,489 15,541 17,725 2/28/1994 15,677 14,776 16,707 3/31/1994 13,801 13,008 14,890 4/30/1994 13,982 13,178 15,591 5/31/1994 14,624 13,783 16,256 6/30/1994 13,741 12,951 15,534 7/31/1994 14,664 13,821 16,401 8/31/1994 15,757 14,851 17,737 9/30/1994 15,637 14,738 17,452 10/31/1994 15,577 14,681 17,790 11/30/1994 14,142 13,329 16,096 12/31/1994 14,013 13,207 15,698 1/31/1995 12,499 11,780 14,015 2/28/1995 13,559 12,779 15,431 3/31/1995 13,751 12,960 15,505 4/30/1995 13,569 12,789 15,359 5/31/1995 14,801 13,950 17,230 6/30/1995 14,568 13,731 16,971 7/31/1995 15,003 14,140 17,239 8/31/1995 14,366 13,541 16,419 9/30/1995 14,599 13,759 16,703 10/31/1995 14,266 13,445 16,450 11/30/1995 13,953 13,150 16,277 12/31/1995 14,508 13,674 17,087 1/31/1996 15,921 15,006 18,653 2/29/1996 15,669 14,768 18,589 3/31/1996 15,507 14,616 18,738 4/30/1996 15,851 14,939 19,263 5/31/1996 15,992 15,073 19,075 6/30/1996 15,568 14,673 18,691 7/31/1996 14,599 13,759 17,344 8/31/1996 15,124 14,254 17,971 9/30/1996 15,548 14,654 18,424 10/31/1996 15,447 14,559 18,076 11/30/1996 16,507 15,558 19,111 12/31/1996 16,807 15,841 18,990 1/31/1997 17,024 16,046 19,266 2/28/1997 17,521 16,514 19,337 3/31/1997 16,455 15,509 18,280 4/30/1997 16,838 15,870 17,814 5/31/1997 18,712 17,636 18,718 6/30/1997 20,535 19,354 19,219 7/31/1997 21,280 20,057 19,312 8/31/1997 19,776 18,639 15,757 9/30/1997 18,961 17,870 15,638 10/31/1997 13,333 12,566 11,823 11/30/1997 12,763 12,029 11,071 12/31/1997 12,629 11,903 10,576 1/31/1998 10,798 10,177 9,685 2/28/1998 13,322 12,556 11,907 3/31/1998 13,009 12,261 11,617 4/30/1998 11,836 11,156 10,420 5/31/1998 10,273 9,682 8,807 6/30/1998 9,469 8,925 7,848 7/31/1998 8,810 8,304 7,630 8/31/1998 7,660 7,220 6,451 9/30/1998 8,620 8,125 7,146 10/31/1998 9,972 9,398 9,098 11/30/1998 10,184 9,598 9,926 12/31/1998 9,860 9,293 10,066 1/31/1999 8,989 8,472 9,728 2/28/1999 8,933 8,420 9,541 3/31/1999 9,558 9,009 10,613 4/30/1999 11,423 10,766 13,066 5/31/1999 10,898 10,272 12,529 6/30/1999 12,987 12,240 14,684 7/31/1999 12,384 11,672 14,101 8/31/1999 12,730 11,998 14,331 9/30/1999 11,937 11,251 13,180 10/31/1999 12,495 11,777 13,819 11/30/1999 14,438 13,608 15,210 12/31/1999 15,823 14,913 16,305 1/31/2000 15,990 15,071 15,942 2/29/2000 17,263 16,271 15,088 3/31/2000 18,603 17,534 15,813 4/30/2000 15,611 14,713 14,530 5/31/2000 14,885 14,029 13,370 6/30/2000 16,024 15,103 14,005 7/31/2000 16,091 15,166 13,493 8/31/2000 15,845 14,934 13,331 9/30/2000 14,237 13,419 11,786 10/31/2000 13,109 12,356 10,865 11/30/2000 12,573 11,851 10,327 12/31/2000 12,674 11,945 10,304 1/31/2001 13,969 13,166 11,688 2/28/2001 13,065 12,314 11,119 3/31/2001 11,691 11,019 9,932 4/30/2001 12,116 11,419 9,970 5/31/2001 11,926 11,240 9,913 6/30/2001 11,468 10,809 9,703 7/31/2001 10,709 10,093 9,330 8/31/2001 9,637 9,083 9,181 9/30/2001 8,419 7,935 7,720 10/31/2001 8,989 8,472 8,116 11/30/2001 9,972 9,398 9,236 12/31/2001 10,474 9,872 10,072 1/31/2002 10,753 10,135 10,485 2/28/2002 10,519 9,914 10,512 3/31/2002 10,943 10,314 11,275 4/30/2002 11,122 10,482 11,437 5/31/2002 11,189 10,545 11,215 6/30/2002 10,429 9,830 10,609 7/31/2002 9,804 9,240 10,218 8/31/2002 9,279 8,746 9,992
PERFORMANCE CLASS A CLASS B CLASS C - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS (AT NET ASSET VALUE) - -------------------------------------------------------------------------------- One Year -3.71% -4.44% -4.61% Five Years -14.04 -14.62 -14.64 Life of Fun+ -0.76 -3.19 -7.71 SEC AVERAGE ANNUAL TOTAL RETURNS (INCLUDING SALES CHARGE OR APPLICABLE CDSC) - -------------------------------------------------------------------------------- One Year -9.28% -9.22% -5.56% Five Years -15.06 -14.96 -14.64 Life of Fund+ -1.35 -3.19 -7.71
+ Inception Dates - Class A: 10/28/92; Class B: 6/7/93; Class C: 12/28/93* Source: TowersData, Bethesda, MD. Investment operations commenced 10/28/92. Index information is available only at month-end; therefore, the line comparison begins at the month-end following the commencement of the Fund's investment operations. Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less their original cost. The performance chart above compares the Fund's total return with that of a broad-based securities market index. Returns are calculated by determining the percentage change in net asset value (NAV) with all distributions reinvested. The lines on the chart represent the total returns of $10,000 hypothetical investments in the Fund and the Morgan Stanley Capital International All Country Far East Free ex-Japan Index -- a broad-based index of common stocks traded in the Asian markets. For the period from 10/31/92 -12/31/98, the MSCI Index data was calculated using gross dividends, without consideration for taxes; from 12/31/98-8/31/02, the Index data was calculated using dividends net of taxes. The calculation of dividends net of taxes was first available on 12/31/98. The Index line on the chart reflects that adjustment. An investment in the Fund's Class B shares on 6/7/93 at net asset value would have been worth $7,415 on August 31, 2002. An investment in the Fund's Class C shares on 12/28/93 at net asset value would have been worth $4,983 on August 31, 2002. The graph and performance table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The Indices' total returns do not reflect any commissions or expenses that would have been incurred if an investor individually purchased or sold the securities represented in the Indices. It is not possible to invest directly in an Index. Returns are calculated by determining the percentage change in net asset value (NAV) with all distributions reinvested. SEC average annual returns reflect applicable contingent deferred sales charge (CDSC). 6 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
AS OF AUGUST 31, 2002 Assets - ------------------------------------------------------ Investment in Greater China Growth Portfolio, at value (identified cost, $65,537,273) $ 61,092,449 Receivable for Fund shares sold 16,803 - ------------------------------------------------------ TOTAL ASSETS $ 61,109,252 - ------------------------------------------------------ Liabilities - ------------------------------------------------------ Payable for Fund shares redeemed $ 55,691 Payable to affiliate for distribution and service fees 15,440 Dividends payable 490 Accrued expenses 103,541 - ------------------------------------------------------ TOTAL LIABILITIES $ 175,162 - ------------------------------------------------------ NET ASSETS $ 60,934,090 - ------------------------------------------------------ Sources of Net Assets - ------------------------------------------------------ Paid-in capital $114,113,402 Accumulated net realized loss from Portfolio (computed on the basis of identified cost) (48,705,055) Accumulated net investment loss (29,433) Net unrealized depreciation from Portfolio (computed on the basis of identified cost) (4,444,824) - ------------------------------------------------------ TOTAL $ 60,934,090 - ------------------------------------------------------ Class A Shares - ------------------------------------------------------ NET ASSETS $ 25,091,149 SHARES OUTSTANDING 3,018,154 NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 8.31 MAXIMUM OFFERING PRICE PER SHARE (100 DIVIDED BY 94.25 of $8.31) $ 8.82 - ------------------------------------------------------ Class B Shares - ------------------------------------------------------ NET ASSETS $ 32,946,003 SHARES OUTSTANDING 4,499,018 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 7.32 - ------------------------------------------------------ Class C Shares - ------------------------------------------------------ NET ASSETS $ 2,896,938 SHARES OUTSTANDING 582,475 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 4.97 - ------------------------------------------------------ On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2002 Investment Income - ----------------------------------------------------- Dividends allocated from Portfolio (net of foreign taxes, $44,796) $ 1,401,460 Interest allocated from Portfolio 29,364 Expenses allocated from Portfolio (825,871) - ----------------------------------------------------- NET INVESTMENT INCOME FROM PORTFOLIO $ 604,953 - ----------------------------------------------------- Expenses - ----------------------------------------------------- Management fee $ 186,834 Trustees' fees and expenses 2,148 Distribution and service fees Class A 153,532 Class B 400,892 Class C 39,376 Transfer and dividend disbursing agent fees 261,556 Registration fees 46,245 Printing and postage 34,650 Legal and accounting services 20,033 Custodian fee 17,293 Miscellaneous 16,315 - ----------------------------------------------------- TOTAL EXPENSES $ 1,178,874 - ----------------------------------------------------- Deduct -- Reduction of custodian fee $ 10,726 - ----------------------------------------------------- TOTAL EXPENSE REDUCTIONS $ 10,726 - ----------------------------------------------------- NET EXPENSES $ 1,168,148 - ----------------------------------------------------- NET INVESTMENT LOSS $ (563,195) - ----------------------------------------------------- Realized and Unrealized Gain (Loss) from Portfolio - ----------------------------------------------------- Net realized gain (loss) -- Investment transactions (identified cost basis) (net of foreign taxes, $176,282) $ 1,622,198 Foreign currency transactions (28,247) - ----------------------------------------------------- NET REALIZED GAIN $ 1,593,951 - ----------------------------------------------------- Change in unrealized appreciation (depreciation) -- Investments (identified cost basis) $(2,311,017) Foreign currency 1,582 - ----------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $(2,309,435) - ----------------------------------------------------- NET REALIZED AND UNREALIZED LOSS $ (715,484) - ----------------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $(1,278,679) - -----------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 7 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 FINANCIAL STATEMENTS CONT'D STATEMENTS OF CHANGES IN NET ASSETS
INCREASE (DECREASE) YEAR ENDED YEAR ENDED IN NET ASSETS AUGUST 31, 2002 AUGUST 31, 2001 - -------------------------------------------------------------------------- From operations -- Net investment loss $ (563,195) $ (810,151) Net realized gain 1,593,951 13,581,425 Net change in unrealized appreciation (depreciation) (2,309,435) (69,982,479) - -------------------------------------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (1,278,679) $ (57,211,205) - -------------------------------------------------------------------------- Transactions in shares of beneficial interest -- Proceeds from sale of shares Class A $ 26,318,331 $ 37,905,868 Class B 3,713,802 1,624,336 Class C 20,035,876 7,725,269 Cost of shares redeemed Class A (32,533,209) (50,018,162) Class B (11,568,264) (18,610,671) Class C (20,798,911) (10,391,289) - -------------------------------------------------------------------------- NET DECREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS $ (14,832,375) $ (31,764,649) - -------------------------------------------------------------------------- NET DECREASE IN NET ASSETS $ (16,111,054) $ (88,975,854) - -------------------------------------------------------------------------- Net Assets - -------------------------------------------------------------------------- At beginning of year $ 77,045,144 $ 166,020,998 - -------------------------------------------------------------------------- AT END OF YEAR $ 60,934,090 $ 77,045,144 - -------------------------------------------------------------------------- Accumulated net investment loss included in net assets - -------------------------------------------------------------------------- AT END OF YEAR $ (29,433) $ (1,113,473) - --------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 8 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 FINANCIAL STATEMENTS CONT'D FINANCIAL HIGHLIGHTS
CLASS A ----------------------------------------------------------------------- YEAR ENDED AUGUST 31, ----------------------------------------------------------------------- 2002(1) 2001(1) 2000(1) 1999(1) 1998(1) - --------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 8.630 $14.190 $11.400 $ 6.860 $17.710 - --------------------------------------------------------------------------------------------------------- Income (loss) from operations - --------------------------------------------------------------------------------------------------------- Net investment income (loss) $(0.042) $(0.045) $(0.069) $ 0.012 $ 0.013 Net realized and unrealized gain (loss) (0.278) (5.515) 2.859 4.528 (10.863) - --------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $(0.320) $(5.560) $ 2.790 $ 4.540 $(10.850) - --------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 8.310 $ 8.630 $14.190 $11.400 $ 6.860 - --------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) (3.71)% (39.18)% 24.47% 66.18% (61.26)% - --------------------------------------------------------------------------------------------------------- Ratios/Supplemental Data - --------------------------------------------------------------------------------------------------------- Net assets, end of year (000's omitted) $25,091 $31,649 $66,428 $65,299 $56,277 Ratios (As a percentage of average daily net assets): Expenses(3) 2.68% 2.42% 2.30% 2.33% 2.27% Expenses after custodian fee reduction(3) 2.37% 2.20% 2.08% 2.14% 2.15% Net investment income (loss) (0.46)% (0.40)% (0.51)% 0.13% 0.11% Portfolio Turnover of the Portfolio 155% 35% 34% 57% 42% - ---------------------------------------------------------------------------------------------------------
(1) Net investment income (loss) per share was computed using average shares outstanding. (2) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed reinvested at the net asset value on the reinvestment date. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. SEE NOTES TO FINANCIAL STATEMENTS 9 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 FINANCIAL STATEMENTS CONT'D FINANCIAL HIGHLIGHTS
CLASS B ----------------------------------------------------------------------- YEAR ENDED AUGUST 31, ----------------------------------------------------------------------- 2002(1) 2001(1) 2000(1) 1999(1) 1998(1) - --------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 7.660 $12.710 $10.260 $ 6.200 $16.130 - --------------------------------------------------------------------------------------------------------- Income (loss) from operations - --------------------------------------------------------------------------------------------------------- Net investment loss $(0.078) $(0.092) $(0.120) $(0.049) $(0.041) Net realized and unrealized gain (loss) (0.262) (4.958) 2.570 4.109 (9.889) - --------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $(0.340) $(5.050) $ 2.450 $ 4.060 $(9.930) - --------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 7.320 $ 7.660 $12.710 $10.260 $ 6.200 - --------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) (4.44)% (39.73)% 23.88% 65.48% (61.56)% - --------------------------------------------------------------------------------------------------------- Ratios/Supplemental Data - --------------------------------------------------------------------------------------------------------- Net assets, end of year (000's omitted) $32,946 $41,907 $90,742 $92,860 $75,635 Ratios (As a percentage of average daily net assets): Expenses(3) 3.18% 2.93% 2.77% 2.83% 2.78% Expenses after custodian fee reduction(3) 2.87% 2.71% 2.55% 2.64% 2.66% Net investment loss (0.96)% (0.91)% (0.97)% (0.59)% (0.40)% Portfolio Turnover of the Portfolio 155% 35% 34% 57% 42% - ---------------------------------------------------------------------------------------------------------
(1) Net investment loss per share was computed using average shares outstanding. (2) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed reinvested at the net asset value on the reinvestment date. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. SEE NOTES TO FINANCIAL STATEMENTS 10 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 FINANCIAL STATEMENTS CONT'D FINANCIAL HIGHLIGHTS
CLASS C ----------------------------------------------------------------------- YEAR ENDED AUGUST 31, ----------------------------------------------------------------------- 2002(1) 2001(1) 2000(1) 1999(1) 1998(1) - --------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 5.210 $ 8.640 $ 6.980 $ 4.220 $10.970 - --------------------------------------------------------------------------------------------------------- Income (loss) from operations - --------------------------------------------------------------------------------------------------------- Net investment loss $(0.049) $(0.063) $(0.083) $(0.039) $(0.025) Net realized and unrealized gain (loss) (0.191) (3.367) 1.743 2.799 (6.725) - --------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $(0.240) $(3.430) $ 1.660 $ 2.760 $(6.750) - --------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 4.970 $ 5.210 $ 8.640 $ 6.980 $ 4.220 - --------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) (4.61)% (39.70)% 23.78% 65.40% (61.53)% - --------------------------------------------------------------------------------------------------------- Ratios/Supplemental Data - --------------------------------------------------------------------------------------------------------- Net assets, end of year (000's omitted) $ 2,897 $ 3,489 $ 8,851 $ 8,158 $ 6,449 Ratios (As a percentage of average daily net assets): Expenses(3) 3.18% 2.92% 2.80% 2.83% 2.79% Expenses after custodian fee reduction(3) 2.87% 2.70% 2.58% 2.64% 2.67% Net investment loss (0.89)% (0.91)% (0.99)% (0.69)% (0.36)% Portfolio Turnover of the Portfolio 155% 35% 34% 57% 42% - ---------------------------------------------------------------------------------------------------------
(1) Net investment loss per share was computed using average shares outstanding. (2) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed reinvested at the net asset value on the reinvestment date. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. SEE NOTES TO FINANCIAL STATEMENTS 11 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 NOTES TO FINANCIAL STATEMENTS 1 Significant Accounting Policies - ------------------------------------------- Eaton Vance Greater China Growth Fund (the Fund) is a diversified series of Eaton Vance Growth Trust (the Trust). The Trust is an entity of the type commonly known as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund offers three classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class B and Class C shares are sold at net asset value and are subject to a contingent deferred sales charge (see Note 6). Each class represents a pro rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income, other than class specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class specific expenses. The Fund invests all of its investable assets in interests in Greater China 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 (99.8% at August 31, 2002). 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 accounting principles generally accepted in the United States of America. A Investment Valuation -- Valuation of securities by the Portfolio is discussed in Note 1A of the Portfolio's Notes to Financial Statements which are included elsewhere in this report. B Income -- The Fund's net investment income consists of the Fund's pro rata share of the net investment income of the Portfolio, less all actual and accrued expenses of the Fund determined in accordance with accounting principles generally accepted in the United States of America. C 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 daily cash balances the Fund or the Portfolio maintains with IBT. All significant credit balances used to reduce the Fund's and the Portfolio's custodian fees are reported as a reduction of total expenses in the Statement of Operations. D Federal Taxes -- The Fund's policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year all of its net investment income and any net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary. At August 31, 2002, the Fund, for federal income tax purposes, had capital loss carryovers which will reduce the taxable income arising from future net realized gain on investments, 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 carryovers will expire August 31, 2007, and August 31, 2008, respectively ($47,540,665 and $1,617,906). E Use of Estimates -- The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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 income and expense during the reporting period. Actual results could differ from those estimates. F Other -- Investment transactions are accounted for on a trade-date basis. 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 net investment income allocated to the Fund by the Portfolio, less the Fund's direct expenses and at least one distribution annually of all or substantially all of the net realized capital gains (reduced by any available capital loss carryforwards from prior years) allocated to the Fund by the Portfolio, if any. Shareholders may reinvest all distributions in shares of the Fund at the per share net asset value as of the close of business on the ex-dividend date. The Fund distinguishes between distributions on a tax basis and a financial reporting basis. Generally accepted accounting principles require that only distributions in excess of tax basis earnings and profits be 12 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 NOTES TO FINANCIAL STATEMENTS CONT'D reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. 3 Shares of Beneficial Interest - ------------------------------------------- The Fund's Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
YEAR ENDED AUGUST 31, ------------------------ CLASS A 2002 2001 ------------------------------------------------------------------ Sales 2,857,006 3,392,867 Redemptions (3,505,388) (4,406,245) ------------------------------------------------------------------ NET DECREASE (648,382) (1,013,378) ------------------------------------------------------------------ YEAR ENDED AUGUST 31, ------------------------ CLASS B 2002 2001 ------------------------------------------------------------------ Sales 452,382 162,908 Redemptions (1,423,146) (1,833,656) ------------------------------------------------------------------ NET DECREASE (970,764) (1,670,748) ------------------------------------------------------------------ YEAR ENDED AUGUST 31, ------------------------ CLASS C 2002 2001 ------------------------------------------------------------------ Sales 3,548,814 1,096,752 Redemptions (3,636,054) (1,451,586) ------------------------------------------------------------------ NET DECREASE (87,240) (354,834) ------------------------------------------------------------------
Redemptions or exchanges of Class A shares made within three months of purchase are subject to a redemption fee equal to 1% of the amount redeemed. For the year ended August 31, 2002 the Fund received $99,389 in redemption fees on Class A shares. 4 Management Fee and Other Transactions with Affiliates - ------------------------------------------- The management fee is earned by Eaton Vance Management (EVM) as compensation for management and administration of the business affairs of the Fund. The fee is based on a percentage of average daily net assets. For the year ended August 31, 2002, the fee was equivalent to 0.25% of the Fund's average net assets for such period and amounted to $186,834. Except for 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. Effective August 1, 2002, EVM serves as the sub-transfer agent of the Fund and receives an aggregate fee based upon the actual expenses incurred by EVM in the performance of those services. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's principal underwriter, received approximately $3,448 as its portion of the sales charge on sales of Class A shares for the year ended August 31, 2002. Certain officers and Trustees of the Fund and of the Portfolio are officers of the above organization. 5 Distribution and Service Plans - ------------------------------------------- The Fund has in effect distribution plans for Class A shares (Class A Plan), Class B shares (Class B Plan) and Class C shares (Class C Plan) (collectively the Plans), pursuant to Rule 12b-1 under the Investment Company Act of 1940. The Plans require the Fund to pay EVD amounts equal to 1/365 of 0.75% of the Fund's average daily net assets attributable to both Class B and Class C shares and an amount equal to (a) 0.50% of that portion of the Fund's Class A shares average daily net assets attributable to Class A shares of the Fund which have remained outstanding for less than one year and (b) 0.25% of that portion of the Fund's Class A shares average daily net assets which is attributable to Class A shares of the Fund which have remained outstanding for more than one year, for providing ongoing distribution services and facilities to the Fund. The Fund will automatically discontinue payments to EVD during any period in which there are no outstanding uncovered distribution charges, which are equivalent to the sum of (i) 5% and 6.25% of the aggregate amount received by the Fund for the Class B and Class C shares sold, respectively plus, (ii) interest calculated by applying the rate of 1% over the prevailing prime rate to the outstanding balance of uncovered distribution charges of EVD of each respective class reduced by the aggregate amount of contingent deferred sales charges (see Note 6) and daily amounts theretofore paid to EVD by each respective class. The Fund paid or accrued approximately $83,690, $300,669 and $29,532 for Class A, Class B, and Class C shares, respectively to or payable to EVD for the year ended August 31, 2002, representing approximately 0.27%, 0.75%, and 0.75% of the average daily net assets for Class A, Class B, and Class C shares, respectively. At August 31, 2002, the amount of Uncovered Distribution Charges EVD calculated under the Plan was approximately $2,134,000 and $5,897,000 for Class B and Class C shares, respectively. 13 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 NOTES TO FINANCIAL STATEMENTS CONT'D The Plan authorizes the Fund to make payments of service fees to EVD, investment dealers and other persons in amounts not exceeding 0.25% of the Fund's average daily net assets attributable to Class A shares based on the value of Fund shares sold by such persons and remaining outstanding for at least one year. Service fee payments will be made for personal services and/or the maintenance of shareholder accounts. Class B and Class C Plans authorize the Fund to make service fee payments equal to 0.25% per annum of the Fund's average daily net assets attributable to Class B and Class C shares. Service fees are separate and distinct from the sales commissions and distribution fees payable by the Fund to EVD, and, as such are not subject to automatic discontinuance when there are no outstanding uncovered distribution charges of EVD. Service fee payments for the year ended August 31, 2002 amounted to approximately $69,842, $100,223 and $9,844 for Class A, Class B and Class C shares, respectively. Certain officers and Trustees of the Fund are officers or directors of EVD. 6 Contingent Deferred Sales Charge - ------------------------------------------- A contingent deferred sales charge (CDSC) generally is imposed on redemptions of Class B shares made within six years of purchase and on redemptions of Class C shares made within one year of purchase. Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gains distributions. Class B CDSC is imposed at declining rates that begin at 5% in the case of redemptions in the first and second year after purchase, declining one percentage point each subsequent year. Class C shares will be subject to a 1% CDSC if redeemed within one year of purchase. No CDSC is levied on shares which have been sold to EVM or its affiliates or to their respective employees or clients and may be waived under certain other limited conditions. CDSC charges are paid to EVD to reduce the amount of uncovered distribution charges calculated under each Fund's Distribution Plan (see Note 5). CDSC charges received when no uncovered distribution charges exist will be credited to the Fund. EVD received approximately $140,000 and $12,000 of CDSC paid by shareholders for Class B shares and Class C shares, respectively, for the year ended August 31, 2002. 7 Investment Transactions - ------------------------------------------- Increases and decreases in the Fund's investment in the Portfolio aggregated $49,631,309 and $65,678,489, respectively, for the year ended August 31, 2002. 14 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 INDEPENDENT AUDITORS' REPORT TO THE TRUSTEES AND SHAREHOLDERS OF EATON VANCE GROWTH TRUST: - --------------------------------------------- We have audited the accompanying statement of assets and liabilities of Eaton Vance Greater China Growth Fund (one of the series constituting Eaton Vance Growth Trust) as of August 31, 2002, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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. 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, such financial statements and financial highlights present fairly, in all material respects, the financial position of Eaton Vance Greater China Growth Fund series of Eaton Vance Growth Trust at August 31, 2002, the results of its operations, the changes in its net assets and its financial highlights for the respective stated periods, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts October 11, 2002 15 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 PORTFOLIO OF INVESTMENTS COMMON STOCKS -- 93.9%
SECURITY SHARES VALUE - ----------------------------------------------------------------------
CHINA -- 2.4%
SECURITY SHARES VALUE Foods -- 2.4% - ---------------------------------------------------------------------- People's Food Holdings, Ltd. 2,328,000 $ 1,450,136 The company produces and sells frozen & fresh pork, processed meat and chicken meat throughout China. - ---------------------------------------------------------------------- $ 1,450,136 - ---------------------------------------------------------------------- Total China (identified cost $1,516,129) $ 1,450,136 - ----------------------------------------------------------------------
HONG KONG -- 59.4%
SECURITY SHARES VALUE - ---------------------------------------------------------------------- Agricultural Operations -- 2.4% - ---------------------------------------------------------------------- Chaoda Modern Agriculture Holdings, Ltd. 4,580,000 $ 1,467,958 The company engages in growing and sales of crops, breeding and sale of livestock and sale of ancillary food products. - ---------------------------------------------------------------------- $ 1,467,958 - ---------------------------------------------------------------------- Airlines -- 2.6% - ---------------------------------------------------------------------- Cathay Pacific Airways, Ltd. 1,010,000 $ 1,560,331 The company operates scheduled airline services, airline catering, aircraft handling and engineering. - ---------------------------------------------------------------------- $ 1,560,331 - ---------------------------------------------------------------------- Appliances -- 0.5% - ---------------------------------------------------------------------- Allan International Holdings, Ltd. 2,598,000 $ 329,748 The company designs, manufactures and sells a wide range of household electrical appliances, personal care products and toys. - ---------------------------------------------------------------------- $ 329,748 - ---------------------------------------------------------------------- Banks -- 4.8% - ---------------------------------------------------------------------- HSBC Holdings PLC 256,800 $ 2,913,711 One of the largest banking and financial services organizations in the world. - ---------------------------------------------------------------------- $ 2,913,711 - ---------------------------------------------------------------------- SECURITY SHARES VALUE - ---------------------------------------------------------------------- Building Materials -- 1.0% - ---------------------------------------------------------------------- Anhui Conch Cement Co., Ltd. 2,124,000 $ 626,312 The company produces and sells cement and commodity clinker which are used in infrastructure & construction projects. - ---------------------------------------------------------------------- $ 626,312 - ---------------------------------------------------------------------- Business Services - Miscellaneous -- 1.2% - ---------------------------------------------------------------------- Linmark Group, Ltd. 2,850,000 $ 727,120 The company engages in sourcing business and the business of provision of supply chain management solutions to retail chain operators, brands, wholesalers, mail order houses and department stores in various countries. - ---------------------------------------------------------------------- $ 727,120 - ---------------------------------------------------------------------- Chemicals - Diversified -- 1.8% - ---------------------------------------------------------------------- Kingboard Chemical Holdings, Ltd. 1,376,000 $ 1,076,110 Manufacturer of laminates, copper foil, glass fabric, specialty chemicals and printed-circuit-board products. - ---------------------------------------------------------------------- $ 1,076,110 - ---------------------------------------------------------------------- Cosmetics & Toiletries -- 2.2% - ---------------------------------------------------------------------- Natural Beauty Bio-Technology, Ltd. 14,960,000 $ 1,323,393 The company researches, develops, manufactures and sells beauty, aromatherapeutic and skin care branded products, distributed through a sales network in Greater China. It also provides skin treatments and SPA services through its beauty centres. - ---------------------------------------------------------------------- $ 1,323,393 - ---------------------------------------------------------------------- Distribution / Wholesale -- 1.7% - ---------------------------------------------------------------------- Espirit Holdings, Ltd. 646,000 $ 1,051,827 The company engages in design, licensing, sourcing, manufacturing, wholesale and retail distribution of high quality apparel and related products under the ESPRIT brand name, and Red Earth cosmetics, skin and general body care products. - ---------------------------------------------------------------------- $ 1,051,827 - ---------------------------------------------------------------------- Diversified Financial Services -- 2.0% - ---------------------------------------------------------------------- Guoco Group, Ltd. 210,000 $ 1,195,392 The company engages in finance, insurance, stockbroking, property development and merchant banking. - ---------------------------------------------------------------------- $ 1,195,392 - ----------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 16 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE - ---------------------------------------------------------------------- Diversified Operations -- 2.1% - ---------------------------------------------------------------------- Jardine Matheson Holdings, Ltd. 226,400 $ 1,313,120 A multinational conglomerate engages in financial services, investment properties, supermarkets, hotels, engineering and insurance. - ---------------------------------------------------------------------- $ 1,313,120 - ---------------------------------------------------------------------- Drugs -- 0.4% - ---------------------------------------------------------------------- Far East Pharmaceutical Technology Co., Ltd. 1,174,000 $ 255,873 The company manufactures, markets and distributes pharmaceutical products in the PRC. - ---------------------------------------------------------------------- $ 255,873 - ---------------------------------------------------------------------- Electric - Generation -- 8.7% - ---------------------------------------------------------------------- CLP Holdings, Ltd. 794,000 $ 3,196,379 The company engages in electricity generation & supply, power projects in the PRC and other Asian countries, and also property development. Huaneng Power International, Inc. 2,780,000 2,102,834 Largest independent power generation company in China. - ---------------------------------------------------------------------- $ 5,299,213 - ---------------------------------------------------------------------- Finance - Other Services -- 3.9% - ---------------------------------------------------------------------- Hong Kong Exchanges and Clearing 1,784,000 $ 2,355,810 Engaged in the stock exchange, futures exchange, and securities clearing services in Hong Kong. - ---------------------------------------------------------------------- $ 2,355,810 - ---------------------------------------------------------------------- Foods -- 3.6% - ---------------------------------------------------------------------- Global Bio-chem Technology Group Co., Ltd. 8,088,800 $ 2,229,619 The company manufactures corn refined and corn based biochemical products in China and researches and develops corn based biochemical products. - ---------------------------------------------------------------------- $ 2,229,619 - ---------------------------------------------------------------------- Industrial / Manufacturing -- 0.0% - ---------------------------------------------------------------------- CIM Co., Ltd.(1)(2) 1,800,000 $ 0 Diversified company with interests in property and investment, public transportation, trading and hotel operations. - ---------------------------------------------------------------------- $ 0 - ---------------------------------------------------------------------- SECURITY SHARES VALUE - ---------------------------------------------------------------------- Insurance -- 2.0% - ---------------------------------------------------------------------- China Insurance International Holdings Co., Ltd. 2,980,000 $ 1,232,123 Underwriting and broking of reinsurance business; underwriting of life and general insurance business in China. - ---------------------------------------------------------------------- $ 1,232,123 - ---------------------------------------------------------------------- Medical Products -- 1.4% - ---------------------------------------------------------------------- Sun Hing Vision Group Holdings, Ltd. 2,970,000 $ 875,775 The company designs, manufactures and sells optical products. - ---------------------------------------------------------------------- $ 875,775 - ---------------------------------------------------------------------- Metals - Industrial -- 2.7% - ---------------------------------------------------------------------- Asia Aluminum Holdings, Ltd. 18,230,000 $ 1,659,408 The company manufactures and sells aluminum and stainless steel products. - ---------------------------------------------------------------------- $ 1,659,408 - ---------------------------------------------------------------------- Mining -- 2.5% - ---------------------------------------------------------------------- Yanzhou Coal Mining Co., Ltd. 4,356,000 $ 1,535,779 Underground mining of prime quality coal from its mines in Shangdong Province. - ---------------------------------------------------------------------- $ 1,535,779 - ---------------------------------------------------------------------- Oil Companies - Exploration & Production -- 4.6% - ---------------------------------------------------------------------- CNOOC, Ltd. 2,040,000 $ 2,837,711 The company's business is exploration, development and production of crude oil and natural gas in offshore China. - ---------------------------------------------------------------------- $ 2,837,711 - ---------------------------------------------------------------------- Restaurants -- 1.5% - ---------------------------------------------------------------------- Cafe De Coral Holdings, Ltd. 1,214,000 $ 926,070 The company operates quick service restaurants, fast casual dining, institutional catering and specialty restaurant chains, and food manufacturing. - ---------------------------------------------------------------------- $ 926,070 - ----------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 17 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE - ---------------------------------------------------------------------- Semiconductor Components / Integrated Circuits -- 1.8% - ---------------------------------------------------------------------- Topsearch International Holdings, Ltd.(2) 8,376,000 $ 1,095,330 The company manufactures and sells a broad range of double-sided and multi-layer printed boards (PCBs). - ---------------------------------------------------------------------- $ 1,095,330 - ---------------------------------------------------------------------- Textiles -- 2.7% - ---------------------------------------------------------------------- Fountain Set Holdings, Ltd. 4,500,000 $ 1,673,088 The company engages in production & sales of finished knitted fabrics, sewing threads & dyed yarns; provision of knitting, dyeing, printing & fabric finishing services; trading of raw yarns and sale of garments. - ---------------------------------------------------------------------- $ 1,673,088 - ---------------------------------------------------------------------- Transportation -- 1.3% - ---------------------------------------------------------------------- China Merchants Holdings 1,089,000 $ 767,890 Engaged in the Industrial and Infrastructure business. - ---------------------------------------------------------------------- $ 767,890 - ---------------------------------------------------------------------- Total Hong Kong (identified cost $39,308,042) $36,328,711 - ----------------------------------------------------------------------
REPUBLIC OF KOREA -- 3.1%
SECURITY SHARES VALUE - ---------------------------------------------------------------------- Electronic Components - Miscellaneous -- 3.1% - ---------------------------------------------------------------------- Samsung Electronics 6,920 $ 1,913,710 World's largest DRAM company and a leading mobile handset manufacturer. - ---------------------------------------------------------------------- $ 1,913,710 - ---------------------------------------------------------------------- Total Republic of Korea (identified cost $584,876) $ 1,913,710 - ----------------------------------------------------------------------
TAIWAN -- 23.3%
SECURITY SHARES VALUE - ---------------------------------------------------------------------- Banks -- 9.6% - ---------------------------------------------------------------------- Chinatrust Financial Holding Co., Ltd.(2) 4,259,000 $ 3,325,981 The company provides a variety of banking and financial services. E. Sun Financial Holding Co., Ltd.(2) 2,500,000 950,570 The company provides commercial and banking services as well as brokerage and dealer services for short-term debt instruments. Far Eastern International Bank 4,460,000 828,342 The company provides general commercial banking services. Taishin Finanicial Holdings Co., Ltd.(2) 1,605,000 760,486 The company provides commercial banking services. - ---------------------------------------------------------------------- $ 5,865,379 - ---------------------------------------------------------------------- Building Materials -- 2.3% - ---------------------------------------------------------------------- Basso Industry Corp. 449,000 $ 689,456 The company manufactures, assembles and markets pneumatic nailers and staplers. Globe Union Industrial Corp. 526,250 723,421 The company manufactures and markets a variety of faucets. - ---------------------------------------------------------------------- $ 1,412,877 - ---------------------------------------------------------------------- Chemicals - Diversified -- 1.7% - ---------------------------------------------------------------------- Formosa Chemical & Fiber Corp. 1,155,400 $ 1,064,495 The company manufactures artificial fibre for the textile industry. - ---------------------------------------------------------------------- $ 1,064,495 - ---------------------------------------------------------------------- Diversified Financial Services -- 2.3% - ---------------------------------------------------------------------- SinoPac Holdings Co.(2) 3,138,231 $ 1,376,820 The company provides commercial banking and securities brokerage services. - ---------------------------------------------------------------------- $ 1,376,820 - ---------------------------------------------------------------------- Entertainment -- 1.5% - ---------------------------------------------------------------------- Holiday Entertainment Co., Ltd. 1,223,000 $ 940,769 The company operates private karaoke rooms throughout Taiwan. - ---------------------------------------------------------------------- $ 940,769 - ----------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 18 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE - ---------------------------------------------------------------------- Semiconductor Components / Integrated Circuits -- 4.9% - ---------------------------------------------------------------------- Realtek Semiconductor Corp. 24,600 $ 70,512 The company designs, tests and distributes integrated circuits which are used in consumer electronics, computer systems and peripherals, and communication network hardware. Taiwan Semiconductor Manufacturing Co.(2) 1,431,917 2,089,870 One of the world's largest contract manufacturers of integrated circuits (foundry) for third parties. United Microelectronics Corp.(2) 1,029,350 846,000 One of the world's largest independent semiconductor foundries. - ---------------------------------------------------------------------- $ 3,006,382 - ---------------------------------------------------------------------- Telecommunication Services -- 1.0% - ---------------------------------------------------------------------- Taiwan Cellular Corp.(2) 531,000 $ 590,173 The company provides cellular telecommunication services. - ---------------------------------------------------------------------- $ 590,173 - ---------------------------------------------------------------------- Total Taiwan (identified cost $16,291,825) $14,256,895 - ----------------------------------------------------------------------
THAILAND -- 3.8%
SECURITY SHARES VALUE - ---------------------------------------------------------------------- Building - Heavy Construction -- 1.2% - ---------------------------------------------------------------------- Italian-Thai Development PCL(2) 970,000 $ 706,143 The company is involved in construction project management, engineering and design of large scale civil works and infrastructure projects in Thailand and Southeast Asia. - ---------------------------------------------------------------------- $ 706,143 - ---------------------------------------------------------------------- Building Materials -- 1.2% - ---------------------------------------------------------------------- Dynasty Ceramic PCL 377,000 $ 745,253 The company produces ceramic floor tiles used for both indoor and outdoor construction and decoration. - ---------------------------------------------------------------------- $ 745,253 - ---------------------------------------------------------------------- SECURITY SHARES VALUE - ---------------------------------------------------------------------- Diversified Financial Services -- 1.4% - ---------------------------------------------------------------------- AEON Thana Sinsap (Thailand) PCL 96,100 $ 404,967 The company provides consumer financial services such as hire purchase, personal loans and credit cards. Kiatnakin Finance PCL 573,200 468,168 The company provides financial services including commercial and consumer financing to its customers. - ---------------------------------------------------------------------- $ 873,135 - ---------------------------------------------------------------------- Total Thailand (identified cost $2,534,771) $ 2,324,531 - ----------------------------------------------------------------------
UNITED STATES -- 1.9%
SECURITY SHARES VALUE - ---------------------------------------------------------------------- Telecommunication Services -- 1.9% - ---------------------------------------------------------------------- UTStarcom, Inc.(2) 90,200 $ 1,190,640 The company manufactures telecommunications equipment for wireline and wireless network service providers, derives the majority of its revenue from PAS wireless access systems, broadband capable access systems for wireline networks and IP-based soft-switch products in China. - ---------------------------------------------------------------------- $ 1,190,640 - ---------------------------------------------------------------------- Total United States (identified cost $1,984,986) $ 1,190,640 - ---------------------------------------------------------------------- Total Common Stocks (identified cost $62,220,629) $57,464,623 - ---------------------------------------------------------------------- Total Investments -- 93.9% (identified cost $62,220,629) $57,464,623 - ---------------------------------------------------------------------- Other Assets, Less Liabilities -- 6.1% $ 3,731,381 - ---------------------------------------------------------------------- Net Assets -- 100.0% $61,196,004 - ----------------------------------------------------------------------
Company descriptions are unaudited. (1) Security valued at fair value using methods determined in good faith by or at the direction of the Trustees. (2) Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS 19 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 PORTFOLIO OF INVESTMENTS CONT'D TOP TEN HOLDINGS
PERCENTAGE COMPANY INDUSTRY SECTOR OF NET ASSETS VALUE - ----------------------------------------------------------------------------------------------- Chinatrust Financial Holding Co., Ltd. Banks 5.4% $3,325,981 CLP Holdings, Ltd. Electric - Generation 5.2 3,196,379 HSBC Holdings PLC Banks 4.8 2,913,711 CNOOC, Ltd. Oil Companies - Exploration & Production 4.6 2,837,711 Hong Kong Exchanges and Clearing Finance - Other Services 3.8 2,355,810 Global Bio-chem Technology Foods Group Co., Ltd. 3.6 2,229,619 Huaneng Power International, Inc. Electric - Generation 3.4 2,102,834 Taiwan Semiconductor Manufacturing Co. Semiconductor Components/ Integrated Circuits 3.4 2,089,870 Samsung Electronics Electronic Components - Miscellaneous 3.1 1,913,710 Fountain Set Holdings, Ltd. Textiles 2.7 1,673,088
INDUSTRY CONCENTRATION -- BELOW ARE THE TOP TEN INDUSTRY SECTORS REPRESENTED IN THE PORTFOLIO OF INVESTMENTS
PERCENTAGE COMPANY OF NET ASSETS VALUE - ------------------------------------------------------------------- Banks 14.3% $8,779,090 Foods 6.0 3,679,755 Building Materials 4.6 2,784,442 Chemicals - Diversified 3.5 2,140,605 Airlines 2.5 1,560,331 Agricultural Operations 2.4 1,467,958 Cosmetics & Toiletries 2.2 1,323,393 Distribution/Wholesale 1.7 1,051,827 Business Services - Miscellaneous 1.2 727,120 Appliances 0.5 329,748
SEE NOTES TO FINANCIAL STATEMENTS 20 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
AS OF AUGUST 31, 2002 Assets - ----------------------------------------------------- Investments, at value (identified cost, $62,220,629) $57,464,623 Cash 571,546 Foreign currency, at value (identified cost, $3,013,940) 2,999,225 Interest and dividends receivable 165,996 Prepaid expenses 290 - ----------------------------------------------------- TOTAL ASSETS $61,201,680 - ----------------------------------------------------- Liabilities - ----------------------------------------------------- Accrued expenses $ 5,676 - ----------------------------------------------------- TOTAL LIABILITIES $ 5,676 - ----------------------------------------------------- NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $61,196,004 - ----------------------------------------------------- Sources of Net Assets - ----------------------------------------------------- Net proceeds from capital contributions and withdrawals $65,945,733 Net unrealized depreciation (computed on the basis of identified cost) (4,749,729) - ----------------------------------------------------- TOTAL $61,196,004 - -----------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2002 Investment Income - ----------------------------------------------------- Dividends (net of foreign taxes, $46,059) $ 1,439,237 Interest 30,417 - ----------------------------------------------------- TOTAL INVESTMENT INCOME $ 1,469,654 - ----------------------------------------------------- Expenses - ----------------------------------------------------- Investment adviser fee $ 578,320 Administration fee 192,668 Trustees' fees and expenses 9,346 Legal and accounting services 50,826 Custodian fee 238,257 Miscellaneous 6,440 - ----------------------------------------------------- TOTAL EXPENSES $ 1,075,857 - ----------------------------------------------------- Deduct -- Reduction of custodian fee $ 226,782 - ----------------------------------------------------- TOTAL EXPENSE REDUCTIONS $ 226,782 - ----------------------------------------------------- NET EXPENSES $ 849,075 - ----------------------------------------------------- NET INVESTMENT INCOME $ 620,579 - ----------------------------------------------------- Realized and Unrealized Gain (Loss) - ----------------------------------------------------- Net realized gain (loss) -- Investment transactions (identified cost basis) (net of foreign taxes, $181,256) $ 1,288,733 Foreign currency transactions (29,327) - ----------------------------------------------------- NET REALIZED GAIN $ 1,259,406 - ----------------------------------------------------- Change in unrealized appreciation (depreciation) -- Investments (identified cost basis) $(1,955,660) Foreign currency 1,806 - ----------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $(1,953,854) - ----------------------------------------------------- NET REALIZED AND UNREALIZED LOSS $ (694,448) - ----------------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (73,869) - -----------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 21 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 FINANCIAL STATEMENTS CONT'D STATEMENTS OF CHANGES IN NET ASSETS
INCREASE (DECREASE) YEAR ENDED YEAR ENDED IN NET ASSETS AUGUST 31, 2002 AUGUST 31, 2001 - -------------------------------------------------------------------------- From operations -- Net investment income $ 620,579 $ 842,547 Net realized gain 1,259,406 13,350,303 Net change in unrealized depreciation (1,953,854) (70,877,958) - -------------------------------------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (73,869) $ (56,685,108) - -------------------------------------------------------------------------- Capital transactions -- Contributions $ 50,377,622 $ 50,608,469 Withdrawals (68,225,260) (83,986,900) - -------------------------------------------------------------------------- NET DECREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (17,847,638) $ (33,378,431) - -------------------------------------------------------------------------- NET DECREASE IN NET ASSETS $ (17,921,507) $ (90,063,539) - -------------------------------------------------------------------------- Net Assets - -------------------------------------------------------------------------- At beginning of year $ 79,117,511 $ 169,181,050 - -------------------------------------------------------------------------- AT END OF YEAR $ 61,196,004 $ 79,117,511 - --------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 22 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 FINANCIAL STATEMENTS CONT'D SUPPLEMENTARY DATA
YEAR ENDED AUGUST 31, ----------------------------------------------------------- 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------- Ratios/Supplemental Data - --------------------------------------------------------------------------------------------- Ratios (As a percentage of average daily net assets): Expenses 1.40% 1.29% 1.25% 1.23% 1.19% Expenses after custodian fee reduction 1.10% 1.08% 1.06% 1.05% 1.07% Net investment income 0.81% 0.71% 0.51% 1.08% 1.19% Portfolio Turnover 155% 35% 34% 57% 42% - --------------------------------------------------------------------------------------------- TOTAL RETURN(1) (2.72)% -- -- -- -- - --------------------------------------------------------------------------------------------- NET ASSETS, END OF YEAR (000'S OMITTED) $61,196 $79,118 $169,181 $168,102 $140,649 - ---------------------------------------------------------------------------------------------
(1) Total Return is required to be disclosed for fiscal years beginning after December 15, 2000. SEE NOTES TO FINANCIAL STATEMENTS 23 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 NOTES TO FINANCIAL STATEMENTS 1 Significant Accounting Policies - ------------------------------------------- Greater China 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 September 1, 1992, seeks long-term capital appreciation by investing primarily in common stocks of companies which, in the opinion of the investment adviser, will benefit from the economic development and growth of the People's Republic of China. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. The following is a summary of the significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America. A Investment Valuations -- Marketable securities, including options, that are listed on foreign or U.S. securities exchanges or in the NASDAQ National Market System are valued at closing sale prices, on the exchange where such securities are principally traded. Futures positions on securities or currencies are generally valued at closing settlement prices. Unlisted or listed securities for which closing sale prices are not available are valued at the mean between the latest bid and asked prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. Other fixed income and debt securities, including listed securities and securities for which price quotations are available, will normally be valued on the basis of valuations furnished by a pricing service. Investments for which valuations or market quotations are unavailable are valued at fair value using methods determined in good faith by or at the direction of the Trustees. B Income Taxes -- The Portfolio has elected to be treated as a partnership for United States 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 one of the Portfolio's investors is a regulated investment company that invests all or substantially all of its assets in the Portfolio, the Portfolio normally must satisfy the applicable source of income and diversification requirements (under the Internal Revenue Code) in order for its investors to satisfy them. The Portfolio will allocate at least annually among its investors each investor's distributive share of the Portfolio's net investment income, net realized capital gains, and any other items of income, gain, loss, deduction or credit. Withholding taxes on foreign dividends and capital gains have been provided for in accordance with the Portfolio's understanding of the applicable countries' tax rules and rates. C Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian of the Portfolio. Pursuant to the 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 reported as a reduction of total expenses in the Statement of Operations. D Financial Futures Contracts -- Upon the entering of a financial futures contract, the Portfolio is required to deposit (initial margin) either in cash or securities an amount 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 the 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 only to hedge against anticipated future changes in interest or currency exchange rates. Should interest or currency exchange rates move unexpectedly, the Portfolio may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. If the Portfolio enters into a closing transaction, the Portfolio will realize, for book purposes, a gain or loss equal to the difference between the value of the financial futures contract to sell and financial futures contract to buy. E Use of Estimates -- The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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 income and expense during the reporting period. Actual results could differ from those estimates. F Foreign Currency Translation -- Investment valuations, other assets, and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions. Realized gains or losses on investment transactions attributable to changes in foreign currency exchange rates are recorded for financial statement 24 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 NOTES TO FINANCIAL STATEMENTS CONT'D purposes as net realized gains and losses on investments. That portion of unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed. G Forward Foreign Currency Exchange Contracts -- The Portfolio may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of their contracts and from movements in the value of a foreign currency relative to the U.S. dollar. The Portfolio will enter into forward contracts for hedging purposes as well as non-hedging purposes. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until such time as the contracts have been closed or offset. H Other -- Investment transactions are accounted for on a trade date basis. Dividend income is recorded on the ex-dividend date. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Portfolio is informed of the ex-dividend date. Interest income is recorded on the accrual basis. 2 Investment Adviser Fee and Other Transactions with Affiliates - ------------------------------------------- The investment adviser fee is earned by Lloyd George Management (Bermuda) Limited (the Adviser), an affiliate of Eaton Vance, as compensation for management and investment advisory services rendered to the Portfolio. Under the advisory agreement, the Adviser receives a monthly fee of 0.0625% (0.75% annually) of the average daily net assets of the Portfolio up to $500,000,000, and at reduced rates as daily net assets exceed that level. For the year ended August 31, 2002, the adviser fee amounted to $578,320. In addition, an administrative fee is earned by Eaton Vance Management (EVM) for managing and administering the business affairs of the Portfolio. Under the administration agreement, EVM earns a monthly fee in the amount of 1/48th of 1% (0.25% annually) of the average daily net assets of the Portfolio up to $500,000,000, and at reduced rates as daily net assets exceed that level. For the year ended August 31, 2002, the administrative fee amounted to $192,668. Except as to Trustees of the Portfolio who are not members of the Adviser or EVM's organization, officers and Trustees receive remuneration for their services to the Portfolio out of such investment adviser and administrative fees. Certain officers and Trustees of the Portfolio are officers of the above organizations. 3 Investment Transactions - ------------------------------------------- Purchases and sales of investments, other than short-term obligations, aggregated $110,656,022 and $124,217,895, respectively, for the year ended August 31, 2002. 4 Federal Income Tax Basis of Unrealized Appreciation (Depreciation) - ------------------------------------------- The cost and unrealized appreciation (depreciation) in value of the investments owned at August 31, 2002, as computed on a federal income tax basis, were as follows: AGGREGATE COST $62,238,942 ----------------------------------------------------- Gross unrealized appreciation $ 4,212,197 Gross unrealized depreciation (8,986,516) ----------------------------------------------------- NET UNREALIZED DEPRECIATION $(4,774,319) -----------------------------------------------------
The appreciation on foreign currency is $6,277. 5 Risks Associated with Foreign Investments - ------------------------------------------- Investing in securities issued by companies whose principal business activities are outside the United States may involve significant risks not present in domestic investments. For example, there is generally less publicly available information about foreign companies, particularly those not subject to the disclosure and reporting requirements of the U.S. securities laws. Foreign issuers are generally not bound by uniform accounting, auditing, and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitation on the removal of funds or other assets of the Portfolio, political or financial instability or diplomatic and other developments which could affect such investments. Foreign stock markets, while growing in volume and sophistication, are generally not as developed as those in the United States, and securities of some foreign issuers (particularly those in developing countries) may be less liquid and more volatile than securities of comparable U.S. companies. In general, there is less overall governmental supervision and regulation of foreign securities markets, broker-dealers, and issuers than in the United States. 25 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 NOTES TO FINANCIAL STATEMENTS CONT'D 6 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 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. There were no obligations under these financial instruments at August 31, 2002. 7 Line of Credit - ------------------------------------------- The Portfolio participates with other portfolios and funds managed by Boston Management and Research and EVM and its affiliates in a $150 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 participating portfolio or fund based on its borrowings at an amount above either the Eurodollar rate or federal funds rate. In addition, a fee computed at an annual rate of 0.10% on the daily unused portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. The Portfolio did not have any significant borrowings or allocated fees during the year ended August 31, 2002. 26 GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2002 INDEPENDENT AUDITORS' REPORT TO THE TRUSTEES AND INVESTORS OF GREATER CHINA GROWTH PORTFOLIO: - --------------------------------------------- We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Greater China Growth Portfolio as of August 31, 2002, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the supplementary data for each of the five years in the period then ended. These financial statements and supplementary data are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and supplementary data based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 the securities owned at August 31, 2002 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 audits provide a reasonable basis for our opinion. In our opinion, such financial statements and supplementary data present fairly, in all material respects, the financial position of Greater China Growth Portfolio at August 31, 2002, and the results of its operations, the changes in its net assets and its supplementary data for the respective stated periods, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boston, Massachusetts October 11, 2002 27 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 INVESTMENT MANAGEMENT FUND MANAGEMENT. The Trustees of the Eaton Vance Growth Trust (the Trust) and Greater China Growth Portfolio (the Portfolio) are responsible for the overall management and supervision of the Trust's and Portfolio's affairs. The Trustees and officers of the Trust and the Portfolio are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. Trustees and officers of the Trust and the Portfolio hold indefinite terms of office. The business address of each Trustee and officer is The Eaton Vance Building, 255 State Street, Boston, Massachusetts, 02109. INTERESTED TRUSTEE(S)
POSITION(S) TERM OF NAME WITH THE OFFICE AND AND DATE TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS - --------------------------------------------------------------------------------------------------------------------------- Jessica M. Bibliowicz Trustee of Since 1998 President and Chief Executive Officer of DOB: 11/28/59 the Trust National Financial Partners (financial services company) (since April 1999). President and Chief Operating Officer of John A. Levin & Co. (registered investment adviser) (July 1997 to April 1999) and a Director of Baker, Fentress & Company, which owns John A. Levin & Co. (July 1997 to April 1999). Ms. Bibliowicz is an interested person because of her affiliation with a brokerage firm. James B. Hawkes Trustee of the Trustee of the Trust since 1989; Chairman, President and Chief Executive DOB: 11/9/41 Trust; Vice Vice President and Trustee of the Officer of BMR, EVM and their corporate President and Portfolio since 1992 parent, Eaton Vance Corp. (EVC), and Trustee of corporate trustee, Eaton Vance, Inc. Portfolio (EV), respectively; Director of EV; Vice President and Director of EVD. Trustee and/or officer of 178 investment companies in the Eaton Vance Fund Complex. Mr. Hawkes is an interested person because of his positions with BMR, EVM and EVC, which are affiliates of the Trust and the Portfolio. Hon. Robert Lloyd George(2) President and Since 1992 Chairman and Chief Executive Officer of DOB: 8/13/52 Trustee of Lloyd George Management (B.V. I.) the Portfolio Limited, Lloyd George Management (Hong Kong) Limited and Lloyd George Investment Management (Bermuda) Limited. - --------------------------------------------------------------------------------------------------------------------------- NAME NUMBER OF PORTFOLIOS AND DATE IN FUND COMPLEX OTHER DIRECTORSHIPS OF BIRTH OVERSEEN BY TRUSTEE(1) HELD - ---------------------------- Jessica M. Bibliowicz 173 None DOB: 11/28/59 James B. Hawkes 178 Director of EVC DOB: 11/9/41 Hon. Robert Lloyd George(2) 5 None DOB: 8/13/52 - ----------------------------
NONINTERESTED TRUSTEE(S)
POSITION(S) TERM OF NAME WITH THE OFFICE AND AND DATE TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS - --------------------------------------------------------------------------------------------------------------------------- Hon. Edward K.Y. Chen(2) Trustee of Since 1992 President of Lingnan University of Hong DOB: 1/14/45 the Portfolio Kong. Director of First Pacific Company and Asia Satellite Telecommunications Holdings Ltd. Board Member of the Mass Transit Railway Corporation. Member of the Executive Council of the Hong Kong Government from 1992-1997. Donald R. Dwight Trustee Trustee of the Trust since 1989; President of Dwight Partners, Inc. DOB: 3/26/31 of the Portfolio since 1996 (corporate relations and communications company). NAME NUMBER OF PORTFOLIOS AND DATE IN FUND COMPLEX OTHER DIRECTORSHIPS OF BIRTH OVERSEEN BY TRUSTEE(1) HELD - ---------------------------- Hon. Edward K.Y. Chen(2) 5 None DOB: 1/14/45 Donald R. Dwight 178 Trustee/Director of the Royce Funds DOB: 3/26/31 (mutual funds) consisting of 17 portfolios
28 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 INVESTMENT MANAGEMENT CONT'D
POSITION(S) TERM OF NAME WITH THE OFFICE AND AND DATE TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS - --------------------------------------------------------------------------------------------------------------------------- Samuel L. Hayes, III Trustee Trustee of the Trust since 1989; Jacob H. Schiff Professor of Investment DOB: 2/23/35 of the Portfolio since 1992 Banking Emeritus, Harvard University Graduate School of Business Administration. Norton H. Reamer Trustee Trustee of the Trust since 1989; President, Unicorn Corporation (an DOB: 9/21/35 of the Portfolio since 1996 investment and financial advisory services company) (since September 2000). Chairman, Hellman, Jordan Management Co., Inc. (an investment management company) (since November 2000). Advisory Director, Berkshire Capital Corporation (investment banking firm) (since June 2002). Formerly, Chairman of the Board, United Asset Management Corporation (a holding company owning institutional investment management firms) and Chairman, President and Director, UAM Funds (mutual funds). Lynn A. Stout Trustee of Since 1998 Professor of Law, University of DOB: 9/14/57 the Trust California at Los Angeles School of Law (since July 2001). Formerly, Professor of Law, Georgetown University Law Center. Jack L. Treynor Trustee of Since 1989 Investment Adviser and Consultant. DOB: 2/21/30 the Trust - --------------------------------------------------------------------------------------------------------------------------- NAME NUMBER OF PORTFOLIOS AND DATE IN FUND COMPLEX OTHER DIRECTORSHIPS OF BIRTH OVERSEEN BY TRUSTEE(1) HELD - ---------------------------- Samuel L. Hayes, III 178 Director of Tiffany & Co. (specialty DOB: 2/23/35 retailer) and Director of Telect, Inc. (telecommunication services company) Norton H. Reamer 178 None DOB: 9/21/35 Lynn A. Stout 173 None DOB: 9/14/57 Jack L. Treynor 170 None DOB: 2/21/30 - ----------------------------
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
POSITION(S) TERM OF NAME WITH THE OFFICE AND AND DATE TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS - ---------------------------------------------------------------------------------------------------------------------- Thomas E. Faust Jr. President of Since 2002 Executive Vice President and Chief DOB: 5/31/58 the Trust Investment Officer of EVM and BMR and Director of EVC. Officer of 50 investment companies managed by EVM or BMR. Pamela Chan(2) Vice President Since 2002 Director of Lloyd George Investment DOB: 2/7/57 of the Management (Bermuda) Limited. Officer of Portfolio 1 investment company managed by EVM or BMR. Gregory Coleman Vice President Since 2001 Partner of Atlanta Capital Management DOB: 10/28/49 of the Trust Company, L.L.C. (Atlanta Capital). Officer of 10 investment companies managed by EVM or BMR. William Walter Raleigh Vice President Since 1992 Director, Finance Director and Chief Kerr(2) and Assistant Operating Officer of Lloyd George DOB: 8/17/50 Treasurer of Management (Hong Kong) Limited and Lloyd the Portfolio George Investment Management (Bermuda) Limited. Director of Lloyd George Management (B.V.I.) Limited. Officer of 4 investment companies managed by EVM or BMR. James A. Womack Vice President Since 2001 Vice President of Atlanta Capital. DOB: 11/20/68 of the Trust Officer of 10 investment companies managed by EVM or BMR. Alan R. Dynner Secretary Since 1997 Vice President, Secretary and Chief DOB: 10/10/40 Legal Officer of BMR, EVM, EVD and EVC. Officer of 178 investment companies managed by EVM or BMR.
29 EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2002 INVESTMENT MANAGEMENT CONT'D
POSITION(S) TERM OF NAME WITH THE OFFICE AND AND DATE TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS - ---------------------------------------------------------------------------------------------------------------------- William J. Austin Jr. Treasurer of Since 2002 Assistant Vice President of EVM and BMR. DOB: 12/27/51 the Portfolio Officer of 54 investment companies managed by EVM or BMR. James L. O'Connor Treasurer of Since 1989 Vice President of BMR, EVM and EVD. DOB: 4/1/45 the Trust Officer of 100 investment companies managed by EVM or BMR. - ----------------------------------------------------------------------------------------------------------------------
(1) Includes both master and feeder-funds in a master feeder structure. (2) The business address for Ms. Chan, Mr. Kerr and Mr. Lloyd George is 3808 One Exchange Square, Central, Hong Kong. The business address for Mr. Chen is President's Office, Lingnan College, Tuen Mun, Hong Kong. The SAI for the Fund includes additional information about the Trustees and officers of the Fund and Portfolio and can be obtained without charge by calling 1-800-225-6265. 30 SPONSOR AND MANAGER OF EATON VANCE GREATER CHINA GROWTH FUND AND ADMINISTRATOR OF GREATER CHINA GROWTH PORTFOLIO Eaton Vance Management The Eaton Vance Building 255 State Street Boston, MA 02109 ADVISER OF GREATER CHINA GROWTH PORTFOLIO LLOYD GEORGE INVESTMENT MANAGEMENT (BERMUDA) LIMITED 3808 One Exchange Square Central, Hong Kong PRINCIPAL UNDERWRITER EATON VANCE DISTRIBUTORS, INC. The Eaton Vance Building 255 State Street Boston, MA 02109 (617) 482-8260 CUSTODIAN INVESTORS BANK & TRUST COMPANY 200 Clarendon Street Boston, MA 02116 TRANSFER AGENT PFPC INC. Attn: Eaton Vance Funds P.O. Box 9653 Providence, RI 02940-9653 (800) 262-1122 INDEPENDENT AUDITORS DELOITTE & TOUCHE LLP 200 Berkeley Street Boston, MA 02116-5022 EATON VANCE FUNDS EATON VANCE MANAGEMENT BOSTON MANAGEMENT AND RESEARCH EATON VANCE DISTRIBUTORS, INC. PRIVACY NOTICE The Eaton Vance organization is committed to ensuring your financial privacy. This notice is being sent to comply with privacy regulations of the Securities and Exchange Commission. Each of the above financial institutions has in effect the following policy with respect to nonpublic personal information about its customers: - - Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. - - None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). - - Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information. For more information about Eaton Vance's privacy policies, call: 1-800-262-1122 EATON VANCE GREATER CHINA GROWTH FUND THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 This report must be preceded or accompanied by a current prospectus which contains more complete information on the Fund, including its sales charges and expenses. Please read the prospectus carefully before you invest or send money. 406-10/02 CGSRC -----END PRIVACY-ENHANCED MESSAGE-----