N-CSR 1 a2145859zn-csr.txt N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File Number: 811-01241 --------- Eaton Vance Growth Trust ------------------------ (Exact Name of registrant as Specified in Charter) The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109 ----------------------------------------------------------------------- (Address of Principal Executive Offices) Alan R. Dynner The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109 ----------------------------------------------------------------------- (Name and Address of Agent for Services) (617) 482-8260 -------------- (registrant's Telephone Number) August 31 ----------------------- Date of Fiscal Year End August 31, 2004 ------------------------ Date of Reporting Period ITEM 1. REPORTS TO STOCKHOLDERS [EV LOGO] [GRAPHIC IMAGE] ANNUAL REPORT AUGUST 31, 2004 EATON VANCE ASIAN SMALL COMPANIES FUND [GRAPHIC IMAGE] 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. IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS The Securities and Exchange Commission permits 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. The Fund will file a schedule of its portfolio holdings on Form N-Q with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year. The Fund's Form N-Q will be available on the Eaton Vance website www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC's public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room). From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios vote proxies according to a set of policies and procedures approved by the Funds' and Portfolios' Boards. You may obtain a description of these policies and procedures without charge, upon request, by calling 1-800-262-1122. This description is also available on the Securities and Exchange Commission's website at http://www.sec.gov. EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2004 LETTER TO SHAREHOLDERS [PHOTO OF THOMAS E. FAUST JR.] Thomas E. Faust Jr. President Eaton Vance Asian Small Companies Fund Class A shares had a total return of 13.69% for the year ended August 31, 2004. That return was the result of an increase in net asset value per share (NAV) from $28.61 on August 31, 2003 to $31.80 on August 31, 2004, and the reinvestment of $0.142 in dividends and $0.645 in capital gain distributions.(1) Class B shares had a total return of 13.15% for the same period, the result of an increase in NAV from $18.20 on August 31, 2003 to $19.94 on August 31, 2004 and the reinvestment of $0.065 in dividends and $0.645 in capital gain distributions.(1) The Fund's returns lagged its benchmark, the Morgan Stanley Capital International All Country Asia Pacific Index - a broad-based, unmanaged index of common stocks traded in developed and emerging markets of the Asia Pacific region - which had a return of 19.60% for the year ended August 31, 2004.(2) ASIAN MARKETS HAVE UNDERGONE A MODEST CORRECTION IN 2004... Following robust showings in 2003, some Asian markets moderated somewhat in 2004. Concerns over the pace of the U.S. recovery, as well as surging oil prices and the threat of higher inflation, were prime causes of the market corrections. Nonetheless, Asian economic growth remained generally on track, with many countries enjoying GDP growth rates well above those in the U.S. and western Europe. For example, Singapore posted 12.5% GDP growth in the second quarter of 2004, benefiting from increased trade with China and a continuing strong global appetite for electronics, one-half of Singapore's exports. Taiwan's economy achieved its fastest growth rate in four years, although investors closely monitored U.S. demand, a key factor in Taiwan's export-based economy. WITH SURGING ECONOMIC GROWTH, RISING ENERGY COSTS HAVE BEEN A CHALLENGE FOR ASIA... Amid its rapid economic development, Asia's energy demands have grown commensurately. As net importers of oil, some countries are especially vulnerable to a spike in prices or a disruption in supply. With growing air traffic and a rapid climb in automobile use, the region's energy demand is expected to grow at a faster pace than in the U.S. That trend will require more investment and advanced planning and will present challenges as well as opportunities for some companies. It is encouraging that, despite the energy and inflation concerns, Asian core economies have continued to post relatively strong GDP growth. We are optimistic that smaller companies in these Asian countries will continue to present interesting investment opportunities. In the following pages, portfolio manager Kooi Cho Yu discusses the past fiscal year and developments in the Fund. Sincerely, /s/ Thomas E. Faust Thomas E. Faust President October 6, 2004 FUND INFORMATION as of August 31, 2004
PERFORMANCE(3) CLASS A CLASS B ---------------------------------------------------------------------- Average Annual Total Returns (at net asset value) One Year 13.69% 13.15% Five Years 16.65 N.A. Life of Fund+ 25.01 13.93 SEC Average Annual Total Returns (including sales charge or applicable CDSC) One Year 7.14% 8.15% Five Years 15.27 N.A. Life of Fund+ 23.67 13.68
+Inception dates: Class A: 3/1/99; Class B: 10/8/99 (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 SHARES. IF SALES CHARGES WERE REFLECTED, PERFORMANCE WOULD BE LOWER. (2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. (3) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED. SEC AVERAGE ANNUAL RETURNS FOR CLASS A REFLECT A 5.75% SALES CHARGE. CLASS A SHARES REDEEMED OR EXCHANGED WITHIN 3 MONTHS OF SETTLEMENT OF PURCHASE ARE SUBJECT TO A 1% EARLY REDEMPTION FEE. CLASS B RETURNS 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. 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. PERFORMANCE IS FOR THE STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN. THE FUND'S PERFORMANCE DURING CERTAIN PERIODS REFLECTS THE STRONG STOCK MARKET PERFORMANCE AND/OR THE STRONG PERFORMANCE OF STOCKS HELD DURING THOSE PERIODS. THIS PERFORMANCE IS NOT TYPICAL AND MAY NOT BE REPEATED. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO www.eatonvance.com. 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 EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2004 MANAGEMENT DISCUSSION [PHOTO OF KOOI CHO YU] Kooi Cho Yu Portfolio Manager AN INTERVIEW WITH KOOI CHO YU, LLOYD GEORGE MANAGEMENT, INVESTMENT ADVISER TO ASIAN SMALL COMPANIES PORTFOLIO. Q: CHO YU, HOW WOULD YOU CHARACTERIZE THE INVESTMENT CLIMATE FOR SMALL COMPANIES IN ASIA DURING THE PAST FISCAL YEAR? A: The investment climate for small companies in Asia during the past fiscal year can be characterized into two distinct periods. In the first half of the year, abundant liquidity conditions in Asia and rising corporate earnings drove share prices to record highs. In the second half, tentative signs of a potential slowdown in the U.S. - and, indeed, globally - as well as high oil prices, rising inflationary pressures and higher interest rates quickly reversed the positive momentum in share prices. Furthermore, generally cautious-to-negative earnings guidance from companies in the U.S. and Europe in March and April 2004 also resulted in a slew of GDP and earnings downgrades by analysts, adding to investors' perception that we may have seen the best of the earnings growth story in 2003. Q: CHINA AND INDIA ARE VERY IMPORTANT GROWTH CENTERS WITHIN THE BROADER ASIAN ECONOMY. WHAT HAVE BEEN THE CATALYSTS FOR GROWTH IN THOSE COUNTRIES IN THE PAST YEAR? A: For China, the main drivers have been residential and corporate fixed-asset investment, which grew by more than 25% year-over-year in 2003 and at a similar rate in the first half of 2004. That trend reflected a particularly sharp pickup in industrial expenditures - especially in electronics, basic materials and machinery - as well as in consumer durables, such as automobiles. For India, most economists have revised down their GDP growth forecast to 5.5%-to-6.5% on the back of an insufficient rainy season this year. The resulting weaker growth in rural incomes is likely to have a diminishing effect on consumption, as almost two-thirds of the population is still dependent on agriculture for its livelihood, which is already showing signs of cooling. Q: THE FUND REGISTERED VERY STRONG PERFORMANCE IN THE FIRST HALF OF THE FISCAL YEAR, BEFORE GIVING BACK SOME OF THOSE GAINS IN THE SECOND HALF. WHAT SECTORS WERE PRIMARILY RESPONSIBLE FOR THE FUND'S STRONG PERFORMANCE? A: The Fund's performance was mainly driven by sectors that were geared toward the strong domestic demand trend throughout the region, including the financial, retail and automobile sectors. With the high savings rate prevalent in most Asian countries, historically low interest TEN LARGEST HOLDINGS(1) Dairy Farm International Holdings 4.1% SMRT Corp Ltd. 3.8 MobileOne Ltd. 3.5 Singapore Post Ltd. 2.6 Jaya Holdings Ltd. 2.4 Malakoff Berhad 2.2 Ezra Holdings Ltd. 2.0 Synnex Technology International Corp. 1.9 Bangkok Expressway PCL 1.9 Central Pattana PCL 1.9
[CHART] REGIONAL DISTRIBUTION(1) As a percentage of common stock investments Australia 0.6% The Philippines 0.6% Singapore 29.0% Taiwan 18.9% Thailand 15.6% Malaysia 9.0% South Korea 8.3% India 8.0% Hong Kong 7.6% Indonesia 1.6% New Zealand 0.8%
(1) Because the Portfolio is actively managed, Ten Largest Holdings and Regional Distribution are subject to change. All data are as of 8/31/04 and are based on total common stock holdings. 3 rates and high consumer confidence due to the buoyant economic growth, consumers have been encouraged to dig into their wallets to spend, thereby benefiting the stocks leveraged to this theme. Q: WHAT SECTORS WERE AMONG THE PORTFOLIO'S LAGGARD PERFORMERS AND WHAT HAS HELD THOSE STOCKS BACK? A: The laggards in the Portfolio included some retail finance stocks in Thailand. These companies suffered, as consumption growth was tempered due to a downward revision of economic growth in the country. That followed on the back of the bird flu outbreak in the beginning of 2004, high oil prices and rising interest rate expectations. In addition, stocks with more defensive characteristics - that is, those with a secure earnings stream but lower growth rates and which pay relatively high dividends - failed to benefit fully from the rally in the markets. Q: AS OF AUGUST 31, 2004, WHERE HAVE YOU BEEN FOCUSING THE PORTFOLIO'S INVESTMENTS, AND WHAT IS THE RATIONALE BEHIND THOSE ALLOCATIONS? A: The Portfolio's largest sector weightings were: banking and finance, at 6.7%; electronic components, at 4.8%; real estate developers, at 4.6%; marine transport, at 4.1%; and telecommunications services, at 4.0%.(1) Those weightings include economically sensitive companies with an exposure to rising industrial and consumer demand, companies that are likely beneficiaries of strong export demand and defensive companies whose earnings growth is less dependent on the overall economy. Specifically, we have started to add to our holdings in the technology sector where we believe value is emerging after the sell-off since the beginning of 2004. We retain our bias towards the domestic demand-oriented stocks through selective additions in Hong Kong and Taiwan. Q: THERE ARE MANY UNCERTAINTIES FACING INVESTORS - OIL PRICES, RISING INTEREST RATES, THE THREAT OF TERRORISM, ETC. ARE SMALL COMPANIES AS KEENLY AFFECTED BY THESE ISSUES, OR DO THEY TEND TO RESPOND TO THE DYNAMICS WITHIN THEIR OWN NICHES? A: In times of uncertainty and volatility, small companies are generally more keenly affected, as risk-averse investors will demand greater premiums relative to the large-cap peers. However, it is also the case that some small-cap stocks with strong underlying fundamentals may be able to buck the general trend and trade on their own merits. Q: WHAT SORT OF THREAT DOES THE SURGE IN OIL PRICES POSE TO ASIAN ECONOMIES AND MARKETS? ARE ANY STOCKS IN THE PORTFOLIO POSSIBLE BENEFICIARIES OF THAT TREND? A: Asia is a large net importer of oil and therefore vulnerable to oil price rises. Sustained high oil prices can reduce income levels for oil consumers, both household and corporate, therefore reducing spending on other items and [CHART] FIVE LARGEST INDUSTRY WEIGHTINGS(1) By total net assets Banking & Finance 6.7% Electronic Components - Miscellaneous- 4.8% Real Estate Development 4.6% Transport - Marine 4.1% Telecommunications Services 4.0%
(1) Because the Portfolio is actively managed, Five Largest Industry Weightings and Sector Weightings are subject to change. All data are as of 8/31/04 and are based on total common stock holdings. 4 draining local liquidity. High oil prices can also lead to inflationary pressures, as companies and households seek to protect margins and incomes. As such, a prolonged period of high oil prices will undoubtedly be negative for Asian markets and, indeed, for global markets. An example of stocks in the Portfolio that have been beneficiaries of a high oil price environment include two companies that own and charter offshore support vessels to the oil and gas companies. With the rising oil prices, there will be more incentive for oil companies to engage in increased drilling activities, thus increasing the demand for their vessels. 5 EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2004 PERFORMANCE
PERFORMANCE(1) CLASS A CLASS B Average Annual Total Returns (at net asset value) One Year 13.69% 13.15% Five Years 16.65 N.A. Life of Fund+ 25.01 13.93 SEC Average Annual Total Returns (including sales charge or applicable CDSC) One Year 7.14% 8.15% Five Years 15.27 N.A. Life of Fund+ 23.67 13.68
+Inception dates: Class A: 3/1/99; Class B: 10/8/99 (1) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED. SEC AVERAGE ANNUAL RETURNS FOR CLASS A REFLECT A 5.75% SALES CHARGE. CLASS A SHARES REDEEMED OR EXCHANGED WITHIN 3 MONTHS OF SETTLEMENT OF PURCHASE ARE SUBJECT TO A 1% EARLY REDEMPTION FEE. SEC AVERAGE ANNUAL 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. [CHART] COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE ASIAN SMALL COMPANIES FUND CLASS A VS. THE MORGAN STANLEY CAPITAL INTERNATIONAL ALL COUNTRY ASIA PACIFIC INDEX* March 31, 1999 - August 31, 2004
EATON VANCE ASIAN SMALL COMPANIES FUND FUND, INCLUDING CLASS A MAXIMUM SALES CHARGE MSCI INDEX 3/31/1999 10,000 9,425 10,000 4/30/1999 11,058 10,420 10,745 5/31/1999 11,337 10,682 10,231 6/30/1999 13,250 12,485 11,251 7/31/1999 14,206 13,386 11,941 8/31/1999 14,708 13,858 11,890 9/30/1999 15,292 14,409 12,243 10/31/1999 16,620 15,661 12,685 11/30/1999 19,499 18,373 13,361 12/31/1999 24,573 23,154 14,233 1/31/2000 24,033 22,645 13,724 2/29/2000 27,429 25,845 13,379 3/31/2000 28,201 26,573 14,261 4/30/2000 24,275 22,873 13,180 5/31/2000 22,647 21,339 12,422 6/30/2000 23,652 22,286 13,284 7/31/2000 21,679 20,427 12,036 8/31/2000 22,451 21,155 12,537 9/30/2000 20,535 19,349 11,736 10/31/2000 19,646 18,512 10,989 11/30/2000 18,709 17,628 10,590 12/31/2000 18,064 17,021 10,166 1/31/2001 19,939 18,788 10,439 2/28/2001 19,256 18,144 9,962 3/31/2001 17,098 16,110 9,383 4/30/2001 17,430 16,423 9,900 5/31/2001 18,650 17,573 9,882 6/30/2001 18,162 17,113 9,453 7/31/2001 17,723 16,699 8,854 8/31/2001 17,762 16,736 8,678 9/30/2001 16,492 15,540 7,702 10/31/2001 16,990 16,009 7,852 11/30/2001 18,494 17,426 8,225 12/31/2001 19,334 18,217 8,039 1/31/2002 20,984 19,772 7,739 2/28/2002 21,824 20,563 7,949 3/31/2002 23,083 21,750 8,518 4/30/2002 23,386 22,036 8,710 5/31/2002 23,366 22,017 9,051 6/30/2002 22,732 21,419 8,588 7/31/2002 21,501 20,260 8,045 8/31/2002 21,335 20,103 7,983 9/30/2002 20,095 18,935 7,495 10/31/2002 19,011 17,914 7,294 11/30/2002 19,714 18,576 7,595 12/31/2002 19,363 18,245 7,346 1/31/2003 19,617 18,484 7,194 2/28/2003 19,636 18,503 7,133 3/31/2003 18,650 17,573 6,891 4/30/2003 19,783 18,641 6,994 5/31/2003 21,746 20,490 7,379 6/30/2003 23,562 22,201 7,862 7/31/2003 26,735 25,191 8,206 8/31/2003 27,936 26,323 8,911 9/30/2003 29,987 28,255 9,302 10/31/2003 31,569 29,746 9,863 11/30/2003 32,184 30,325 9,644 12/31/2003 35,875 33,804 10,312 1/31/2004 35,046 33,023 10,575 2/29/2004 36,235 34,143 10,715 3/31/2004 35,306 33,267 11,544 4/30/2004 34,157 32,185 10,908 5/31/2004 32,080 30,228 10,617 6/30/2004 31,790 29,955 10,928 7/31/2004 31,171 29,371 10,468 8/31/2004 31,760 29,927 10,657
*SOURCES: THOMSON FINANCIAL; LIPPER INC. INVESTMENT OPERATIONS COMMENCED 3/1/99. INDEX INFORMATION IS AVAILABLE ONLY AT MONTH-END; THEREFORE, THE LINE COMPARISON BEGINS AT THE NEXT MONTH-END FOLLOWING THE COMMENCEMENT OF THE FUND'S INVESTMENT OPERATIONS. THE PERFORMANCE CHART ABOVE COMPARES THE FUND'S TOTAL RETURN WITH THAT OF A BROAD-BASED SECURITIES MARKET INDEX. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED. THE LINES ON THE CHART REPRESENT THE TOTAL RETURNS OF $10,000 HYPOTHETICAL INVESTMENTS IN THE FUND AND THE MORGAN STANLEY CAPITAL INTERNATIONAL ALL COUNTRY ASIA PACIFIC INDEX - A BROAD-BASED INDEX OF COMMON STOCKS TRADED IN DEVELOPED AND EMERGING MARKETS OF THE ASIA PACIFIC REGION. A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES ON 10/8/99 AT NET ASSET VALUE WOULD HAVE BEEN WORTH $18,944 ON AUGUST 31, 2003, $18,744 INCLUDING THE FUND'S APPLICABLE CDSC. 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 INDEX'S TOTAL RETURNS DO NOT REFLECT ANY COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN THE INDEX. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR OFFERING PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN. THE FUND'S PERFORMANCE DURING CERTAIN PERIODS REFLECTS THE STRONG STOCK MARKET PERFORMANCE AND/OR THE STRONG PERFORMANCE OF STOCKS HELD DURING THOSE PERIODS. IN 2003, THE FUND'S PERFORMANCE BENEFITED SIGNIFICANTLY FROM THE EXCEPTIONAL PERFORMANCE OF INDIAN AND HONG KONG STOCKS. THIS PERFORMANCE IS NOT TYPICAL AND MAY NOT BE REPEATED. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO www.eatonvance.com. 6 EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2004 FUND EXPENSES Example: As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (March 1, 2004 - August 31, 2004). Actual Expenses: The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes: The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the actual return of the Fund. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EATON VANCE ASIAN SMALL COMPANIES FUND
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* (3/1/04) (8/31/04) (3/1/04-8/31/04) Actual Class A $ 1,000.00 $ 876.50 $ 12.31 Class B $ 1,000.00 $ 874.60 $ 14.56 Hypothetical (5% return before expenses) Class A $ 1,000.00 $ 1,012.00 $ 13.20 Class B $ 1,000.00 $ 1,009.60 $ 15.61
* Expenses are equal to the s annualized expense ratio of 2.61% for Class A shares and 3.09% Fund' for Class B shares multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The Example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on February 29, 2004. The example reflects the expenses of both the Fund and the Portfolio. 7 EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investment in Asian Small Companies Portfolio, at value (identified cost, $41,255,404) $ 36,856,784 Receivable for Fund shares sold 193,631 Prepaid expenses 17,100 -------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 37,067,515 -------------------------------------------------------------------------------------------------- LIABILITIES Payable for Fund shares redeemed $ 93,235 Payable to affiliate for distribution and service fees 3,371 Accrued expenses 31,532 -------------------------------------------------------------------------------------------------- TOTAL LIABILITIES $ 128,138 -------------------------------------------------------------------------------------------------- NET ASSETS $ 36,939,377 -------------------------------------------------------------------------------------------------- SOURCES OF NET ASSETS Paid-in capital $ 34,307,496 Accumulated undistributed net realized gain from Portfolio (computed on the basis of identified cost) 7,115,593 Accumulated net investment loss (85,092) Net unrealized depreciation from Portfolio (computed on the basis of identified cost) (4,398,620) -------------------------------------------------------------------------------------------------- TOTAL $ 36,939,377 -------------------------------------------------------------------------------------------------- CLASS A SHARES NET ASSETS $ 29,001,522 SHARES OUTSTANDING 911,971 NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 31.80 MAXIMUM OFFERING PRICE PER SHARE (100 DIVIDED BY 94.25 of $31.80) $ 33.74 -------------------------------------------------------------------------------------------------- CLASS B SHARES NET ASSETS $ 7,937,855 SHARES OUTSTANDING 398,133 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 19.94 --------------------------------------------------------------------------------------------------
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, 2004 INVESTMENT INCOME Dividends allocated from Portfolio (net of foreign taxes, $84,080) $ 848,382 Interest allocated from Portfolio 7,229 Expenses allocated from Portfolio (494,069) -------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME FROM PORTFOLIO $ 361,542 -------------------------------------------------------------------------------------------------- EXPENSES Management fee $ 91,875 Trustees' fees and expenses 101 Distribution and service fees Class A 148,518 Class B 69,717 Transfer and dividend disbursing agent fees 70,881 Registration fees 34,353 Printing and postage 13,941 Custodian fee 12,893 Legal and accounting services 12,140 Miscellaneous 2,853 -------------------------------------------------------------------------------------------------- TOTAL EXPENSES $ 457,272 -------------------------------------------------------------------------------------------------- NET INVESTMENT LOSS $ (95,730) -------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO Net realized gain (loss) -- Investment transactions (net of foreign taxes, $1,318,174) (identified cost basis) $ 8,253,860 Foreign currency transactions (83,462) -------------------------------------------------------------------------------------------------- NET REALIZED GAIN $ 8,170,398 -------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) Investments (identified cost basis) $ (6,292,539) Foreign currency 494 -------------------------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ (6,292,045) -------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN $ 1,878,353 -------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,782,623 --------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 8 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 ------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment income (loss) $ (95,730) $ 92,079 Net realized gain (loss) from investment transactions and foreign currency 8,170,398 (71,195) Net change in unrealized appreciation (depreciation) from investments and foreign currency (6,292,045) 2,316,306 ------------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,782,623 $ 2,337,190 ------------------------------------------------------------------------------------------------ Distributions to shareholders -- From net investment income Class A $ (126,317) $ -- Class B (16,913) -- From net realized gain Class A (577,030) -- Class B (167,885) -- ------------------------------------------------------------------------------------------------ TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (888,145) $ -- ------------------------------------------------------------------------------------------------ Transactions in shares of beneficial interest -- Proceeds from sale of shares Class A $ 32,868,498 $ 13,253,162 Class B 9,087,111 1,530,587 Net asset value of shares issued to shareholders in payment of distributions declared Class A 542,336 -- Class B 115,637 -- Cost of shares redeemed Class A (20,697,117) (2,466,865) Class B (3,348,927) (393,068) Redemption fees 10,693 3,282 ------------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS $ 18,578,231 $ 11,927,098 ------------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS $ 19,472,709 $ 14,264,288 ------------------------------------------------------------------------------------------------ NET ASSETS At beginning of year $ 17,466,668 $ 3,202,380 ------------------------------------------------------------------------------------------------ AT END OF YEAR $ 36,939,377 $ 17,466,668 ------------------------------------------------------------------------------------------------ ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) INCLUDED IN NET ASSETS AT END OF YEAR $ (85,092) $ 65,491 ------------------------------------------------------------------------------------------------
Certain prior year amounts have been reclassed to conform to the current year presentation. SEE NOTES TO FINANCIAL STATEMENTS 9 FINANCIAL HIGHLIGHTS
CLASS A -------------------------------------------------------------- YEAR ENDED AUGUST 31, -------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000 -------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 28.610 $ 21.850 $ 18.190 $ 24.130 $ 15.840 -------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment income (loss) $ (0.064) $ 0.437 $ (0.253) $ (0.268) $ (0.322) Net realized and unrealized gain (loss) 4.030 6.306 3.913 (4.632) 8.660 -------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 3.966 $ 6.743 $ 3.660 $ (4.900) $ 8.338 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net investment income $ (0.142) $ -- $ -- $ -- $ (0.048) From net realized gain (0.645) -- -- (1.040) -- -------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ (0.787) $ -- $ -- $ (1.040) $ (0.048) -------------------------------------------------------------------------------------------------------------- REDEMPTION FEES $ 0.011 $ 0.017 $ -- $ -- $ -- -------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 31.800 $ 28.610 $ 21.850 $ 18.190 $ 24.130 -------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) 13.69% 30.94% 20.12% (20.89)% 52.65% -------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA+ Net assets, end of year (000's omitted) $ 29,002 $ 15,121 $ 2,349 $ 340 $ 1,723 Ratios (As a percentage of average daily net assets): Net expenses(3) 2.50% 2.47% 2.52% 2.78% 2.70% Net expenses after custodian fee reduction(3) 2.50% 2.47% 2.49% 2.50% 2.49% Net investment income (loss) (0.19)% 1.93% (1.13)% (1.38)% (1.66)% Portfolio Turnover of the Portfolio 120% 112% 83% 109% 112% -------------------------------------------------------------------------------------------------------------- +(4) The operating expenses of the Fund reflect a reduction of the management fee and/or distribution fee as well as an allocation of expenses to the Distributor. Had such actions not been taken, the ratios would have been as follows: Ratios (As a percentage of average daily net assets): Expenses(3) 3.54% 7.41% 7.84% 6.67% Expenses after custodian fee reduction(3) 3.54% 7.38% 7.56% 6.46% Net investment income (loss) 0.86% (6.02)% (6.44)% (5.63)% Net investment income (loss) per share $ 0.195 $ (1.348) $ (1.251) $ (1.092) --------------------------------------------------------------------------------------------------------------
(1) Net investment income (loss) per share was computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the corresponding Portfolio's allocated expenses. (4) A contractual reimbursement was discontinued effective September 1, 2003. * Certain prior year amounts have been reclassed to conform to the current year presentation. SEE NOTES TO FINANCIAL STATEMENTS 10
CLASS B -------------------------------------------------------------- YEAR ENDED AUGUST 31, -------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000 -------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 18.200 $ 13.980 $ 11.700 $ 16.070 $ 11.700 -------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment income (loss) $ (0.118) $ 0.129 $ (0.204) $ (0.234) $ (0.345) Net realized and unrealized gain (loss) 2.566 4.091 2.484 (3.096) 4.715 -------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 2.448 $ 4.220 $ 2.280 $ (3.330) $ 4.370 -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net investment income $ (0.065) $ -- $ -- $ -- $ -- From net realized gain (0.645) -- -- (1.040) -- -------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ (0.710) $ -- $ -- $ (1.040) $ -- -------------------------------------------------------------------------------------------------------------- REDEMPTION FEES $ 0.002 $ -- $ -- $ -- $ -- -------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 19.940 $ 18.200 $ 13.980 $ 11.700 $ 16.070 -------------------------------------------------------------------------------------------------------------- TOTAL RETURN(3) 13.15% 30.19% 19.49% (21.64)% 37.35% -------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA+ Net assets, end of year (000's omitted) $ 7,938 $ 2,346 $ 853 $ 14 $ 47 Ratios (As a percentage of average daily net assets): Net expenses(4) 3.00% 2.97% 3.03% 3.28% 2.77%(5) Net expenses after custodian fee reduction(4) 3.00% 2.97% 3.00% 3.00% 2.56%(5) Net investment income (loss) (0.56)% 0.91% (1.40)% (1.88)% (1.59)%(5) Portfolio Turnover of the Portfolio 120% 112% 83% 109% 112% -------------------------------------------------------------------------------------------------------------- +(6)The operating expenses of the Fund reflect a reduction of the management fee and/or distribution fee as well as an allocation of expenses to the Distributor. Had such actions not been taken, the ratios would have been as follows: Ratios (As a percentage of average daily net assets): Expenses(4) 4.06% 6.64% 10.80% 4.81%(5) Expenses after custodian fee reduction(4) 4.06% 6.61% 10.52% 4.60%(5) Net investment loss (0.18)% (5.01)% (9.40)% (3.63)%(5) Net investment loss per share $ (0.026) $ (0.730) $ (1.170) $ (0.788) --------------------------------------------------------------------------------------------------------------
(1) Net investment income (loss) per share was computed using average shares outstanding. (2) For the period from the commencement of offering of Class B shares, October 8, 1999 to August 31, 2000. (3) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (4) Includes the Fund's share of the corresponding Portfolio's allocated expenses. (5) Annualized. (6) A contractual reimbursement was discontinued effective September 1, 2003. SEE NOTES TO FINANCIAL STATEMENTS 11 EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2004 NOTES TO FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES Eaton Vance Asian Small Companies 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 two classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class B 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 Asian Small Companies 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 (32.4% at August 31, 2004). 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 Trustees have adopted a conversion feature pursuant to which Class B shares of the Fund automatically convert to Class A shares eight years after their purchase as described in the Fund's prospectus. 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 credit balances used to reduce the Fund'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. 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 EXPENSES -- The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds. G REDEMPTION FEES -- Upon the redemption or exchange of shares held by Class A shareholders for less than three months, a fee of 1% of the current net asset value of the shares will be assessed and retained by the Fund for the benefit of the remaining shareholders. The redemption fee is accounted for as an addition to paid-in capital and amounted to $10,693 for the year ended August 31, 2004. H INDEMNIFICATIONS -- Under the Trust's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund and shareholders are indemnified against personal liability for obligations of the Trust. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The 12 Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. I OTHER -- Investment transactions are accounted for on a trade-date basis. 2 DISTRIBUTIONS TO SHAREHOLDERS It is present policy of the Fund to make at least one distribution annually (normally in December) of all or substantially all of the net investment income allocated to the Fund by the Portfolio, less the Fund's direct 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. Accounting principles generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be 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. The tax character of distributions paid for the year ended August 31, 2004 was as follows: Distributions declared from: Ordinary income $ 143,230 Long-term capital gain $ 744,915
There were no distributions for the year ended August 31, 2003. During the year ended August 31, 2004, paid-in capital was decreased by $428, accumulated net investment loss was decreased by $88,377, and accumulated undistributed net realized gain was decreased by $87,949 primarily due to differences between book and tax accounting for investment transactions. This change had no effect on the net assets or the net asset value per share. As of August 31, 2004, the components of distributable earnings (accumulated losses) on a tax basis were as follows: Undistributed income $ 3,874,168 Undistributed gain $ 3,474,044 Unrealized loss $ (4,398,620) Other temporary differences $ (317,711)
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 2004 2003 ------------------------------------------------------------------ Sales 977,518 526,906 Issued to shareholders electing to receive payments of distributions in Fund shares 15,742 -- Redemptions (609,746) (105,985) ------------------------------------------------------------------ NET INCREASE 383,514 420,921 ------------------------------------------------------------------ YEAR ENDED AUGUST 31, ----------------------- CLASS B 2004 2003 ------------------------------------------------------------------ Sales 423,472 97,914 Issued to shareholders electing to receive payments of distributions in Fund shares 5,336 -- Redemptions (159,571) (30,020) ------------------------------------------------------------------ NET INCREASE 269,237 67,894 ------------------------------------------------------------------
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. For the year ended August 31, 2004, the fee was equivalent to 0.25% of the Fund's average daily net assets for such period and amounted to $91,875. 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. EVM serves as the sub-transfer agent of the Fund and receives from the transfer agent an aggregate fee based upon the actual expenses incurred by EVM in the performance of those 13 activities. During the year ended August 31, 2004, EVM earned $4,818 in sub-transfer agent fees. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's principal underwriter, received approximately $80,358 as its portion of the sales charge on sales of Class A shares for the year ended August 31, 2004. Certain officers and Trustees of the Fund and of the Portfolio are officers of the above organization. 5 DISTRIBUTION PLAN The Fund has in effect distribution plans for Class A shares (Class A Plan) and Class B shares (Class B Plan) (collectively, the Plans) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The Class B Plan requires the Fund to pay EVD amounts equal to 1/365 of 0.75% of the Fund's average daily net assets attributable to Class B shares. The Class A Plan requires the Fund to pay EVD 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 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's Class B shares 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% of the aggregate amount received by the Fund for the Class B shares sold 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 reduced by the aggregate amount of contingent deferred sales charges (see Note 6) and daily amounts theretofore paid to EVD. The Fund accrued approximately $133,284 and $52,331 for Class A and Class B shares, respectively, payable to EVD for the year ended August 31, 2004, representing approximately 0.45% and 0.75% of the average daily net assets for Class A and Class B shares, respectively. At August 31, 2004, the amount of Uncovered Distribution Charges EVD calculated under the Plan was approximately $327,000 for Class B shares. The Plans authorize 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 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. The Class B Plan authorizes 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 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, 2004, amounted to approximately $15,000 and $17,000 for Class A and Class B 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 A shares made within three months of purchase and on redemptions of Class B shares made within six years of purchase. Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gain distributions. Class A shares will be subject to a 1% CDSC if redeemed within three months of purchase. 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. No CDSC is levied on shares which have been sold to EVM or its affiliates or to their respective employees or clients and may be waived under certain other limited conditions. CDSC charges are paid to EVD to reduce the amount of Uncovered Distribution Charges calculated under the Plans (see Note 5). CDSC charges received when no Uncovered Distribution Charges exist will be credited to the Fund. EVD received approximately $20,000 and $36,000 of CDSC paid by Class A and Class B shareholders, respectively, for the year ended August 31, 2004. 7 INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in the Portfolio aggregated $42,207,317 and $24,486,793 respectively, for the year ended August 31, 2004. 14 EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE TRUSTEES OF EATON VANCE GROWTH TRUST AND SHAREHOLDERS OF EATON VANCE ASIAN SMALL COMPANIES FUND: We have audited the accompanying statement of assets and liabilities of Eaton Vance Asian Small Companies Fund (one of the series constituting Eaton Vance Growth Trust) as of August 31, 2004, 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 periods presented. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 the Eaton Vance Asian Small Companies Fund at August 31, 2004, 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 19, 2004 15 EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2004 FEDERAL TAX INFORMATION (Unaudited) The Form 1099-DIV you receive in January 2005 will show the tax status of all distributions paid to your account in calendar 2004. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Fund. As required by the Internal Revenue Code regulations, shareholders must be notified within 60 days of the Fund's fiscal year end regarding the status of qualified dividend income for individuals, the dividends received deduction for corporations, and the foreign tax credit. QUALIFIED DIVIDEND INCOME. The Fund designates approximately $703,638, or up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income eligible for the reduced tax rate of 15%. DIVIDENDS RECEIVED DEDUCTION. Corporate shareholders are generally entitled to take the dividends received deduction on the portion of the Fund's dividend distribution that qualifies under tax law. Of the Fund's fiscal 2004 ordinary income dividends, 0% qualifies for the corporate dividends received deduction. FOREIGN TAX CREDIT. For the fiscal year ended August 31, 2004, the Fund paid foreign taxes of $84,080 and recognized foreign source income of $939,691. CAPITAL GAIN DIVIDENDS. The Fund designates $744,915 as Capital Gain Dividends. 16 ASIAN SMALL COMPANIES PORTFOLIO as of August 31, 2004 PORTFOLIO OF INVESTMENTS COMMON STOCKS -- 93.6%
SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ AUSTRALIA -- 0.6% MINING -- 0.6% Lihir Gold Ltd.(1) 912,400 $ 666,397 ------------------------------------------------------------------------------------------------ $ 666,397 ------------------------------------------------------------------------------------------------ TOTAL AUSTRALIA (IDENTIFIED COST $795,275) $ 666,397 ------------------------------------------------------------------------------------------------ HONG KONG -- 7.1% SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ BANKING AND FINANCE -- 1.4% CITIC International Financial Holdings Ltd. 3,985,000 $ 1,643,728 ------------------------------------------------------------------------------------------------ $ 1,643,728 ------------------------------------------------------------------------------------------------ ELECTRONIC COMPONENTS - MISCELLANEOUS -- 0.4% Kwang Sung Electronics HK Co., Ltd. 2,260,000 $ 393,969 ------------------------------------------------------------------------------------------------ $ 393,969 ------------------------------------------------------------------------------------------------ HOUSEHOLD FURNISHING & APPLIANCES -- 0.1% Chitaly Holdings Ltd. 210,000 $ 122,501 ------------------------------------------------------------------------------------------------ $ 122,501 ------------------------------------------------------------------------------------------------ INSURANCE -- 1.3% China Insurance International Holdings Co., Ltd. 3,676,000 $ 1,516,234 ------------------------------------------------------------------------------------------------ $ 1,516,234 ------------------------------------------------------------------------------------------------ MACHINE TOOLS -- 0.3% Wang Sing International 2,628,000 $ 361,443 ------------------------------------------------------------------------------------------------ $ 361,443 ------------------------------------------------------------------------------------------------ PUBLISHING -- 0.3% Global China Group Holdings Ltd.(1) 6,234,000 $ 319,694 ------------------------------------------------------------------------------------------------ $ 319,694 ------------------------------------------------------------------------------------------------ RETAIL - APPAREL -- 1.0% Ports Design Ltd. 618,000 $ 1,125,084 ------------------------------------------------------------------------------------------------ $ 1,125,084 ------------------------------------------------------------------------------------------------ RETAIL - RESTAURANTS -- 2.3% Cafe de Coral Holdings Ltd. 1,463,000 $ 1,670,557 Fairwood Ltd.(1) 3,140,000 946,032 ------------------------------------------------------------------------------------------------ $ 2,616,589 ------------------------------------------------------------------------------------------------ TOTAL HONG KONG (IDENTIFIED COST $6,974,200) $ 8,099,242 ------------------------------------------------------------------------------------------------ INDIA -- 7.5% SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ AUDIO / VIDEO PRODUCTS -- 0.1% Mirc Electronics Ltd. 288,180 $ 121,254 ------------------------------------------------------------------------------------------------ $ 121,254 ------------------------------------------------------------------------------------------------ AUTO AND PARTS -- 1.4% Automotive Axles Ltd. 104,454 $ 444,344 TVS Motor Co., Ltd. 736,240 1,196,221 ------------------------------------------------------------------------------------------------ $ 1,640,565 ------------------------------------------------------------------------------------------------ BANKING AND FINANCE -- 0.3% ING Vysya Bank Ltd. 57,380 $ 359,979 ------------------------------------------------------------------------------------------------ $ 359,979 ------------------------------------------------------------------------------------------------ COSMETICS & TOILETRIES -- 0.5% Dabur India Ltd. 352,980 $ 524,767 ------------------------------------------------------------------------------------------------ $ 524,767 ------------------------------------------------------------------------------------------------ DIVERSIFIED MINERALS -- 1.1% Gujarat Mineral Development Corp., Ltd. 259,000 $ 1,230,665 ------------------------------------------------------------------------------------------------ $ 1,230,665 ------------------------------------------------------------------------------------------------ DIVERSIFIED OPERATIONS -- 1.1% Indian Rayon and Industries Ltd. 200,000 $ 1,257,309 ------------------------------------------------------------------------------------------------ $ 1,257,309 ------------------------------------------------------------------------------------------------ ELECTRIC - GENERATION -- 0.8% Alstom Projects India Ltd. 321,360 $ 920,846 ------------------------------------------------------------------------------------------------ $ 920,846 ------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 17
SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ ENTERTAINMENT -- 0.6% Pritish Nandy Communications Ltd. 320,000 $ 628,331 ------------------------------------------------------------------------------------------------ $ 628,331 ------------------------------------------------------------------------------------------------ FOOD AND BEVERAGES -- 0.2% United Breweries Holdings Ltd.(1) 270,107 $ 200,781 ------------------------------------------------------------------------------------------------ $ 200,781 ------------------------------------------------------------------------------------------------ MACHINERY -- 0.6% Ingersoll Rand (India) Ltd. 150,319 $ 715,349 ------------------------------------------------------------------------------------------------ $ 715,349 ------------------------------------------------------------------------------------------------ PETROCHEMICAL -- 0.8% Finolex Industries Ltd. 690,583 $ 960,926 ------------------------------------------------------------------------------------------------ $ 960,926 ------------------------------------------------------------------------------------------------ TOTAL INDIA (IDENTIFIED COST $7,881,892) $ 8,560,772 ------------------------------------------------------------------------------------------------ INDONESIA -- 1.5% SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ BANKING AND FINANCE -- 0.6% PT Bank Nisp Tbk 11,819,140 $ 662,513 ------------------------------------------------------------------------------------------------ $ 662,513 ------------------------------------------------------------------------------------------------ PACKAGING -- 0.9% PT Dynaplast Tbk 6,565,000 $ 1,036,348 ------------------------------------------------------------------------------------------------ $ 1,036,348 ------------------------------------------------------------------------------------------------ TOTAL INDONESIA (IDENTIFIED COST $1,201,599) $ 1,698,861 ------------------------------------------------------------------------------------------------ MALAYSIA -- 8.4% SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ BUILDING PRODUCTS -- 0.6% Jaya Tiasa Holdings Berhad 616,500 $ 645,607 ------------------------------------------------------------------------------------------------ $ 645,607 ------------------------------------------------------------------------------------------------ ELECTRIC - GENERATION -- 2.0% Malakoff Berhad 1,392,200 $ 2,313,135 ------------------------------------------------------------------------------------------------ $ 2,313,135 ------------------------------------------------------------------------------------------------ ENGINEERING AND CONSTRUCTION -- 1.2% IJM Corp. Berhad 1,080,000 $ 1,364,431 ------------------------------------------------------------------------------------------------ $ 1,364,431 ------------------------------------------------------------------------------------------------ HOUSEHOLD FURNISHING & APPLIANCES -- 1.0% Yeo Aik Resources Berhad 3,065,900 $ 1,145,678 ------------------------------------------------------------------------------------------------ $ 1,145,678 ------------------------------------------------------------------------------------------------ OFFICE SUPPLIES AND FORMS -- 1.0% Asia File Corp. Berhad 652,000 $ 1,132,421 ------------------------------------------------------------------------------------------------ $ 1,132,421 ------------------------------------------------------------------------------------------------ OIL COMPANIES - EXPLORATION & PRODUCTION -- 1.0% Eastern Pacific Industrial Corp. Berhad 2,924,800 $ 1,177,617 ------------------------------------------------------------------------------------------------ $ 1,177,617 ------------------------------------------------------------------------------------------------ RETAIL - BUILDING PRODUCTS -- 1.2% Engtex Group Berhad 1,740,000 $ 1,391,039 ------------------------------------------------------------------------------------------------ $ 1,391,039 ------------------------------------------------------------------------------------------------ WATER UTILITIES -- 0.4% Salcon Berhad(1) 1,472,600 $ 434,029 ------------------------------------------------------------------------------------------------ $ 434,029 ------------------------------------------------------------------------------------------------ TOTAL MALAYSIA (IDENTIFIED COST $10,955,812) $ 9,603,957 ------------------------------------------------------------------------------------------------ NEW ZEALAND -- 0.7% SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ RETAIL - SPECIALTY AND APPAREL -- 0.7% Briscoe Group Ltd. 860,644 $ 810,274 ------------------------------------------------------------------------------------------------ $ 810,274 ------------------------------------------------------------------------------------------------ TOTAL NEW ZEALAND (IDENTIFIED COST $779,777) $ 810,274 ------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 18 PHILIPPINES -- 0.6%
SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ ELECTRIC - GENERATION -- 0.6% First Philippine Holdings(1) 1,487,000 $ 642,855 ------------------------------------------------------------------------------------------------ $ 642,855 ------------------------------------------------------------------------------------------------ TOTAL PHILIPPINES (IDENTIFIED COST $742,828) $ 642,855 ------------------------------------------------------------------------------------------------ REPUBLIC OF KOREA -- 7.8% SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ COMMERCIAL SERVICES - FINANCE -- 0.5% Korea Information Service, Inc. 31,128 $ 602,643 ------------------------------------------------------------------------------------------------ $ 602,643 ------------------------------------------------------------------------------------------------ ELECTRONIC COMPONENTS - MISCELLANEOUS -- 1.0% HiCel Co., Ltd. 96,508 $ 312,987 Interflex Co., Ltd. 36,300 804,422 ------------------------------------------------------------------------------------------------ $ 1,117,409 ------------------------------------------------------------------------------------------------ ENGINEERING AND CONSTRUCTION -- 0.7% Kumho Industrial Co., Ltd. 118,000 $ 815,845 ------------------------------------------------------------------------------------------------ $ 815,845 ------------------------------------------------------------------------------------------------ MACHINERY -- 1.3% Daewoo Heavy Industries & Machinery Ltd.(1) 191,300 $ 1,491,644 ------------------------------------------------------------------------------------------------ $ 1,491,644 ------------------------------------------------------------------------------------------------ MANUFACTURING - SPECIAL -- 1.2% STX Shipbuilding Co., Ltd. 139,800 $ 1,358,818 ------------------------------------------------------------------------------------------------ $ 1,358,818 ------------------------------------------------------------------------------------------------ METALS -- 0.6% Korea Zinc Co., Ltd. 41,380 $ 678,440 ------------------------------------------------------------------------------------------------ $ 678,440 ------------------------------------------------------------------------------------------------ OFFICE AUTOMATION AND EQUIPMENT -- 0.7% Sindo Ricoh Co. 16,430 $ 785,752 ------------------------------------------------------------------------------------------------ $ 785,752 ------------------------------------------------------------------------------------------------ SOAP & CLEANING PREPARATIONS -- 1.8% LG Household & Health Care Ltd. 79,050 $ 1,986,023 ------------------------------------------------------------------------------------------------ $ 1,986,023 ------------------------------------------------------------------------------------------------ TOTAL REPUBLIC OF KOREA (IDENTIFIED COST $9,786,292) $ 8,836,574 ------------------------------------------------------------------------------------------------ SINGAPORE -- 27.1% SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ BUILDING PRODUCTS -- 1.4% Hong Leong Asia Ltd. 1,848,000 $ 1,622,431 ------------------------------------------------------------------------------------------------ $ 1,622,431 ------------------------------------------------------------------------------------------------ BUSINESS SERVICES - MISCELLANEOUS -- 2.5% Singapore Post Ltd. 6,128,000 $ 2,811,873 ------------------------------------------------------------------------------------------------ $ 2,811,873 ------------------------------------------------------------------------------------------------ CONSUMER PRODUCTS -- 1.0% GP Batteries International Ltd. 592,000 $ 1,149,532 ------------------------------------------------------------------------------------------------ $ 1,149,532 ------------------------------------------------------------------------------------------------ DISTRIBUTION / WHOLESALE -- 1.5% Tat Hong Holdings Ltd. 7,514,000 $ 1,718,705 ------------------------------------------------------------------------------------------------ $ 1,718,705 ------------------------------------------------------------------------------------------------ ELECTRONIC COMPONENTS - MISCELLANEOUS -- 1.5% Jurong Technologies Industrial Corp., Ltd. 2,574,000 $ 1,719,938 ------------------------------------------------------------------------------------------------ $ 1,719,938 ------------------------------------------------------------------------------------------------ ELECTRONIC EQUIPMENT SUPPLIER -- 1.4% Autron Corp., Ltd. 9,457,000 $ 1,553,810 ------------------------------------------------------------------------------------------------ $ 1,553,810 ------------------------------------------------------------------------------------------------ FOOD - RETAIL -- 3.8% Dairy Farm International Holdings Ltd. 1,784,300 $ 4,353,692 ------------------------------------------------------------------------------------------------ $ 4,353,692 ------------------------------------------------------------------------------------------------ PLASTIC PRODUCTS -- 0.4% First Engineering Ltd. 700,000 $ 501,003 ------------------------------------------------------------------------------------------------ $ 501,003 ------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 19
SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ REAL ESTATE OPERATING / DEVELOPMENT -- 1.0% Hersing Corp., Ltd. 2,946,000 $ 275,255 Wing Tai Holdings Ltd. 1,667,000 874,027 ------------------------------------------------------------------------------------------------ $ 1,149,282 ------------------------------------------------------------------------------------------------ REITS -- 1.7% CapitaMall Trust 1,913,700 $ 1,881,163 ------------------------------------------------------------------------------------------------ $ 1,881,163 ------------------------------------------------------------------------------------------------ TELECOMMUNICATION SERVICES -- 3.3% MobileOne Ltd. 3,986,000 $ 3,752,403 ------------------------------------------------------------------------------------------------ $ 3,752,403 ------------------------------------------------------------------------------------------------ TRANSPORT - MARINE -- 4.1% Ezra Holdings Ltd. 3,519,000 $ 2,084,289 Jaya Holdings Ltd. 4,891,000 2,533,455 ------------------------------------------------------------------------------------------------ $ 4,617,744 ------------------------------------------------------------------------------------------------ TRANSPORT - SERVICES -- 3.5% SMRT Corp., Ltd. 9,918,000 $ 4,025,233 ------------------------------------------------------------------------------------------------ $ 4,025,233 ------------------------------------------------------------------------------------------------ TOTAL SINGAPORE (IDENTIFIED COST $28,668,218) $ 30,856,809 ------------------------------------------------------------------------------------------------ TAIWAN -- 17.7% SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ AUDIO / VIDEO PRODUCTS -- 0.8% Hanpin Electron Co., Ltd. 1,173,679 $ 924,247 ------------------------------------------------------------------------------------------------ $ 924,247 ------------------------------------------------------------------------------------------------ BANKING AND FINANCE -- 2.5% Bank of Kaohsiung 1,963,500 $ 1,264,228 Polaris Securities Co., Ltd. 3,376,776 1,593,820 ------------------------------------------------------------------------------------------------ $ 2,858,048 ------------------------------------------------------------------------------------------------ BUSINESS SERVICES - MISCELLANEOUS -- 0.9% Taiwan Secom Co., Ltd. 1,040,000 $ 1,072,775 ------------------------------------------------------------------------------------------------ $ 1,072,775 ------------------------------------------------------------------------------------------------ CHEMICALS -- 1.4% Taiwan Fertilizer Co. Ltd. 1,982,000 $ 1,579,651 ------------------------------------------------------------------------------------------------ $ 1,579,651 ------------------------------------------------------------------------------------------------ ELECTRONIC COMPONENTS - MISCELLANEOUS -- 1.9% LITE-ON IT Corp. 332,400 $ 744,731 Unimicron Technology Corp. 2,221,000 1,376,097 ------------------------------------------------------------------------------------------------ $ 2,120,828 ------------------------------------------------------------------------------------------------ ELECTRONIC PARTS & COMPONENTS -- 2.9% Synnex Technology International Corp. 1,380,500 $ 2,059,861 Topco Scientific Co., Ltd. 701,500 1,209,299 ------------------------------------------------------------------------------------------------ $ 3,269,160 ------------------------------------------------------------------------------------------------ ENTERTAINMENT -- 0.9% Advanced International Multitech Co., Ltd. 561,600 $ 1,067,806 ------------------------------------------------------------------------------------------------ $ 1,067,806 ------------------------------------------------------------------------------------------------ HEALTH AND PERSONAL CARE -- 2.8% Johnson Health Tech Co., Ltd. 1,105,000 $ 1,899,016 Kang NA Hsiung Enterprise 2,789,280 1,338,903 ------------------------------------------------------------------------------------------------ $ 3,237,919 ------------------------------------------------------------------------------------------------ HOTELS AND MOTELS -- 0.7% Formosa International Hotels Corp. 689,000 $ 761,347 ------------------------------------------------------------------------------------------------ $ 761,347 ------------------------------------------------------------------------------------------------ PHOTO EQUIPMENT AND SUPPLIES -- 0.8% Premier Image Technology Corp. 1,022,700 $ 904,985 ------------------------------------------------------------------------------------------------ $ 904,985 ------------------------------------------------------------------------------------------------ REAL ESTATE OPERATING / DEVELOPMENT -- 0.5% Sinyi Realty Co. 325,000 $ 507,915 ------------------------------------------------------------------------------------------------ $ 507,915 ------------------------------------------------------------------------------------------------ SOFTWARE -- 1.6% Soft-World International Corp.(1) 913,000 $ 1,829,427 ------------------------------------------------------------------------------------------------ $ 1,829,427 ------------------------------------------------------------------------------------------------ TOTAL TAIWAN (IDENTIFIED COST $22,623,011) $ 20,134,108 ------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 20 THAILAND -- 14.6%
SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ APPLIANCES -- 0.9% Mida Assets PCL 3,199,000 $ 1,098,336 ------------------------------------------------------------------------------------------------ $ 1,098,336 ------------------------------------------------------------------------------------------------ BANKING AND FINANCE -- 1.9% Bankthai PCL(1) 6,469,100 $ 621,282 Tisco Finance PCL 2,689,100 1,510,803 ------------------------------------------------------------------------------------------------ $ 2,132,085 ------------------------------------------------------------------------------------------------ BUILDING PRODUCTS -- 0.4% Vanachai Group PCL 1,964,000 $ 440,898 ------------------------------------------------------------------------------------------------ $ 440,898 ------------------------------------------------------------------------------------------------ COMMERCIAL SERVICES - FINANCE -- 1.6% Siam Panich Leasing PCL 2,151,200 $ 1,808,082 ------------------------------------------------------------------------------------------------ $ 1,808,082 ------------------------------------------------------------------------------------------------ ENGINEERING -- 1.1% Power Line Engineering PCL 3,614,100 $ 1,232,178 ------------------------------------------------------------------------------------------------ $ 1,232,178 ------------------------------------------------------------------------------------------------ FOOD AND BEVERAGES -- 1.4% Serm Suk PCL 400,000 $ 230,492 Thai Vegetable Oil PCL 4,458,100 1,348,669 ------------------------------------------------------------------------------------------------ $ 1,579,161 ------------------------------------------------------------------------------------------------ HOTELS AND MOTELS -- 0.3% Royal Garden Resort PCL 5,136,100 $ 352,683 ------------------------------------------------------------------------------------------------ $ 352,683 ------------------------------------------------------------------------------------------------ METALS - INDUSTRIAL -- 0.7% Millennium Steel PCL(1) 18,700,000 $ 767,755 ------------------------------------------------------------------------------------------------ $ 767,755 ------------------------------------------------------------------------------------------------ REAL ESTATE OPERATING / DEVELOPMENT -- 3.1% Amata Corp. PCL 6,212,500 $ 1,551,260 Central Pattana PCL 9,807,500 2,001,531 ------------------------------------------------------------------------------------------------ $ 3,552,791 ------------------------------------------------------------------------------------------------ RETAIL - MAJOR DEPARTMENT STORE -- 0.7% Robinson Department Store PCL(1) 11,406,000 $ 859,900 ------------------------------------------------------------------------------------------------ $ 859,900 ------------------------------------------------------------------------------------------------ TELECOMMUNICATION SERVICES -- 0.7% True Corp. PCL(1) 6,290,000 $ 785,306 ------------------------------------------------------------------------------------------------ $ 785,306 ------------------------------------------------------------------------------------------------ TRANSPORTATION -- 1.8% Bangkok Expressway PCL 3,580,400 $ 2,037,346 ------------------------------------------------------------------------------------------------ $ 2,037,346 ------------------------------------------------------------------------------------------------ TOTAL THAILAND (IDENTIFIED COST $21,012,292) $ 16,646,521 ------------------------------------------------------------------------------------------------ TOTAL COMMON STOCKS (IDENTIFIED COST $111,421,196) $ 106,556,370 ------------------------------------------------------------------------------------------------ WARRANTS -- 0.2% SECURITY SHARES VALUE ------------------------------------------------------------------------------------------------ SINGAPORE -- 0.2% ELECTRONIC EQUIPMENT SUPPLIER -- 0.2% Autron Corp., Ltd., Strike .18, Expires 6/4/07(1) 3,152,333 $ 266,921 ------------------------------------------------------------------------------------------------ $ 266,921 ------------------------------------------------------------------------------------------------ TOTAL SINGAPORE (IDENTIFIED COST $36,779) $ 266,921 ------------------------------------------------------------------------------------------------ TOTAL WARRANTS (IDENTIFIED COST $36,779) $ 266,921 ------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS -- 93.8% (IDENTIFIED COST $111,457,975) $ 106,823,291 ------------------------------------------------------------------------------------------------ OTHER ASSETS, LESS LIABILITIES -- 6.2% $ 7,002,039 ------------------------------------------------------------------------------------------------ Net Assets -- 100.0% $ 113,825,330 ------------------------------------------------------------------------------------------------
(1) Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS 21 ASIAN SMALL COMPANIES PORTFOLIO as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investments, at value (identified cost, $111,457,975) $ 106,823,291 Cash 5,099,661 Foreign currency, at value (identified cost, $3,958,670) 3,950,971 Receivable for investments sold 789,094 Interest and dividends receivable 330,100 Tax reclaim receivable 114,274 ------------------------------------------------------------------------------ TOTAL ASSETS $ 117,107,391 ------------------------------------------------------------------------------ LIABILITIES Payable for investments purchased $ 3,055,424 Reserve for estimate of capital gains taxes 206,809 Accrued expenses 19,828 ------------------------------------------------------------------------------ TOTAL LIABILITIES $ 3,282,061 ------------------------------------------------------------------------------ NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $ 113,825,330 ------------------------------------------------------------------------------ SOURCES OF NET ASSETS Net proceeds from capital contributions and withdrawals $ 118,468,882 Net unrealized depreciation (computed on the basis of identified cost) (4,643,552) ------------------------------------------------------------------------------ TOTAL $ 113,825,330 ------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2004 INVESTMENT INCOME Dividends (net of foreign taxes, $248,321) $ 2,711,368 Interest 22,876 ------------------------------------------------------------------------------ TOTAL INVESTMENT INCOME $ 2,734,244 ------------------------------------------------------------------------------ EXPENSES Investment adviser fee $ 874,895 Administration fee 291,705 Trustees' fees and expenses 14,608 Custodian fee 363,018 Legal and accounting services 32,458 Miscellaneous 2,777 ------------------------------------------------------------------------------ TOTAL EXPENSES $ 1,579,461 ------------------------------------------------------------------------------ Deduct -- Reduction of custodian fee $ 3 ------------------------------------------------------------------------------ TOTAL EXPENSE REDUCTIONS $ 3 ------------------------------------------------------------------------------ NET EXPENSES $ 1,579,458 ------------------------------------------------------------------------------ NET INVESTMENT INCOME $ 1,154,786 ------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) -- Investment transactions (net of foreign taxes, $4,064,228) (identified cost basis) $ 28,707,497 Foreign currency and forward foreign currency exchange contract transactions (273,621) ------------------------------------------------------------------------------ NET REALIZED GAIN $ 28,433,876 ------------------------------------------------------------------------------ Change in unrealized appreciation (depreciation) -- Investments (identified cost basis) $ (20,995,442) Foreign currency and forward foreign currency exchange contracts (7,834) ------------------------------------------------------------------------------ NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ (21,003,276) ------------------------------------------------------------------------------ NET REALIZED AND UNREALIZED GAIN $ 7,430,600 ------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS FROM OPERATIONS $ 8,585,386 ------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 22 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 ------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment income $ 1,154,786 $ 796,730 Net realized gain from investment transactions and foreign currency 28,433,876 4,349,951 Net change in unrealized appreciation (depreciation) from investments and foreign currency (21,003,276) 9,427,444 ------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS FROM OPERATIONS $ 8,585,386 $ 14,574,125 ------------------------------------------------------------------------------ Capital transactions -- Contributions $ 71,807,317 $ 28,098,702 Withdrawals (35,404,544) (30,082,477) ------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 36,402,773 $ (1,983,775) ------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS $ 44,988,159 $ 12,590,350 ------------------------------------------------------------------------------ NET ASSETS At beginning of year $ 68,837,171 $ 56,246,821 ------------------------------------------------------------------------------ AT END OF YEAR $ 113,825,330 $ 68,837,171 ------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 23 SUPPLEMENTARY DATA
YEAR ENDED AUGUST 31, ------------------------------------------------------ 2004 2003 2002 2001 2000 ---------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Ratios (As a percentage of average daily net assets): Expenses 1.35% 1.52% 1.50% 1.47% 1.34% Expenses after custodian fee reduction 1.35% 1.52% 1.47% 1.19% 1.13% Net investment income (loss) 0.99% 1.52% (0.24)% 0.58% (0.31)% Portfolio Turnover 120% 112% 83% 109% 112% ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(1) 15.00% 32.17% 21.32% -- -- ---------------------------------------------------------------------------------------------------------------------- NET ASSETS, END OF YEAR (000'S OMITTED) $ 113,825 $ 68,837 $ 56,247 $ 44,084 $ 64,295 ----------------------------------------------------------------------------------------------------------------------
(1) Total return is required to be disclosed for fiscal years beginning after December 15, 2000. SEE NOTES TO FINANCIAL STATEMENTS 24 ASIAN SMALL COMPANIES PORTFOLIO as of August 31, 2004 NOTES TO FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES Asian Small Companies Portfolio (the Portfolio) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company which was organized as a trust under the laws of the State of New York on January 19, 1996. The Portfolio seeks to achieve capital growth. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At August 31, 2004, the Eaton Vance Asian Small Companies Fund held an approximate 32.4% interest in the Portfolio. The following is a summary of 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 -- Securities listed on a U.S. securities exchange generally are valued at the last sale price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on NASDAQ National Market System generally are valued at the official NASDAQ closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by an independent pricing service. The value of preferred equity securities that are valued by a pricing service on a bond basis will be adjusted by an income factor, to be determined by the investment adviser, to reflect the next anticipated regular dividend. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on the principal exchange or board of trade on which the options are traded or, in the absence of sales on such date, at the mean between the latest bid and asked prices therefore. Futures positions on securities and currencies generally are valued at closing settlement prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. If short-term debt securities were acquired with a remaining maturity of more than 60 days, their amortized cost value will be based on their value on the sixty-first day prior to maturity. 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. The daily valuation of foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. The Portfolio may rely on an independent fair valuation service in adjusting the valuations of foreign securities. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by an independent quotation service. Investments held by the Portfolio 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 of the Portfolio considering relevant factors, data and information including the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded. B INCOME -- Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Portfolio is informed of the ex-dividend date. 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 balance the Portfolio maintains with IBT. All credit balances used to reduce the Portfolio's custodian fees are reported as a reduction of total expenses on the Statement of Operations. D 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 country's tax rules and rates. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be subject to capital gains taxes in certain countries in which it invests. At August 31, 2004, 25 the Portfolio had an accrual for capital gains taxes of $206, 809, of which $92,535 is included in the change in net unrealized appreciation (depreciation) on investments in the Statement of Operations. Capital gains taxes paid are included in net realized gain (loss) on investments in the Statement of Operations and were $4,064,228 for the year ended August 31, 2004. E 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. 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 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. Risk 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 may 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. Realized gains and losses are computed based on the specific identification of the securities sold. I 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. J INDEMNIFICATIONS -- Under the Portfolio's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Interestholders in the Portfolio are jointly and severally liable for the liabilities and obligations of the Portfolio in the event that the Portfolio fails to satisfy such liabilities and obligations; provided, however, that, to the extent assets are available in the Portfolio, the Portfolio may, under certain circumstances, indemnify interestholders from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in the Portfolio. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred. 2 INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES The investment adviser fee is earned by Lloyd George Investment Management (Bermuda) Limited (the Adviser), an affiliate of Eaton Vance Management (EVM), 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 26 August 31, 2004, the adviser fee amounted to $874,895. In addition, an administrative fee is earned by 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, 2004, the administrative fee amounted to $291,705. 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 $152,009,045 and $123,304,688, respectively, for the year ended August 31, 2004. 4 FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION) The cost and unrealized appreciation (depreciation) in value of the investments owned at August 31, 2004, as computed on a federal income tax basis, are as follows: AGGREGATE COST $ 111,812,859 ------------------------------------------------------- Gross unrealized appreciation $ 10,638,154 Gross unrealized depreciation (15,627,722) ------------------------------------------------------- NET UNREALIZED DEPRECIATION $ (4,989,568) -------------------------------------------------------
The net unrealized depreciation on currency was $8,868. 5 LINE OF CREDIT The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $150 million unsecured line of credit agreement with a group of banks. The Portfolio may temporarily borrow from the line of credit to satisfy redemption requests or settle investment transactions. Interest is charged to each participating portfolio or fund based on its borrowings at an amount above the Eurodollar rate or Federal Funds rate. In addition, a fee computed at an annual rate of 0.10% on the daily unused portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. The Portfolio did not have any significant borrowings or allocated fees during the year ended August 31, 2004. 6 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. 7 FINANCIAL INSTRUMENTS The Portfolio regularly trades 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 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. At August 31, 2004, there were no outstanding obligations under these financial instruments. 27 ASIAN SMALL COMPANIES PORTFOLIO as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE TRUSTEES AND INVESTORS OF ASIAN SMALL COMPANIES PORTFOLIO: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Asian Small Companies Portfolio (the "Portfolio") as of August 31, 2004, 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and supplementary data are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2004, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other audit procedures. 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 Asian Small Companies Portfolio at August 31, 2004, 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 19, 2004 28 EATON VANCE ASIAN SMALL COMPANIES FUND MANAGEMENT AND ORGANIZATION (UNAUDITED) FUND MANAGEMENT. The Trustees of Eaton Vance Growth Trust (the Trust) and Asian Small Companies 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 "noninterested Trustees" consist of those Trustees who are not "interested persons" of the Trust and the Portfolio, as that term is defined under the 1940 Act. The business address of each Trustee and officer, with the exception of Messrs. Chen, Kerr, Lloyd George and Kooi Cho Yu is The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. As used below, "EVC" refers to Eaton Vance Corp., "EV" refers to Eaton Vance, Inc., "EVM" refers to Eaton Vance Management, "BMR" refers to Boston Management and Research, "EVD" refers to Eaton Vance Distributors, Inc., "Atlanta Capital" refers to Atlanta Capital Management Company, LLC, "LGM" refers to Lloyd George Management (B. V.I.) Limited, and "Lloyd George" refers to Lloyd George Investment Management (Bermuda) Limited. EVC and EV are the corporate parent and trustee, respectively, of EVM and BMR. EVD is the Fund's principal underwriter, the Portfolio's placement agent and a wholly-owned subsidiary of EVM. Lloyd George is a wholly-owned subsidiary of LGM.
POSITION(S) TERM OF NUMBER OF PORTFOLIOS WITH THE OFFICE AND IN FUND COMPLEX NAME AND TRUST AND THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DATE OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD ---------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE(S) James B. Hawkes Trustee of the Trustee of Chairman, President and 195 Director of EVC 11/9/41 Trust; Trustee the Trust Chief Executive Officer and Vice since 1989; of BMR, EVC, EVM and EV; President of the Trustee and Director of EV; Vice Portfolio Vice President and Director of President EVD. Trustee and/or of the officer of 195 registered Portfolio investment companies in since 1996 the Eaton Vance Fund Complex. Mr. Hawkes is an interested person because of his positions with BMR, EVM, EVC and EV, which are affiliates of the Trust and the Portfolio. Hon. Robert Lloyd Trustee and Since 1996 Chief Executive Officer 5 Chairman of LGM George(2) President of the of LGM and Lloyd George. 8/13/52 Portfolio Mr. Lloyd George is an interested person because of his positions with LGM and Lloyd George, which are affiliates of the Portfolio. NONINTERESTED TRUSTEE(S) Edward K.Y. Chen(2) Trustee of the Since 1996 President of Lingnan 5 Director of First Pacific 1/14/45 Portfolio University in Hong Kong. Company, Asia Satellite Telecommunication Holdings Ltd. and Wharf Holdings Limited (property management and communications) Samuel L. Hayes, Trustee Trustee of Jacob H. Schiff Professor 194 Director of Tiffany & Co. III the Trust of Investment Banking (specialty retailer) and 2/23/35 since 1989; Emeritus, Harvard Telect, Inc. (telecommunication of the University Graduate services company) Portfolio School of Business since 1996 Administration.
29
POSITION(S) TERM OF NUMBER OF PORTFOLIOS WITH THE OFFICE AND IN FUND COMPLEX NAME AND TRUST AND THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DATE OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD ---------------------------------------------------------------------------------------------------------------------------------- NONINTERESTED TRUSTEE(S) (CONTINUED) William H. Park Trustee Since 2003 President and Chief 194 None 9/19/47 Executive Officer, Prizm Capital Management, LLC (investment management firm) (since 2002). Executive Vice President and Chief Financial Officer, United Asset Management Corporation (a holding company owning institutional investment management firms) (1982-2001). Ronald A. Pearlman Trustee Since 2003 Professor of Law, 194 None 7/10/40 Georgetown University Law Center (since 1999). Tax Partner, Covington & Burling, Washington, DC (1991-2000). Norton H. Reamer Trustee Trustee of President, Chief 195 None 9/21/35 the Trust Executive Officer and a since 1989; Director of Asset of the Management Finance Corp. Portfolio (a specialty finance since 1996 company serving the investment management industry) (since October 2003). President, Unicorn Corporation (an investment and financial advisory services company) (since September 2000). Formerly, Chairman, Hellman, Jordan Management Co., Inc. (an investment management company) (2000-2003). Formerly, Advisory Director of Berkshire Capital Corporation (investment banking firm) (2002-2003). 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) (1980-2000). Lynn A. Stout Trustee Since 1998 Professor of Law, 195 None 9/14/57 University of California at Los Angeles School of Law (since July 2001). Formerly, Professor of Law, Georgetown University Law Center.
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
POSITION(S) TERM OF WITH THE OFFICE AND NAME AND TRUST AND THE LENGTH OF PRINCIPAL OCCUPATION(S) DATE OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS ----------------------------------------------------------------------------------------------------------------------- Thomas E. Faust President of the Since 2002(3) Executive Vice President of EVM, BMR, EVC and EV; Jr. 5/31/58 Trust Chief Investment Officer of EVM and BMR and Director of EVC. Chief Executive Officer of Belair Capital Fund LLC, Belcrest Capital Fund LLC, Belmar Capital Fund LLC, Belport Capital Fund LLC and Belrose Capital Fund LLC (private investment companies sponsored by EVM). Officer of 57 registered investment companies managed by EVM or BMR. Gregory L. Vice President of Since 2001 Partner of Atlanta Capital. Officer of 10 Coleman 10/28/49 the Trust registered investment companies managed by EVM or BMR. William Walter Vice President and Since 1996 Director, Finance Director and Chief Operating Raleigh Kerr(2) Assistant Treasurer Officer of Lloyd George. Director of LGM. Officer 8/17/50 of the Portfolio of 4 registered investment companies managed by EVM or BMR. James A. Womack Vice President of Since 2001 Vice President of Atlanta Capital. Officer of 10 11/20/68 the Trust registered investment companies managed by EVM or BMR.
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POSITION(S) TERM OF WITH THE OFFICE AND NAME AND TRUST AND THE LENGTH OF PRINCIPAL OCCUPATION(S) DATE OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS ----------------------------------------------------------------------------------------------------------------------- Kooi Cho Yu(2) Vice President of Since 2004 Officer of Lloyd George. Officer of 1 registered 10/19/71 the Portfolio investment company managed by EVM or BMR. Alan R. Dynner Secretary Since 1997 Vice President, Secretary and Chief Legal Officer 10/10/40 of BMR, EVM, EVD, EV and EVC. Officer of 195 registered investment companies managed by EVM or BMR. William J. Treasurer of the Since 2002(3) Vice President of EVM and BMR. Officer of 56 Austin, Jr. Portfolio registered investment companies managed by EVM or 12/27/51 BMR. James L. Treasurer of the Since 1989 Vice President of BMR, EVM and EVD. Officer of 116 O'Connor 4/1/45 Trust registered investment companies managed by EVM or BMR.
(1) Includes both master and feeder funds in a master-feeder structure. (2) The business address for Messrs. Lloyd George, Kerr and Ms. Yu is 3803 One Exchange Square, Central, Hong Kong. The business address for Mr. Chen is President's Office, Lingnan College, Tuen Mun, Hong Kong. (3) Prior to 2002, Mr. Faust served as Vice President of the Trust since 1999 and Mr. Austin served as Assistant Treasurer of the Portfolio since 1996. The SAI for the Fund includes additional information about the Trustees and officers of the Fund and the Portfolio and can be obtained without charge by calling 1-800-225-6265. 31 This Page Intentionally Left Blank This Page Intentionally Left Blank SPONSOR AND MANAGER OF EATON VANCE ASIAN SMALL COMPANIES FUND AND ADMINISTRATOR OF ASIAN SMALL COMPANIES PORTFOLIO EATON VANCE MANAGEMENT THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 ADVISER OF ASIAN SMALL COMPANIES 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 ASIAN SMALL COMPANIES FUND THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. BEFORE INVESTING, INVESTORS SHOULD CONSIDER CAREFULLY THE FUND'S INVESTMENT OBJECTIVE(S), RISKS, AND CHARGES AND EXPENSES. THE FUND'S CURRENT PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND AND IS AVAILABLE THROUGH YOUR FINANCIAL ADVISOR. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. FOR FURTHER INFORMATION PLEASE CALL 1-800-225-6265. 405-10/04 ASSRC [EV LOGO] [GRAPHIC IMAGE] ANNUAL REPORT AUGUST 31, 2004 [GRAPHIC IMAGE] EATON VANCE GROWTH FUND [GRAPHIC IMAGE] 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. IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS The Securities and Exchange Commission permits 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. The Fund will file a schedule of its portfolio holdings on Form N-Q with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year. The Fund's Form N-Q will be available on the Eaton Vance website www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC's public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room). From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios vote proxies according to a set of policies and procedures approved by the Funds' and Portfolios' Boards. You may obtain a description of these policies and procedures without charge, upon request, by calling 1-800-262-1122. This description is also available on the Securities and Exchange Commission's website at http://www.sec.gov. EATON VANCE GROWTH FUND as of August 31, 2004 LETTER TO SHAREHOLDERS [PHOTO OF THOMAS E. FAUST JR.] Thomas E. Faust Jr. President For the year ended August 31, 2004, Eaton Vance Growth Fund Class A shares had a total return of -3.96%. That return was the result of a decrease in net asset value (NAV) per share from $6.31 on August 31, 2003, to $6.06 on August 31, 2004.(1) Class B shares had a total return of -4.64% for the same period, the result of a decrease in NAV per share from $12.06 to $11.50.(1) Class C shares had a total return of -4.60% for the same period, the result of a decrease in NAV per share from $10.43 to $9.95.(1) For comparison, the Standard & Poors 500 Composite Index (the "S&P 500") had a total return of 11.45% for the year ended August 31, 2004, while the average return of funds in the Lipper Mid-Cap Growth Classification was 2.40% for the same period.(2) For the one-year period ended August 31, 2004, growth stocks lagged their value counterparts, as investors took a more conservative stance, favoring defensive investments over higher potential (but also more risky) growth stocks. THE CONTINUED APPEAL OF GROWTH STOCKS ... We believe fearful investor sentiment, rather than a deterioration in fundamentals, has taken precedence in the market recently. Growth Fund will continue to seek investments in companies expected to grow at rates exceeding that of the U.S. economy, and which are reasonably priced in relation to their fundamental value. In the following pages, portfolio manager Arieh Coll shares his insights with shareholders about the Fund's performance over the past year. Sincerely, /s/ Thomas E. Faust Jr. Thomas E. Faust Jr. President October 6, 2004 FUND INFORMATION AS OF AUGUST 31, 2004
PERFORMANCE(3) CLASS A CLASS B CLASS C ------------------------------------------------------------------------------------------- Average Annual Total Returns (at net asset value) One Year -3.96% -4.64% -4.60% Five Years -4.27 -5.05 -5.06 Ten Years 5.80 N.A. N.A. Life of Fund+ 8.94 5.11 4.66 SEC Average Annual Total Returns (including sales charge or applicable CDSC) One Year -9.42% -9.41% -5.56% Five Years -5.40 -5.37 -5.06 Ten Years 5.17 N.A. N.A. Life of Fund+ 8.82 5.11 4.66
+ Inception Dates - Class A: 8/1/52; Class B: 9/13/94; Class C:11/7/94 (1) THESE RETURNS ARE HISTORICAL AND DO NOT INCLUDE THE 5.75% MAXIMUM SALES CHARGE FOR THE FUND'S CLASS A SHARES OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR CLASS B AND CLASS C SHARES. IF THE SALES CHARGE WAS DEDUCTED, THE PERFORMANCE WOULD BE REDUCED. (2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX OR A LIPPER CLASSIFICATION. (3) SEC RETURNS FOR CLASS A REFLECT THE MAXIMUM 5.75% SALES CHARGE. SEC RETURNS FOR CLASS B REFLECT APPLICABLE CDSC BASED ON THE FOLLOWING SCHEDULE: 5% - 1ST AND 2ND YEARS; 4% - 3RD YEAR; 3% - 4TH YEAR; 2% - 5TH YEAR; 1% - 6TH YEAR. SEC 1-YEAR RETURN FOR CLASS C REFLECTS 1% CDSC. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR OFFERING PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO WWW.EATONVANCE.COM. 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 EATON VANCE GROWTH FUND as of August 31, 2004 MANAGEMENT DISCUSSION AN INTERVIEW WITH ARIEH COLL, VICE PRESIDENT AND PORTFOLIO MANAGER OF GROWTH PORTFOLIO [PHOTO OF ARIEH COLL] Arieh Coll Portfolio Manager Q: ARIEH, AFTER POSTING STRONG RETURNS LAST YEAR, THE FUND LAGGED THE S&P 500 THIS YEAR. WHAT WAS THE ENVIRONMENT LIKE OVER THE YEAR ENDED AUGUST 31, 2004? A: MR. COLL: In what was a period of modestly positive returns for growth stocks as a group, Growth Fund lagged both its benchmark, the S&P 500, as well as its peer group, the Lipper Mid-Cap Growth Classification, for the year ended August 31, 2004.* The market continued to be volatile. Following a strong run-up in 2003, in the first half of 2004, U.S. equity markets consolidated those prior gains, effectively trading in a tight range for much of the period. Optimism regarding an improving economy and accelerating earnings growth at the start of the year gave way to concerns about potential inflation and impending interest rate increases by the Federal Reserve. Also weighing on investors' minds was the uncertainty of the situation in Iraq. Towards the end of this one-year period, the broader market rebounded, but it was value stocks that led the way, not growth stocks. Q: WHAT CAN YOU TELL US ABOUT THE FUND'S PERFORMANCE RELATIVE TO THE S&P 500 and ITS PEER LIPPER GROUP? A: The S&P500 is a broad-based index that is made up of both value stocks and growth stocks - it's about a 50/50 split. In the last year, the market has become more risk-averse. The Fund's Portfolio is invested primarily in growth stocks, and as value stocks came into favor this year and outperformed during the period, that hurt our numbers when compared to the broad market index. However, if you look at the Lipper Classification of mid-cap growth stocks, it is a much closer match to the composition of our Portfolio. We did underperform here as well, but the numbers were more in line. Q: WHAT SPECIFICALLY ACCOUNTED FOR THE FUND'S UNDERPERFORMANCE? A: Underperformance relative to the peer group was primarily a function of the Portfolio having held five specific stocks that declined during the period. One such stock was our largest holding last year; it was a drug company that had great success with a new product, but failed to keep up its generic drug business, and consequently, its stock price suffered. Also, there were a number of health care stocks that were up over the past year that unfortunately we didn't own. [CHART] COMMON STOCK INVESTMENTS BY SECTOR+ By total common stocks Information Technology 31.4% Industrials 13.0% Consumer Staples 10.5% Health Care 9.6% Financials 9.4% Telecommunications 8.2% Consumer Discretionary 8.1% Energy 6.3% Materials 2.1% Utilities 1.4%
+ As of August 31, 2004. Sector positions subject to change due to active management. * It is not possible to invest directly in an Index or a Lipper Classification. 3 In the consumer discretionary area, there were a few stocks that didn't perform well. One was an Internet travel company that experienced a slowdown in growth; another was a gaming equipment manufacturer whose stock price suffered a short-term correction. Individual stock selection tends to be the primary driver of relative returns for a portfolio such as ours; the performance of just a handful of stocks can have a strong effect on performance. In this case, five stocks out of between 55 and 60 over the course of the year accounted for all of our underperformance relative to the Lipper Mid-Cap Growth Classification.* Q: WHAT WERE THE AREAS OF POSITIVE PERFORMANCE? A: One of our biggest positions over the past year has been in the company that makes a very successful wireless handheld device. The stock tripled during the time period. Also, despite the short-term correction in one gaming stock I mentioned earlier, we also have other positions in gaming stocks that did very well. We also were anticipating the recovery in the art auction market; companies we held in that group are recovering from the recession in that group and were good performers for us. One of the worst performing sectors in the broad market over the past year was technology, but our average technology holding was up for the year. This is an example of how stock selection can greatly influence relative returns on the upside as well. Q: DO YOU HAVE ANY FINAL COMMENTS FOR OUR SHAREHOLDERS? A: For the last three or four years, the consumer has driven the growth of the U.S. economy, while business spending was down. We are now more pessimistic about consumer spending: tax cuts are spent, the wave of home refinancing has subsided, and gas prices are up 50% year-over-year, taking away from discretionary income. Therefore, we are under-weighting companies that sell discretionary products to consumers. On the other hand, we are overweighted in tech stocks. Even though the sector as a whole was down over the past year, we found attractive investments, and we hope to continue that going forward. We continue to believe that growth stocks merit investor consideration. Historically, growth funds have tended to lag in bear markets, due to their higher valuations and higher risk profiles. In bull markets, the situation has historically been the reverse, and growth funds have tended to beat the stock market indexes. TEN LARGEST HOLDINGS+ By total net assets PalmOne, Inc. 10.4% Research in Motion. Ltd. 5.0 NIIHoldings, Inc., Class B 4.4 Gillette Co., (The) 3.3 Affiliated Computer Services, Inc. Class A 3.2 Sirva, Inc. 3.2 WMS Industries, Inc. 2.7 Harvest Natural Resources, Inc. 2.6 Sotheby's Holdings, Inc. 2.5 Citizens Communications Co. 2.5
* It is not possible to invest directly in a Lipper Classification. + Ten Largest Holdings accounted for 39.8% of net assets as of August 31, 2004. Holdings subject to change due to active management. THE VIEWS EXPRESSED IN THIS REPORT ARE THOSE OF THE PORTFOLIO MANAGER AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS, AND EATON VANCE DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FUND ARE BASED ON MANY FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FUND. 4 EATON VANCE GROWTH FUND as of August 31, 2004 PERFORMANCE [CHART] COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE GROWTH FUND, CLASS A VS. THE S&P 500* August 31, 1994 - August 31, 2004
EATON VANCE GROWTH FUND, CLASS A EATON VANCE GROWTH INCLUDING MAXIMUM DATE FUND, CLASS A SALES CAHRGE S&P 500 8/31/1994 10000 9425 10000 9/30/1994 9760.54 9194.55 9755.66 10/31/1994 9974.92 9396.49 9974.52 11/30/1994 9596.61 9040.12 9611.75 12/31/1994 9619.38 9061.57 9754.06 1/31/1995 9674.9 9113.87 10006.83 2/28/1995 10105.2 9519.23 10396.43 3/31/1995 10411.5 9807.76 10702.72 4/30/1995 10467.2 9860.21 11017.64 5/31/1995 10731.6 10109.34 11457.12 6/30/1995 11079.6 10437.14 11722.99 7/31/1995 11399.8 10738.71 12111.58 8/31/1995 11594.6 10922.28 12141.81 9/30/1995 11845.4 11158.51 12653.93 10/31/1995 11636.4 10961.6 12608.72 11/30/1995 12096.3 11394.81 13161.6 12/31/1995 12430.8 11709.99 13415.13 1/31/1996 12748.4 12009.2 13871.18 2/29/1996 13066.1 12308.41 14000.23 3/31/1996 13160.1 12397 14135.02 4/30/1996 13536.5 12751.59 14343.23 5/31/1996 13912.9 13106.18 14712.5 6/30/1996 13666.8 12874.33 14768.59 7/31/1996 12856.1 12110.6 14116.48 8/31/1996 13377.3 12601.57 14414.68 9/30/1996 13994.2 13182.74 15225.25 10/31/1996 14037.8 13223.76 15644.89 11/30/1996 14879.7 14016.92 16826.41 12/31/1996 14698.1 13845.79 16493.09 1/31/1997 15738.9 14826.29 17522.95 2/28/1997 15723.2 14811.43 17660.52 3/31/1997 15013.5 14142.91 16936.22 4/30/1997 15802 14885.71 17946.39 5/31/1997 16905.9 15925.63 19038.22 6/30/1997 17552.5 16534.73 19890.66 7/31/1997 18845.7 17752.92 21472.44 8/31/1997 17793.1 16761.33 20270.42 9/30/1997 18754.9 17667.35 21379.93 10/31/1997 18394.2 17327.59 20666.7 11/30/1997 18806.4 17715.88 21622.62 12/31/1997 18891 17795.56 21993.7 1/31/1998 18995.9 17894.42 22236.73 2/28/1998 20640.1 19443.3 23839.61 3/31/1998 21672.1 20415.46 25059.43 4/30/1998 22231.9 20942.74 25311.42 5/31/1998 21287.3 20052.96 24876.95 6/30/1998 21637.2 20382.51 25886.7 7/31/1998 21304.8 20069.44 25611.74 8/31/1998 18051.4 17004.65 21912.62 9/30/1998 19328.3 18207.49 23316.43 10/31/1998 20675.1 19476.25 25211.33 11/30/1998 21462.2 20217.73 26738.72 12/31/1998 22350.7 21054.67 28278.52 1/31/1999 22526.5 21220.29 29460.58 2/28/1999 22218.8 20930.45 28545.11 3/31/1999 22109 20826.94 29686.87 4/30/1999 23273.7 21924.18 30836.47 5/31/1999 22482.6 21178.88 30109.34 6/30/1999 23911.1 22524.56 31779 7/31/1999 22900.1 21572.23 30787.66 8/31/1999 21867.2 20599.21 30635.24 9/30/1999 21273.8 20040.23 29796.44 10/31/1999 22218.8 20930.45 31681.18 11/30/1999 22526.5 21220.29 32325.15 12/31/1999 23355 22000.75 34227.85 1/31/2000 22104.3 20822.52 32508.37 2/29/2000 22650.1 21336.66 31893.64 3/31/2000 22172.5 20886.79 35011.74 4/30/2000 21194.6 19965.63 33958.76 5/31/2000 20694.3 19494.34 33261.66 6/30/2000 21376.6 20137.01 34081.8 7/31/2000 21285.6 20051.32 33549.44 8/31/2000 23559.7 22193.55 35632.17 9/30/2000 23468.7 22107.87 33751.51 10/31/2000 22337.4 21042.09 33608.34 11/30/2000 19842.5 18691.93 30960.61 12/31/2000 21002.9 19785.03 31112.5 1/31/2001 22163.3 20878.13 32215.67 2/28/2001 19233.3 18118.06 29280.08 3/31/2001 16390.4 15439.98 27426.21 4/30/2001 18595.1 17516.86 29555.82 5/31/2001 19001.3 17899.44 29754.09 6/30/2001 19697.5 18555.3 29030.18 7/31/2001 18740.2 17653.49 28744.29 8/31/2001 18189 17134.27 26946.65 9/30/2001 15114 14237.57 24770.82 10/31/2001 16535.5 15576.61 25243.45 11/30/2001 18044 16997.64 27179.31 12/31/2001 18682.2 17598.84 27417.55 1/31/2002 17898.9 16861 27017.66 2/28/2002 16796.5 15822.56 26496.51 3/31/2002 18595.1 17516.86 27493.14 4/30/2002 18682.2 17598.84 25827.02 5/31/2002 17492.8 16478.42 25637.42 6/30/2002 15810.2 14893.43 23811.9 7/31/2002 13692.5 12898.53 21956.21 8/31/2002 13808.6 13007.84 22099.95 9/30/2002 12909.3 12160.69 19700.28 10/31/2002 13750.5 12953.18 21432.59 11/30/2002 15172 14292.22 22692.86 12/31/2002 13692.5 12898.53 21360.39 1/31/2003 13141.3 12379.31 20801.89 2/28/2003 12677.2 11942.07 20489.31 3/31/2003 13170.3 12406.64 20687.7 4/30/2003 14301.7 13472.4 22390.94 5/31/2003 15984.3 15057.39 23569.54 6/30/2003 16709.5 15740.58 23870.64 7/31/2003 17637.8 16615.05 24291.71 8/31/2003 18305 17243.58 24764.51 9/30/2003 17695.8 16669.71 24502.3 10/31/2003 18305 17243.58 25887.68 11/30/2003 18450.1 17380.22 26115.19 12/31/2003 18711.2 17626.17 27483.83 1/31/2004 19175.3 18063.4 27988.19 2/29/2004 19639.5 18500.64 28377.11 3/31/2004 19523.4 18391.33 27949.05 4/30/2004 18508.1 17434.87 27510.88 5/31/2004 18508.1 17434.87 27887.66 6/30/2004 19755.5 18609.95 28429.77 7/31/2004 18653.2 17571.51 27488.94 8/31/2004 17579.8 16560.4 27599.35
PERFORMANCE** CLASS A CLASS B CLASS C ------------------------------------------------------------------------------------------- Average Annual Total Returns (at net asset value) One Year -3.96% -4.64% -4.60% Five Years -4.27 -5.05 -5.06 Ten Years 5.80 N.A. N.A. Life of Fund+ 8.94 5.11 4.66 SEC Average Annual Total Returns (including sales charge or applicable CDSC) One Year -9.42% -9.41% -5.56% Five Years -5.40 -5.37 -5.06 Ten Years 5.17 N.A. N.A. Life of Fund+ 8.82 5.11 4.66
+ Inception Dates - Class A: 8/1/52; Class B: 9/13/94; Class C:11/7/94 * Source: Thomson Financial. Investment operations commenced 8/1/52. The chart compares the Fund's total return with that of the S&P 500, an unmanaged index of 500 stocks commonly used as a measure of U.S. stock market performance. The lines on the chart represent the total returns of $10,000 hypothetical investments in the Fund and in the S&P 500. An investment in the Fund's Class B shares on 9/13/94 at net asset value would have grown to $16,439 on August 31, 2004. An investment in the Fund's Class C shares on 11/7/94 at net asset value would have grown to $15,636 on August 31, 2004. 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 Index's total returns do not reflect any commissions or expenses that would have been incurred if an investor individually purchased or sold the securities represented in the Index. It is not possible to invest directly in an Index. ** SEC returns for Class A reflect the maximum 5.75% sales charge. SEC returns for Class B reflect applicable CDSC based on the following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC 1-Year return for Class C reflects 1% CDSC. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR OFFERING PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO www.eatonvance.com. 5 EATON VANCE GROWTH FUND as of August 31, 2004 FUND EXPENSES EXAMPLE: As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (March 1, 2004 - August 31, 2004). ACTUAL EXPENSES: The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES: The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EATON VANCE GROWTH FUND
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* (3/1/04) (8/31/04) (3/1/04 - 8/31/04) ------------------------------------------------------------------------------------------------------------------ Actual Class A $ 1,000.00 $ 895.10 $ 6.05 Class B $ 1,000.00 $ 892.90 $ 9.61 Class C $ 1,000.00 $ 893.20 $ 9.57 Hypothetical (5% return before expenses) Class A $ 1,000.00 $ 1,018.80 $ 6.44 Class B $ 1,000.00 $ 1,015.00 $ 10.23 Class C $ 1,000.00 $ 1,015.00 $ 10.18
* Expenses are equal to the Fund's annualized expense ratio of 1.27% for Class A shares, 2.02% for Class B shares and 2.01% for Class C shares, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on February 29, 2004. The Example reflects the expenses of both the Fund and the Portfolio. 6 EATON VANCE GROWTH FUND as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investment in Growth Portfolio, at value (identified cost, $103,952,415) $ 113,089,292 Receivable for Fund shares sold 39,131 Prepaid expenses 15,880 ---------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 113,144,303 ---------------------------------------------------------------------------------------------------- LIABILITIES Payable for Fund shares redeemed $ 512,820 Payable to affiliate for distribution and service fees 48,723 Accrued expenses 74,881 ---------------------------------------------------------------------------------------------------- TOTAL LIABILITIES $ 636,424 ---------------------------------------------------------------------------------------------------- NET ASSETS $ 112,507,879 ---------------------------------------------------------------------------------------------------- SOURCES OF NET ASSETS Paid-in capital $ 125,185,419 Accumulated net realized loss from Portfolio (computed on the basis of identified cost) (21,814,417) Net unrealized appreciation from Portfolio (computed on the basis of identified cost) 9,136,877 ---------------------------------------------------------------------------------------------------- TOTAL $ 112,507,879 ---------------------------------------------------------------------------------------------------- CLASS A SHARES NET ASSETS $ 95,213,641 SHARES OUTSTANDING 15,708,647 NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 6.06 MAXIMUM OFFERING PRICE PER SHARE (100 DIVIDED BY 94.25 of $6.06) $ 6.43 ---------------------------------------------------------------------------------------------------- CLASS B SHARES NET ASSETS $ 11,246,660 SHARES OUTSTANDING 978,214 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (NOTE 6) (net assets DIVIDED BY shares of beneficial interest outstanding) $ 11.50 ---------------------------------------------------------------------------------------------------- CLASS C SHARES NET ASSETS $ 6,047,578 SHARES OUTSTANDING 608,038 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (NOTE 6) (net assets DIVIDED BY shares of beneficial interest outstanding) $ 9.95 ----------------------------------------------------------------------------------------------------
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, 2004 INVESTMENT INCOME Dividends allocated from Portfolio (net of foreign taxes, $2,865) $ 741,884 Interest allocated from Portfolio 45,207 Expenses allocated from Portfolio (898,533) ---------------------------------------------------------------------------------------------------- NET INVESTMENT LOSS FROM PORTFOLIO $ (111,442) ---------------------------------------------------------------------------------------------------- EXPENSES Trustees' fees and expenses $ 2,204 Distribution and service fees Class A 251,353 Class B 144,683 Class C 62,649 Transfer and dividend disbursing agent fees 199,876 Registration fees 46,805 Legal and accounting services 32,627 Custodian fee 21,755 Printing and postage 20,760 Miscellaneous 4,812 ---------------------------------------------------------------------------------------------------- TOTAL EXPENSES $ 787,524 ---------------------------------------------------------------------------------------------------- NET INVESTMENT LOSS $ (898,966) ---------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO Net realized gain (loss) -- Investment transactions (identified cost basis) $ 14,121,963 Foreign currency transactions 13,990 ---------------------------------------------------------------------------------------------------- NET REALIZED GAIN $ 14,135,953 ---------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) -- Investments (identified cost basis) $ (18,222,401) ---------------------------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ (18,222,401) ---------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED LOSS $ (4,086,448) ---------------------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (4,985,414) ----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 7 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 --------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment loss $ (898,966) $ (1,115,014) Net realized gain (loss) from investments and foreign currency transactions 14,135,953 (1,967,721) Net change in unrealized appreciation (depreciation) from investments (18,222,401) 30,467,014 --------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (4,985,414) $ 27,384,279 --------------------------------------------------------------------------------------------------------- Transactions in shares of beneficial interest -- Proceeds from sale of shares Class A $ 11,134,135 $ 35,128,608 Class B 6,153,590 6,699,259 Class C 3,643,134 22,051,926 Cost of shares redeemed Class A (12,069,262) (42,233,841) Class B (4,048,830) (3,122,335) Class C (1,837,986) (20,973,870) Net asset value of shares exchanged Class A 3,621,667 -- Class B (3,621,667) -- --------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS $ 2,974,781 $ (2,450,253) --------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS $ (2,010,633) $ 24,934,026 --------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of year $ 114,518,512 $ 89,584,486 --------------------------------------------------------------------------------------------------------- AT END OF YEAR $ 112,507,879 $ 114,518,512 --------------------------------------------------------------------------------------------------------- ACCUMULATED NET INVESTMENT LOSS INCLUDED IN NET ASSETS AT END OF YEAR $ -- $ (1,204) ---------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 8 FINANCIAL HIGHLIGHTS
CLASS A --------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ----------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 6.310 $ 4.760 $ 6.270 $ 10.360 $ 9.950 ----------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.039) $ (0.057) $ (0.057) $ (0.049) $ (0.020) Net realized and unrealized gain (loss) (0.211) 1.607 (1.453) (1.811) 0.771 ----------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ (0.250) $ 1.550 $ (1.510) $ (1.860) $ 0.751 ----------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ -- $ (2.230) $ (0.341) ----------------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ -- $ (2.230) $ (0.341) ----------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 6.060 $ 6.310 $ 4.760 $ 6.270 $ 10.360 ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) (3.96)% 32.56% (24.08)% (22.80)% 7.74% ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 95,214 $ 96,673 $ 80,121 $ 109,847 $ 164,388 Ratios (As a percentage of average daily net assets): Expenses(3) 1.26% 1.38% 1.29% 1.23% 1.09% Interest expense(3) 0.01% -- -- 0.04% 0.01% Net investment loss (0.60)% (1.13)% (0.99)% (0.70)% (0.21)% Portfolio Turnover of the Portfolio 276% 217% 282% 301% 274% -----------------------------------------------------------------------------------------------------------------------------
(1) Net investment loss per share was computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of its Portfolio's allocated expenses. SEE NOTES TO FINANCIAL STATEMENTS 9
CLASS B --------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ----------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 12.060 $ 9.170 $ 12.160 $ 18.140 $ 17.330 ----------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.176) $ (0.182) $ (0.196) $ (0.195) $ (0.180) Net realized and unrealized gain (loss) (0.384) 3.072 (2.794) (3.555) 1.331 ----------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ (0.560) $ 2.890 $ (2.990) $ (3.750) $ 1.151 ----------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ -- $ (2.230) $ (0.341) ----------------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ -- $ (2.230) $ (0.341) ----------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 11.500 $ 12.060 $ 9.170 $ 12.160 $ 18.140 ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) (4.64)% 31.52% (24.59)% (23.53)% 6.74% ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 11,247 $ 13,254 $ 6,972 $ 9,863 $ 16,178 Ratios (As a percentage of average daily net assets): Expenses(3) 2.01% 2.13% 2.04% 1.98% 1.94% Interest expense(3) 0.01% -- -- 0.04% 0.01% Net investment loss (1.43)% (1.87)% (1.74)% (1.44)% (1.05)% Portfolio Turnover of the Portfolio 276% 217% 282% 301% 274% -----------------------------------------------------------------------------------------------------------------------------
(1) Net investment loss per share was computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of its Portfolio's allocated expenses. SEE NOTES TO FINANCIAL STATEMENTS 10
CLASS C --------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ----------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 10.430 $ 7.930 $ 10.520 $ 16.000 $ 15.330 ----------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.143) $ (0.157) $ (0.172) $ (0.172) $ (0.159) Net realized and unrealized gain (loss) (0.337) 2.657 (2.418) (3.078) 1.170 ----------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ (0.480) $ 2.500 $ (2.590) $ (3.250) $ 1.011 ----------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ -- $ (2.230) $ (0.341) ----------------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ -- $ (2.230) $ (0.341) ----------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 9.950 $ 10.430 $ 7.930 $ 10.520 $ 16.000 ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) (4.60)% 31.53% (24.62)% (23.56)% 6.70% ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 6,048 $ 4,592 $ 2,491 $ 2,584 $ 2,774 Ratios (As a percentage of average daily net assets): Expenses(3) 2.01% 2.13% 2.04% 1.98% 1.94% Interest expense(3) 0.01% -- -- 0.04% 0.01% Net investment loss (1.34)% (1.87)% (1.75)% (1.48)% (1.05)% Portfolio Turnover of the Portfolio 276% 217% 282% 301% 274% -----------------------------------------------------------------------------------------------------------------------------
(1) Net investment loss per share was computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of its Portfolio's allocated expenses. SEE NOTES TO FINANCIAL STATEMENTS 11 EATON VANCE GROWTH FUND as of August 31, 2004 NOTES TO FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES Eaton Vance Growth Fund (the Fund) is a diversified series of Eaton Vance Growth Trust (the Trust). The Trust is an entity of the type commonly known as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund offers three classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class B and Class C shares are sold at net asset value and are subject to a contingent deferred sales charge (see Note 6). The Trustees have adopted a conversion feature pursuant to which Class B shares of the Fund automatically convert to Class A shares eight years after their purchase as described in the Fund's prospectus. Each class represents a pro rata interest in the Fund, but votes separately on class-specific matters and (as noted below) is subject to different expenses. Realized and unrealized gains and losses and net investment income, other than class-specific expenses, are allocated daily to each class of shares based on the relative net assets of each class to the total net assets of the Fund. Each class of shares differs in its distribution plan and certain other class-specific expenses. The Fund invests all of its investable assets in interests in Growth Portfolio (the Portfolio), a New York Trust, having the same investment objective as the Fund. The value of the Fund's investment in the Portfolio reflects the Fund's proportionate interest in the net assets of the Portfolio (approximately 99.9% at August 31, 2004). 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 Portfolio maintains with IBT. All credit balances used to reduce the Fund's custodian fees are reported as a reduction of total expenses in the Statement of Operations. There were no credit balances used to reduce the Fund's custodian fees for the year ended August 31, 2004. 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 taxable income, including any net realized capital gain on investments. Accordingly, no provision for federal income or excise tax is necessary. At August 31, 2004, the Fund, for federal income tax purposes, had a capital loss carryover of $20,657,943, which will reduce the Fund's 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 carryover will expire August 31, 2010 ($15,034,769) and August 31, 2011 ($5,623,174). During the year ended August 31, 2004, capital loss carryovers of $14,919,641 were utilized to offset net realized gains. E OTHER -- Investment transactions are accounted for on a trade-date basis. F 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. G EXPENSES -- The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds. 12 H INDEMNIFICATIONS -- Under the Trust's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund and shareholders are indemnified against personal liability for obligations of the Trust. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. 2 DISTRIBUTIONS TO SHAREHOLDERS It is the present policy of the Fund to pay dividends semiannually and to make 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 same class of the Fund at the net asset value as of the ex-dividend date. Distributions are paid in the form of additional shares of the same class or, at the election of the shareholder, in cash. The Fund distinguishes between distributions on a tax basis and a financial reporting basis. Accounting principles generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be 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. During the year ended August 31, 2004, accumulated paid-in capital was decreased by $815,887, accumulated undistributed net investment loss was decreased by $900,170, and accumulated net realized loss on investments was increased by $84,283 due to differences between book and tax accounting for net operating losses, foreign currency gain/loss and passive foreign investment companies. This change had no effect on the net assets or the net asset value per share. As of August 31, 2004, the components of distributable earnings (accumulated losses) on a tax basis were as follows: Undistributed ordinary income $ 0 Capital loss carryforwards $ 20,657,943
The temporary differences between book and tax basis distributable earnings (accumulated losses) are primarily due to wash sales. 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 2004 2003 ---------------------------------------------------------------------------------------------------- Sales 1,709,183 6,866,403 Redemptions (1,870,200) (8,376,318) Exchange from Class B shares 552,131 -- ---------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) 391,114 (1,509,915) ----------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, ------------------------------------- CLASS B 2004 2003 ---------------------------------------------------------------------------------------------------- Sales 499,050 667,433 Redemptions (329,450) (329,108) Exchange to Class A shares (290,120) -- ---------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) (120,520) 338,325 ----------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, ------------------------------------- CLASS B 2004 2003 ---------------------------------------------------------------------------------------------------- Sales 342,689 2,602,721 Redemptions (174,757) (2,476,631) ---------------------------------------------------------------------------------------------------- NET INCREASE 167,932 126,090 ----------------------------------------------------------------------------------------------------
4 TRANSACTIONS WITH AFFILIATES Eaton Vance Management (EVM) serves as the Administrator of the Fund, but receives no compensation. The Portfolio has engaged Boston Management and Research (BMR), a subsidiary of EVM, to render investment advisory services. See Note 2 of the Portfolio's Notes to Financial Statements which are included elsewhere in this report. Except as to Trustees of the Fund and Portfolio who are not members of EVM's or BMR's organization, officers and Trustees receive remuneration for their services to the Fund out of such investment adviser fee. EVM serves as the sub-transfer agent of the Fund and receives from the transfer agent an aggregate fee based upon the actual expenses incurred by EVM in the performance of those services. During the year ended August 31, 2004, EVM earned $19,528 in sub-transfer agent fees. The Fund was informed that Eaton Vance 13 Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's principal underwriter, received $16,419 as its portion of the sales charge on sales of Class A shares for the year ended August 31, 2004. Certain officers and Trustees of the Fund and of the Portfolio are officers of the above organizations. 5 DISTRIBUTION AND SERVICE PLANS The Fund has in effect distribution plans for Class B Shares (Class B Plan) and Class C Shares (Class C Plan) pursuant to Rule 12b-1 under the Investment Company Act of 1940 and a service plan for Class A shares (Class A Plan) (collectively, the Plans). The Class B and Class C Plans require the Fund to pay EVD amounts equal to 1/365 of 0.75% of the Fund's average daily net assets attributable to Class B and Class C shares for providing ongoing distribution services and facilities to the Fund. The Fund will automatically discontinue payments to EVD during any period in which there are no outstanding Uncovered Distribution Charges, which are equivalent to the sum of (i) 5% and 6.25% of the aggregate amount received by the Fund for the Class B and Class C shares sold, respectively, plus (ii) interest calculated by applying the rate of 1% over the prevailing prime rate to the outstanding balance of Uncovered Distribution Charges of EVD of each respective class, reduced by the aggregate amount of contingent deferred sales charges (see Note 6) and daily amounts theretofore paid to EVD by each respective class. The Fund paid or accrued $108,512 and $46,987 for Class B and Class C shares, respectively, to or payable to EVD for the year ended August 31, 2004, representing 0.75% of the average daily net assets for Class B and Class C shares. At August 31, 2004, the amount of Uncovered Distribution Charges of EVD calculated under the Plan was approximately $197,000 and $643,000 for Class B and Class C shares, respectively. The Plans authorize each class 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, Class B and Class C shares for each fiscal year. Service fee payments are made for personal services and/or the maintenance of shareholder accounts. Service fees are separate and distinct from the sales commissions and distribution fees payable by the Fund to EVD, and, as such are not subject to automatic discontinuance when there are no outstanding Uncovered Distribution Charges of EVD. Service fees for the year ended August 31, 2004 amounted to $251,353, $36,171 and $15,662 for Class A, Class B and Class C shares, respectively. 6 CONTINGENT DEFERRED SALES CHARGE Class A shares purchased at net asset value in amounts of $1 million or more (other than shares purchased in a single transaction of $5 million or more) are subject to a 1.00% CDSC if redeemed within one year of purchase. Investors who purchase Class A shares in a single fund purchased in a single transaction at net asset value in amounts of $5 million or more will not be subject to any CDSC for such investment or any subsequent investment in the same fund. A contingent deferred sales charge (CDSC) generally is imposed on redemptions of Class B shares made within six years of purchase and on redemptions of Class C shares made within one year of purchase. Generally, the CDSC is based upon the lower of the net asset value at date of redemption or date of purchase. No charge is levied on shares acquired by reinvestment of dividends or capital gains distributions. Class B CDSC is imposed at declining rates that begin at 5% in the case of redemptions in the first and second year after purchase, declining one percentage point each subsequent year. Class C shares will be subject to a 1% CDSC if redeemed within one year of purchase. No CDSC is levied on shares which have been sold to EVM or its affiliates or to their respective employees or clients and may be waived under certain other limited conditions. CDSC charges are paid to EVD to reduce the amount of Uncovered Distribution Charges calculated under the Plans (see Note 5). CDSC charges received when no Uncovered Distribution Charges exist will be credited to the Fund. The Fund was informed that EVD received approximately $2,000, $27,000 and $2,000 of CDSC paid by shareholders for Class A, Class B and Class C shares, respectively, for the year ended August 31, 2004. 7 INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in the Portfolio aggregated $21,038,376 and $18,246,860 respectively, for the year ended August 31, 2004. 14 EATON VANCE GROWTH FUND as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE TRUSTEES AND SHAREHOLDERS OF EATON VANCE GROWTH FUND: In our opinion, the accompanying statement of assets and liabilities and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Eaton Vance Growth Fund, a series of Eaton Vance Growth Trust (the "Fund") at August 31, 2004, and the results of its operations, the changes in its net assets and financial highlights for each of the periods indicated in conformity with accounting principles generally accepted in the United States of America. These financial statements and the financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts October 25, 2004 15 GROWTH PORTFOLIO as of August 31, 2004 PORTFOLIO OF INVESTMENTS COMMON STOCKS -- 96.2%
SECURITY SHARES VALUE --------------------------------------------------------------------------------------------------------- Beverages -- 1.0% Cott Corp.(1) 42,000 $ 1,138,620 --------------------------------------------------------------------------------------------------------- $ 1,138,620 --------------------------------------------------------------------------------------------------------- BIOTECHNOLOGY -- 2.0% Celgene Corp.(1) 40,000 $ 2,270,000 --------------------------------------------------------------------------------------------------------- $ 2,270,000 --------------------------------------------------------------------------------------------------------- BUSINESS SERVICES - MISCELLANEOUS -- 8.6% Dun & Bradstreet Corp.(1) 23,000 $ 1,268,220 Intersections, Inc.(1) 88,911 1,127,391 MDC Partners, Inc., Class A(1) 80,000 960,880 Sirva, Inc.(1) 169,200 3,583,656 Sotheby's Holdings, Inc.(1) 175,000 2,798,250 --------------------------------------------------------------------------------------------------------- $ 9,738,397 --------------------------------------------------------------------------------------------------------- COMMUNICATIONS SERVICES -- 2.5% Citizens Communications Co. 220,000 $ 2,778,600 --------------------------------------------------------------------------------------------------------- $ 2,778,600 --------------------------------------------------------------------------------------------------------- COMPUTER SOFTWARE & Services -- 8.4% Affiliated Computer Services, Inc., Class A(1) 66,000 $ 3,585,779 Cognizant Technology Solutions Corp.(1) 54,000 1,480,680 Intellisync Corp.(1) 145,400 325,696 Kanbay International, Inc.(1) 110,000 2,190,100 Microsoft Corp. 45,000 1,228,500 Salesforce.com, Inc.(1) 2,100 27,300 VERITAS Software Corp.(1) 40,000 668,800 --------------------------------------------------------------------------------------------------------- $ 9,506,855 --------------------------------------------------------------------------------------------------------- COMPUTERS AND BUSINESS EQUIPMENT -- 15.4% PalmOne, Inc.(1) 360,334 $ 11,764,905 Research In Motion, Ltd.(1) 93,200 5,612,504 --------------------------------------------------------------------------------------------------------- $ 17,377,409 --------------------------------------------------------------------------------------------------------- DISTRIBUTION/WHOLESALE -- 0.9% Central European Distribution Corp.(1) 39,450 $ 966,131 --------------------------------------------------------------------------------------------------------- $ 966,131 --------------------------------------------------------------------------------------------------------- DRUGS -- 1.2% Isolagen, Inc.(1) 91,500 $ 768,600 Oscient Pharmaceuticals Corp.(1) 115,000 484,150 Pharmion Corp.(1) 2,000 98,340 --------------------------------------------------------------------------------------------------------- $ 1,351,090 --------------------------------------------------------------------------------------------------------- EDUCATION -- 1.8% EVCI Career Colleges Holding Corp.(1) 117,000 $ 847,080 Laureate Education, Inc.(1) 34,700 1,186,393 --------------------------------------------------------------------------------------------------------- $ 2,033,473 --------------------------------------------------------------------------------------------------------- ELECTRONICS - INSTRUMENTS -- 0.6% FLIR Systems, Inc.(1) 12,000 $ 700,440 --------------------------------------------------------------------------------------------------------- $ 700,440 --------------------------------------------------------------------------------------------------------- ENERGY SERVICES -- 2.4% NRG Energy, Inc.(1) 55,000 $ 1,504,250 Spinnaker Exploration Co.(1) 34,000 1,160,760 --------------------------------------------------------------------------------------------------------- $ 2,665,010 --------------------------------------------------------------------------------------------------------- ENGINEERING AND CONSTRUCTION -- 1.0% Eagle Materials, Inc. 18,000 $ 1,168,380 --------------------------------------------------------------------------------------------------------- $ 1,168,380 --------------------------------------------------------------------------------------------------------- FINANCIAL SERVICES -- 5.6% Coinstar, Inc.(1) 100,000 $ 1,972,000 Commerce Bancorp, Inc. 24,000 1,259,280 Mitsubishi Tokyo Financial Group, Inc. ADR 150,000 1,359,000 Providian Financial Corp.(1) 75,000 1,083,000 Student Loan Corp., (The) 4,400 632,500 --------------------------------------------------------------------------------------------------------- $ 6,305,780 --------------------------------------------------------------------------------------------------------- GAMING EQUIPMENT -- 2.6% WMS Industries, Inc.(1) 148,400 $ 2,999,164 --------------------------------------------------------------------------------------------------------- $ 2,999,164 --------------------------------------------------------------------------------------------------------- GENERIC DRUGS -- 2.1% Taro Pharmaceutical Industries Ltd.(1) 116,000 $ 2,404,680 --------------------------------------------------------------------------------------------------------- $ 2,404,680 ---------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 16
SECURITY SHARES VALUE --------------------------------------------------------------------------------------------------------- HARDWARE - NETWORKING -- 1.0% Blue Coat Systems, Inc.(1) 32,000 $ 467,840 RADWARE Ltd.(1) 32,500 609,375 --------------------------------------------------------------------------------------------------------- $ 1,077,215 --------------------------------------------------------------------------------------------------------- HEALTH SERVICES -- 2.3% PacifiCare Health Systems, Inc.(1) 80,000 $ 2,608,800 --------------------------------------------------------------------------------------------------------- $ 2,608,800 --------------------------------------------------------------------------------------------------------- INSURANCE -- 5.2% PMI Group, Inc., (The) 64,000 $ 2,657,920 Radian Group, Inc. 60,000 2,658,000 Triad Guaranty, Inc.(1) 9,700 540,290 --------------------------------------------------------------------------------------------------------- $ 5,856,210 --------------------------------------------------------------------------------------------------------- INTERNET SERVICES -- 1.7% Answerthink, Inc.(1) 120,000 $ 678,000 CheckFree Corp.(1) 47,300 1,288,925 --------------------------------------------------------------------------------------------------------- $ 1,966,925 --------------------------------------------------------------------------------------------------------- MEDICAL PRODUCTS -- 1.6% DENTSPLY International, Inc. 27,000 $ 1,375,650 I-Flow Corp.(1) 28,160 427,469 --------------------------------------------------------------------------------------------------------- $ 1,803,119 --------------------------------------------------------------------------------------------------------- METAL PROCESSORS & FABRICATOR -- 1.2% Precision Castparts Corp. 24,000 $ 1,322,160 --------------------------------------------------------------------------------------------------------- $ 1,322,160 --------------------------------------------------------------------------------------------------------- MINING -- 1.0% Bema Gold Corp.(1) 425,000 $ 1,109,250 --------------------------------------------------------------------------------------------------------- $ 1,109,250 --------------------------------------------------------------------------------------------------------- OIL AND GAS - EQUIPMENT AND SERVICES -- 1.1% Baker Hughes, Inc. 33,000 $ 1,297,890 --------------------------------------------------------------------------------------------------------- $ 1,297,890 --------------------------------------------------------------------------------------------------------- OIL AND GAS - EXPLORATION AND PRODUCTION -- 3.9% Harvest Natural Resources, Inc.(1) 220,000 $ 2,921,600 Plains Exploration & Production Co.(1) 78,000 1,513,980 --------------------------------------------------------------------------------------------------------- $ 4,435,580 --------------------------------------------------------------------------------------------------------- PERSONAL PRODUCTS -- 4.2% Estee Lauder Co., Inc., (The), Class A 25,000 $ 1,098,750 Gillette Co., (The) 87,000 3,697,500 --------------------------------------------------------------------------------------------------------- $ 4,796,250 --------------------------------------------------------------------------------------------------------- RETAIL -- 2.1% Select Comfort Corp.(1) 75,000 $ 1,191,000 Tweeter Home Entertainment Group, Inc.(1) 207,300 1,183,683 --------------------------------------------------------------------------------------------------------- $ 2,374,683 --------------------------------------------------------------------------------------------------------- RETAIL - FOOD AND DRUG -- 4.0% CVS Corp. 64,000 $ 2,560,000 Walgreen Co. 55,000 2,004,750 --------------------------------------------------------------------------------------------------------- $ 4,564,750 --------------------------------------------------------------------------------------------------------- RETAIL - SPECIALTY -- 1.0% Pep Boys - Manny, Moe & Jack (The) 68,500 $ 1,089,150 --------------------------------------------------------------------------------------------------------- $ 1,089,150 --------------------------------------------------------------------------------------------------------- SEMICONDUCTORS -- 2.1% NVIDIA Corp.(1) 190,000 $ 2,367,400 --------------------------------------------------------------------------------------------------------- $ 2,367,400 --------------------------------------------------------------------------------------------------------- TELECOMMUNICATION EQUIPMENT -- 1.0% ECI Telecom, Ltd.(1) 170,000 $ 1,173,000 --------------------------------------------------------------------------------------------------------- $ 1,173,000 --------------------------------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES -- 6.7% Leap Wireless International, Inc.(1) 43,000 $ 1,188,950 NII Holdings, Inc., Class B(1) 136,000 4,984,400 NTL, Inc.(1) 25,331 1,375,727 --------------------------------------------------------------------------------------------------------- $ 7,549,077 --------------------------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST $99,658,617) $ 108,795,488 ---------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 17 SHORT-TERM INVESTMENTS -- 2.4%
PRINCIPAL AMOUNT SECURITY (000'S OMITTED) VALUE --------------------------------------------------------------------------------------------------------- Investors Bank and Trust Time Deposit, 1.58%, 9/1/04 $ 2,657 $ 2,657,000 --------------------------------------------------------------------------------------------------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST, $2,657,000) $ 2,657,000 --------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 98.6% (IDENTIFIED COST $102,315,617) $ 111,452,488 --------------------------------------------------------------------------------------------------------- OTHER ASSETS, LESS LIABILITIES -- 1.4% $ 1,636,824 --------------------------------------------------------------------------------------------------------- NET ASSETS -- 100.0% $ 113,089,312 ---------------------------------------------------------------------------------------------------------
ADR - American Depositary Receipt (1) Non-income producing security. SEE NOTES TO FINANCIAL STATEMENTS 18 GROWTH PORTFOLIO as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investments, at value (identified cost, $102,315,617) $ 111,452,488 Cash 193 Receivable for investments sold 1,203,953 Receivable from the investment adviser 2,726 Interest and dividends receivable 520,903 ---------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 113,180,263 ---------------------------------------------------------------------------------------------------- LIABILITIES Payable for investments purchased $ 58,627 Accrued expenses 32,324 ---------------------------------------------------------------------------------------------------- TOTAL LIABILITIES $ 90,951 ---------------------------------------------------------------------------------------------------- NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $ 113,089,312 ---------------------------------------------------------------------------------------------------- SOURCES OF NET ASSETS Net proceeds from capital contributions and withdrawals $ 103,952,441 Net unrealized appreciation (computed on the basis of identified cost) 9,136,871 ---------------------------------------------------------------------------------------------------- TOTAL $ 113,089,312 ----------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2004 INVESTMENT INCOME Dividends (net of foreign taxes, $2,865) $ 741,884 Interest 45,207 ---------------------------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME $ 787,091 ---------------------------------------------------------------------------------------------------- EXPENSES Investment adviser fee $ 758,489 Trustees' fees and expenses 7,274 Custodian fee 89,600 Legal and accounting services 34,522 Interest expense 8,982 Miscellaneous 2,392 ---------------------------------------------------------------------------------------------------- TOTAL EXPENSES $ 901,259 ---------------------------------------------------------------------------------------------------- Deduct -- Reduction of investment adviser fee $ 2,726 ---------------------------------------------------------------------------------------------------- TOTAL EXPENSE REDUCTIONS $ 2,726 ---------------------------------------------------------------------------------------------------- NET EXPENSES $ 898,533 ---------------------------------------------------------------------------------------------------- NET INVESTMENT LOSS $ (111,442) ---------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) -- Investment transactions (identified cost basis) $ 14,121,964 Foreign currency transactions 13,990 ---------------------------------------------------------------------------------------------------- NET REALIZED GAIN $ 14,135,954 ---------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) -- Investments (identified cost basis) $ (18,222,403) ---------------------------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ (18,222,403) ---------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED LOSS $ (4,086,449) ---------------------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (4,197,891) ----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 19 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 --------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment loss $ (111,442) $ (468,016) Net realized gain (loss) from investments and foreign currency transactions 14,135,954 (1,967,721) Net change in unrealized appreciation (depreciation) from investments (18,222,403) 30,467,019 --------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (4,197,891) $ 28,031,282 --------------------------------------------------------------------------------------------------------- Capital transactions -- Contributions $ 21,038,376 $ 63,757,139 Withdrawals (18,246,860) (67,091,995) --------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 2,791,516 $ (3,334,856) --------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS $ (1,406,375) $ 24,696,426 --------------------------------------------------------------------------------------------------------- NET ASSETS At beginning of year $ 114,495,687 $ 89,799,261 --------------------------------------------------------------------------------------------------------- AT END OF YEAR $ 113,089,312 $ 114,495,687 ---------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 20 SUPPLEMENTARY DATA
YEAR ENDED AUGUST 31, --------------------------------------------------------------- 2004 2003 2002 2001 2000 ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Ratios (As a percentage of average daily net assets): Expenses 0.74% 0.77% 0.75% 0.73% 0.72% Interest expense 0.01% -- -- 0.04% 0.01% Net investment income (loss) (0.09)% (0.52)% (0.44)% (0.20)% 0.16% Portfolio Turnover 276% 217% 282% 301% 274% ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(1) (3.47)% 33.37% (23.66)% -- -- ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS, END OF YEAR (000'S OMITTED) $ 113,089 $ 114,496 $ 89,799 $ 122,467 $ 183,553 -----------------------------------------------------------------------------------------------------------------------------
(1) Total return is required to be disclosed for fiscal years beginning after December 15, 2000. SEE NOTES TO FINANCIAL STATEMENTS 21 GROWTH PORTFOLIO as of August 31, 2004 NOTES TO FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES Growth Portfolio (the Portfolio) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Portfolio, which was organized as a trust under the laws of the State of New York on May 1, 1992, seeks to achieve capital growth. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At August 31, 2004, the Eaton Vance Growth Fund held an approximate 99.9% interest 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 -- SECURITIES listed on a U.S. securities exchange generally are valued at the last sale price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on NASDAQ National Market System generally are valued at the official NASDAQ closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by an independent pricing service. The value of preferred equity securities that are valued by a pricing service or a bond basis will be adjusted by an income factor, to be determined by the investment adviser, to reflect the next anticipated regular dividend. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on the principal exchange or board of trade on which the options are traded or, in the absence of sales on such date, at the mean between the latest bid and asked prices therefore. Futures positions on securities and currencies generally are valued at closing settlement prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. If short-term debt securities were acquired with a remaining maturity of more than 60 days, their amortized cost value will be based on their value on the sixty-first day prior to maturity. 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. The daily valuation of foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. The Portfolio may rely on an independent fair valuation service in adjusting the valuations of foreign securities. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by an independent quotation service. Investments held by the Portfolio 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 of the Portfolio considering relevant factors, data and information including the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded. B INCOME -- Interest income is determined on the basis of interest accrued, adjusted for amortization of premium or accretion of discount. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Portfolio is informed of the ex-dividend date. Dividend income may include dividends that represent returns of capital for federal income tax purposes C INCOME TAXES -- The Portfolio is 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. D EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee reduced by credits which are determined based on the average daily cash balance the Portfolio maintains with IBT. All credit balances used to reduce the Portfolio's custodian fees are reported as a reduction of total expenses on the Statement of Operations. There were no credit balances 22 used to reduce the Portfolio's custodian fees for the year ended August 31, 2004. E OTHER -- Investment transactions are accounted for on a trade date basis. Realized gains and losses are computed based on the specific identification of the securities sold. F 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. G INDEMNIFICATIONS -- Under the Portfolio's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Interestholders in the Portfolio are jointly and severally liable for the liabilities and obligations of the Portfolio in the event that the Portfolio fails to satisfy such liabilities and obligations; provided, however, that, to the extent assets are available in the Portfolio, the Portfolio may, under certain circumstances, indemnify interestholders from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in the Portfolio. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred. 2 INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES The investment adviser fee is earned by Boston Management and Research (BMR), a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for management and investment advisory services rendered to the Portfolio. Pursuant to the advisory agreement, BMR receives a monthly fee at the annual rate of 0.625% of the Portfolio's average daily net assets. For the year ended August 31, 2004, the fee amounted to $758,489. Except as to the Trustees of the Portfolio, who are not members of EVM's or BMR's organization, officers and Trustees receive remuneration for their services to the Portfolio out of such investment adviser fee. Certain officers and Trustees of the Portfolio are officers of the above organizations. Trustees of the Portfolio that are not affiliated with the investment adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the year ended August 31, 2004, no significant amounts have been deferred. Effective May 24, 2004, BMR has agreed to reduce the investment adviser fee by an amount equal to that portion of commissions paid to broker dealers in execution of portfolio transactions attributed to the Portfolio that is consideration for third-party research services. For the year ended August 31, 2004, BMR waived $2,726 of its advisory fee. 3 INVESTMENT TRANSACTIONS Purchases and sales of investments, other than short-term obligations, aggregated $324,587,388 and $321,855,216 respectively, for the year ended August 31, 2004. 4 FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION) The cost and unrealized appreciation (depreciation) in value of the investments owned at August 31, 2004, as computed on a federal income tax basis, were as follows: AGGREGATE COST $ 103,472,091 ------------------------------------------------------------------------------- Gross unrealized appreciation $ 12,822,977 Gross unrealized depreciation (4,842,580) ------------------------------------------------------------------------------- NET UNREALIZED APPRECIATION $ 7,980,397 -------------------------------------------------------------------------------
5 LINE OF CREDIT The Portfolio participates with other portfolios and funds managed by BMR 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 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 average daily loan balance for the year ended August 31, 2004 was $589,344 and the average interest rate was 1.52%. 23 GROWTH PORTFOLIO as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE TRUSTEES AND SHAREHOLDERS OF GROWTH PORTFOLIO: In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the supplementary data present fairly, in all material respects, the financial position of Growth Portfolio (the "Portfolio") at August 31, 2004, and the results of its operations, the changes in its net assets and the supplementary data for each of the periods indicated in conformity with accounting principles generally accepted in the United States of America. These financial statements and supplementary data (hereafter referred to as "financial statements") are the responsibility of the Portfolio's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts October 25, 2004 24 EATON VANCE GROWTH FUND MANAGEMENT AND ORGANIZATION Fund Management. The Trustees of Eaton Vance Growth Trust (the Trust) and 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 "noninterested Trustees" consist of those Trustees who are not "interested persons" of the Trust and the Portfolio, as that term is defined under the 1940 Act. The business address of each Trustee and officer is The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. As used below, "EVC" refers to Eaton Vance Corp., "EV" refers to Eaton Vance, Inc., "EVM" refers to Eaton Vance Management, "BMR" refers to Boston Management and Research, "EVD" refers to Eaton Vance Distributors, Inc. and "Atlanta Capital" refers to Atlanta Capital Management Company, LLC. EVC and EV are the corporate parent and trustee, respectively, of EVM and BMR. EVD is the Fund's principal underwriter, the Portfolio's placement agent and a wholly-owned subsidiary of EVM.
POSITION(S) TERM OF NUMBER OF PORTFOLIOS WITH THE OFFICE AND IN FUND COMPLEX NAME AND TRUST AND THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DATE OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD -------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE James B. Hawkes Trustee Trustee of the Trust Chairman, President and 195 Director of EVC 11/9/41 since 1989; of the Chief Executive Officer Portfolio since 1992 of BMR, EVC, EVM and EV; Director of EV; Vice President and Director of EVD. Trustee and/or officer of 195 registered investment companies in the Eaton Vance Fund Complex. Mr. Hawkes is an interested person because of his positions with BMR, EVM, EVC and EV, which are affiliates of the Trust and the Portfolio. NONINTERESTED TRUSTEE(S) Samuel L. Hayes, III Trustee Trustee of the Trust Jacob H. Schiff Professor 195 Director of Tiffany & Co. 2/23/35 since 1989; of the of Investment Banking (specialty retailer) and Portfolio since 1993 Emeritus, Harvard Telect, Inc. University Graduate (telecommunication School of Business services company) Administration. William H. Park Trustee Since 2003 President and Chief 194 None 9/19/47 Executive Officer, Prizm Capital Management, LLC (investment management firm) (since 2002). Executive Vice President and Chief Financial Officer, United Asset Management Corporation (a holding company owning institutional investment management firms) (1982-2001). Ronald A. Pearlman Trustee Since 2003 Professor of Law, 194 None 7/10/40 Georgetown University Law Center (since 1999). Tax Partner, Covington & Burling, Washington, DC (1991-2000). Norton H. Reamer Trustee Trustee of the Trust President, Chief 195 None 9/21/35 since 1989; of the Executive Officer and a Portfolio since 1993 Director of Asset Management Finance Corp. (a specialty finance company serving the investment management industry) (since October 2003). President, Unicorn Corporation (an investment and financial advisory services company) (since September 2000). Formerly, Chairman, Hellman, Jordan Management Co., Inc. (an investment management company) (2000-2003). Formerly, Advisory Director of Berkshire Capital Corporation (investment banking firm) (2002-2003). 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) (1980-2000). Lynn A. Stout Trustee Since 1998 Professor of Law, 195 None 9/14/57 University of California at Los Angeles School of Law (since July 2001). Formerly, Professor of Law, Georgetown University Law Center.
25 PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
POSITION(S) TERM OF WITH THE OFFICE AND NAME AND TRUST AND THE LENGTH OF PRINCIPAL OCCUPATION(S) DATE OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS ------------------------------------------------------------------------------------------------------------------------ Thomas E. Faust Jr. President of the Trust Since 2002(2) Executive Vice President of EVM, BMR, EVC and 5/31/58 EV; Chief Investment Officer of EVM and BMR and Director of EVC. Chief Executive Officer of Belair Capital Fund LLC, Belcrest Capital Fund LLC, Belmar Capital Fund LLC, Belport Capital Fund LLC and Belrose Capital Fund LLC (private investment companies sponsored by EVM). Officer of 57 registered investment companies managed by EVM or BMR. Gregory L. Coleman Vice President of the Since 2001 Partner of Atlanta Capital. Officer of 10 10/28/49 Trust registered investment companies managed by EVM or BMR. Arieh Coll Vice President of the Since 2000 Vice President of EVM and BMR. Officer of 7 11/9/63 Portfolio registered investment companies managed by EVM or BMR. Duncan W. Richardson President of the Since 2002 Senior Vice President and Chief Equity 10/26/57 Portfolio Investment Officer of EVM and BMR. Officer of 43 registered investment companies managed by EVM or BMR. James A. Womack Vice President of the Since 2001 Vice President of Atlanta Capital. Officer of 10 11/20/68 Trust registered investment companies managed by EVM or BMR. Alan R. Dynner Secretary Since 1997 Vice President, Secretary and Chief Legal 10/10/40 Officer of BMR, EVM, EVD, EV and EVC. Officer of 195 registered investment companies managed by EVM or BMR. William Treasurer of the Since 2002(2) Vice President of EVM and BMR. Officer of 56 J. Austin, Jr. Portfolio registered investment companies managed by EVM 12/27/51 or BMR. James L. O'Connor Treasurer of the Trust Since 1989 Vice President of BMR, EVM and EVD. Officer of 4/1/45 116 registered investment companies managed by EVM or BMR.
(1) Includes both master and feeder funds in a master-feeder structure. (2) Prior to 2002, Mr. Faust served as Vice President of the Trust since 1999 and Mr. Austin served as Assistant Treasurer since 1993. The SAI for the Fund includes additional information about the Trustees and officers of the Fund and the Portfolio and can be obtained without charge by calling 1-800-225-6265. 26 This Page Intentionally Left Blank This Page Intentionally Left Blank This Page Intentionally Left Blank INVESTMENT ADVISER OF GROWTH PORTFOLIO BOSTON MANAGEMENT AND RESEARCH THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 ADMINISTRATOR OF EATON VANCE GROWTH FUND EATON VANCE MANAGEMENT THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 PRINCIPAL UNDERWRITER EATON VANCE DISTRIBUTORS, INC. THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 (617) 482-8260 CUSTODIAN INVESTORS BANK & TRUST COMPANY 200 CLARENDON STREET BOSTON, MA 02116 TRANSFER AGENT PFPC INC. ATTN: EATON VANCE FUNDS P.O. BOX 9653 PROVIDENCE, RI 02940-9653 (800) 262-1122 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PRICEWATERHOUSECOOPERS LLP 125 HIGH STREET BOSTON, MA 02110 EATON VANCE GROWTH FUND THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. BEFORE INVESTING, INVESTORS SHOULD CONSIDER CAREFULLY THE FUND'S INVESTMENT OBJECTIVE(S), RISKS, AND CHARGES AND EXPENSES. THE FUND'S CURRENT PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND AND IS AVAILABLE THROUGH YOUR FINANCIAL ADVISOR. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. FOR FURTHER INFORMATION PLEASE CALL 1-800-225-6265. 444-10/04 GFSRC [EV LOGO] [GRAPHIC] ANNUAL REPORT AUGUST 31, 2004 [GRAPHIC] EATON VANCE GLOBAL GROWTH FUND [GRAPHIC] 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. IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS The Securities and Exchange Commission permits 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. The Fund will file a schedule of its portfolio holdings on Form N-Q with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year. The Fund's Form N-Q will be available on the Eaton Vance website www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC's public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room). From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios vote proxies according to a set of policies and procedures approved by the Funds' and Portfolios' Boards. You may obtain a description of these policies and procedures without charge, upon request, by calling 1-800-262-1122. This description is also available on the Securities and Exchange Commission's website at http://www.sec.gov. EATON VANCE GLOBAL GROWTH FUND as of August 31, 2004 LETTER TO SHAREHOLDERS [PHOTO OF THOMAS E. FAUST JR.] Thomas E. Faust Jr. President Eaton Vance Global Growth Fund ("the Fund") Class A shares had a total return of 4.18% during the year ended August 31, 2004. That return was the result of an increase in net asset value (NAV) per share from $12.69 on August 31, 2003, to $13.22 on August 31, 2004.(1) Class B shares had a total return of 3.61% for the same period, the result of an increase in NAV per share from $12.76 to $13.22.(1) Class C shares had a total return of 3.58% for the same period, the result of an increase in NAV per share from $12.30 to $12.74.(1) Class D shares had a total return of 3.54% for the same period, the result of an increase in NAV per share from $7.63 to $7.90.(1) By comparison, the Morgan Stanley Capital International World Index had a return of 15.61% for the one-year period ended August 31, 2004.(2) RIGOROUS RESEARCH UNCOVERS EXCITING OPPORTUNITIES FOR GROWTH AMIDST VOLATILITY Co-managed by Eaton Vance and Lloyd George Investment Management, the Fund (formerly Eaton Vance Information Age Fund) seeks long-term capital growth by investing in a global and diversified portfolio of common stocks of companies expected to grow in value over time. Investment opportunities outside the United States represent nearly half of the investable stock market universe worldwide. In recognition of this, and of the ever-expanding opportunities for growth stocks in particular, we at Eaton Vance and our partners at Lloyd George continue to combine our research efforts to seek the best growth opportunities worldwide. We believe that the Fund, with its investment approach of broad diversification, is well suited for the continued volatility we anticipate in the global equity markets. Please turn to the interview with portfolio managers Arieh Coll and Jacob Rees-Mogg to learn more about the Fund's performance over the past year. Sincerely, /s/ Thomas E. Faust Jr. Thomas E. Faust Jr. President October 6, 2004 FUND INFORMATION as of August 31, 2004
PERFORMANCE(3) CLASS A CLASS B CLASS C CLASS D ----------------------------------------------------------------------------------------- Average Annual Total Returns (at net asset value) One Year 4.18% 3.61% 3.58% 3.54% Five Years -1.65 -2.23 -2.23 N.A. Life of Fund+ 7.76 7.29 6.90 -6.53 SEC Average Annual Total Returns (including sales charge or applicable CDSC) One Year -1.78% -1.39% 2.58% -1.46% Five Years -2.81 -2.56 -2.23 N.A. Life of Fund+ 7.05 7.29 6.90 -7.34
+ Inception Dates - Class A: 9/18/95; Class B: 9/18/95; Class C: 11/22/95; Class D: 3/9/01 (1) These returns do not include the 5.75% maximum sales charge for the Fund's Class A shares or the applicable contingent deferred sales charges (CDSC) for Class B, Class C, and Class D shares. If the sales charge was deducted, the performance would be reduced. (2) The MSCI World Index is an unmanaged index of global stocks. It is not possible to invest directly in an Index. (3) SEC returns for Class A reflect the maximum 5.75% sales charge. SEC returns for Class B and Class D 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. Class A shares redeemed or exchanged within three months of settlement of purchase are subject to a 1% redemption fee. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR OFFERING PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO www.eatonvance.com. 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 EATON VANCE GLOBAL GROWTH FUND as of August 31, 2004 MANAGEMENT DISCUSSION AN INTERVIEW WITH ARIEH COLL AND HON. JACOB REES-MOGG, CO-PORTFOLIO MANAGERS OF GLOBAL GROWTH PORTFOLIO [PHOTO OF ARIEH COLL] Arieh Coll Co-Portfolio Manager Q: ARIEH, LET'S START WITH THE U.S. PORTION OF THE FUND. WHAT WAS THE ENVIRONMENT LIKE OVER THE PAST YEAR? A: MR. COLL: The domestic market continued to be volatile. Following a strong run-up in 2003, U.S. equity markets consolidated those prior gains in the first halfof 2004, effectively trading in a tight range for much of the period. Optimism regarding an improving economy and accelerating earnings growth at the start of the year gave way to concerns about potential inflation and impending interest rate increases by the Federal Reserve. Also weighing on investors' minds was the uncertainty of the situation in Iraq. Towards the end of this one-year period, the broader market rebounded, but it was value stocks that led the way. The U.S. portion of the Fund lagged the broader U.S. equity market indexes during the period. Q: WHAT ACCOUNTED FOR THE RELATIVE UNDER PERFORMANCE OF THE U.S. COMPONENT OF THE FUND? A: MR. COLL: The U.S. broad-based market index is made up of both value stocks and growth stocks - it's about a 50/50 split. In the last year, the market has become more risk-averse. The Fund's U.S. investments are primarily in growth stocks, and as value stocks came into favor this year and outperformed during the period, that hurt our numbers when compared to the broad market index. Specifically, our under performance was a function of the Portfolio having held a small number of specific stocks that declined during the period. One such stock was a drug company that had great success with a new product, but failed to keep up its generic drug business, and consequently, its stock price suffered. Also, there were a number of health care stocks that were up over the past year that, unfortunately, we didn't own. [PHOTO OF JACOB REES-MOGG] Hon. Jacob Rees-Mogg Co-Portfolio Manager In the consumer discretionary area, there were a few stocks that didn't perform well. One was an Internet travel company that experienced a slowdown in growth; another was a gaming equipment manufacturer whose stock price suffered a short-term correction. Q: JACOB, LET'S TURN NOW TO THE INTERNATIONAL COMPONENT OF THE FUND. HOW DID IT FARE? A: MR. REES-MOGG: As Arieh pointed out, individual stock selection tends to be the primary driver of relative returns for a growth portfolio such as ours; the performance of just a handful of stocks can have a strong effect on performance. In this case, a few stocks out of around 80 stocks held over the course of the year accounted for the performance shortfall of the Fund. For instance, one of our media stocks lost 26% of its value, in spite of increasing its operating profits, its earnings per share, and decreasing its net debt. The reason for the short-term price correction was concern that the company could not meet its target of 10 million subscribers by the year 2010, coupled with worries over how much it would spend 3 in trying to reach that goal. Even if the target of 10 million subscribers is not met, the potential for growth remains likely, and the fundamentals strong. Still, the set-back in share price had a negative effect on returns. The stock of a major advertising firm the Portfolio held fell 10.9% since the firm was purchased in December 2003. The shares had posted modest gains until July 2004, when concern over the proposed acquisition of another company sent the price down sharply over the summer. The acquisition in question has now been successfully completed, and the company's share price has recovered, but the timing of the brief decline was detrimental to returns for the August 31, 2004 timeframe. Q: WHAT WERE THE AREAS OF POSITIVE PERFORMANCE? A: MR. COLL: On the U.S. side, some specific stocks added to returns during the period. One of our biggest positions over the past year has been in the company that makes a very successful wireless handheld device. The stock tripled during the time period. Also, despite the short-term correction in one gaming stock, we also have other positions in gaming stocks that did very well. We also were anticipating the recovery in the art auction market; companies we held in that group are recovering from the recession and were good performers for us. One of the worst performing sectors in the broad market over the past year was technology, but our average technology holding was up for the year. This is an example of how stock selection can greatly influence relative returns on the upside as well. [CHART] FIVE LARGEST INDUSTRY POSITIONS+ As a percentage of total net assets BUSINESS SERVICES 9.6% COMPUTERS & BUSINESS EQUIPMENT 9.1% DIVERSIFIED TELECOMMUNICATION SERVICES 8.7% PUBLISHING 6.7% SPECIALITY RETAIL 6.1%
+ As of August 31, 2004. Industry positions subject to change due to active management. [CHART] GEOGRAPHIC DISTRIBUTION+ As a percentage of common stock investments South Africa 1.7% United States 44.2% United Kingdon 18.3% Other Europe 12.5% Japan 8.7% Other Asia 8.3% Canada 4.3% Israel 2.0%
+ As of August 31, 2004. Geographic distribution subject to change due to active management. 4 MR. REES-MOGG: In the publishing area, we had two stocks perform particularly well. One company recovered from a scandal over faked pictures of British soldiers in Iraq published in its flagship newspaper to post an increase of 35.9%. This was largely due to new management making clear strategic decisions, and thus taking greater advantage of the synergies made possible by an earlier merger. A Spanish publishing company's stock also fared well, rising 40% from the beginning of the year. Q: RECENTLY, THE FUND HAS HAD A CHANGE IN ITS NAME AND ITS POLICY OF INVESTING 80% OF ITS ASSETS IN "INFORMATION AGE COMPANIES." HOW HAS THIS PLAYED OUT THIS YEAR? A: MR. REES-MOGG: In January of this year, the Fund's name changed to "Eaton Vance Global Growth Fund" and the Fund was no longer required to invest at least 80% of its net assets in information age companies. The reasoning behind this was that, while we continued to believe that there were better-than-average growth prospects among information-driven companies, the prospectus definition excluded many companies driven by specialized, technology-oriented information (such as biotechnology and online trading companies). Under the new fund name and policy, we are able to research and invest in an even more diversified universe of growth stocks. MR. COLL: We believe that this added layer of diversification enhances our investment style, which is already diversified by market capitalization, geographical region, and industry grouping. We will continue to use our intensive research efforts, both here at Eaton Vance and at Lloyd George Management in London, to uncover global growth stocks that are reasonably priced in relation to their fundamental value and that are expected to grow in value over time. THE VIEWS EXPRESSED IN THIS REPORT ARE THOSE OF THE PORTFOLIO MANAGERS AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS, AND EATON VANCE DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FUND ARE BASED ON MANY FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FUND. 5 EATON VANCE GLOBAL GROWTH FUND as of August 31, 2004 MANAGEMENT DISCUSSION [CHART] COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE GLOBAL GROWTH FUND CLASS A VS THE MSCI WORLD INDEX* GLOBAL GROWTH-A
EATAN VANCE EATAN VANCE GLOBAL GROWTH GLOBAL GROWTH FUND CLASS A FUND CLASS A MSCI WORLD DATE OR NAV WITH SALES CHARGE INDEX 9/30/1995 10,000 9,425 10000 10/31/1995 10,138 9,554 9840.4 11/30/1995 10,236 9,647 10179.93 12/31/1995 10,296 9,703 10475.42 1/31/1996 10,335 9,740 10662.75 2/29/1996 10,562 9,954 10725.5 3/31/1996 10,581 9,972 10901.75 4/30/1996 11,143 10,501 11155.86 5/31/1996 11,360 10,706 11163.27 6/30/1996 11,192 10,548 11217.48 7/31/1996 10,502 9,898 10818.79 8/31/1996 10,897 10,269 10940.9 9/30/1996 11,547 10,882 11367 10/31/1996 11,320 10,669 11444.1 11/30/1996 11,842 11,161 12083.16 12/31/1996 11,715 11,041 11887.38 1/31/1997 11,923 11,236 12028.41 2/28/1997 11,932 11,246 12164.5 3/31/1997 11,518 10,855 11921.62 4/30/1997 11,617 10,948 12309.03 5/31/1997 12,564 11,840 13066.54 6/30/1997 13,027 12,277 13716 7/31/1997 13,648 12,863 14345.47 8/31/1997 13,186 12,427 13383.57 9/30/1997 13,869 13,071 14108.4 10/31/1997 13,142 12,386 13363.58 11/30/1997 13,484 12,708 13597.79 12/31/1997 13,734 12,943 13761.23 1/31/1998 13,895 13,095 14142.44 2/28/1998 15,070 14,203 15096.81 3/31/1998 15,923 15,006 15731.98 4/30/1998 15,969 15,050 15883.35 5/31/1998 15,716 14,811 15681.92 6/30/1998 16,015 15,093 16051.71 7/31/1998 15,865 14,952 16023.58 8/31/1998 13,492 12,715 13884.39 9/30/1998 14,091 13,280 14127.56 10/31/1998 14,437 13,606 15402.27 11/30/1998 15,324 14,442 16315.82 12/31/1998 16,782 15,816 17110.44 1/31/1999 17,831 16,804 17482.62 2/28/1999 17,156 16,168 17015.08 3/31/1999 17,976 16,941 17721.04 4/30/1999 19,085 17,986 18417.13 5/31/1999 18,795 17,713 17741.67 6/30/1999 20,736 19,543 18566.68 7/31/1999 21,375 20,145 18508.48 8/31/1999 20,905 19,702 18473.06 9/30/1999 21,496 20,259 18291.43 10/31/1999 22,936 21,616 19239.71 11/30/1999 26,209 24,700 19778.47 12/31/1999 30,700 28,932 21376.91 1/31/2000 30,330 28,584 20150.28 2/29/2000 33,453 31,527 20202.2 3/31/2000 33,700 31,760 21596.04 4/30/2000 30,796 29,023 20680.44 5/31/2000 29,371 27,680 20154.41 6/30/2000 30,549 28,790 20830.55 7/31/2000 28,494 26,854 20241.66 8/31/2000 29,919 28,197 20897.58 9/30/2000 28,631 26,983 19783.95 10/31/2000 27,590 26,002 19450.04 11/30/2000 25,028 23,587 18266.7 12/31/2000 25,410 23,947 18559.79 1/31/2001 26,240 24,729 18917.19 2/28/2001 23,911 22,535 17316.37 3/31/2001 21,146 19,929 16176.07 4/30/2001 22,529 21,232 17368.47 5/31/2001 22,354 21,067 17142.15 6/30/2001 21,568 20,326 16602.65 7/31/2001 20,899 19,696 16380.73 8/31/2001 19,851 18,708 15592.06 9/30/2001 17,755 16,733 14216.07 10/31/2001 18,308 17,254 14487.53 11/30/2001 19,778 18,639 15342.41 12/31/2001 20,084 18,927 15437.31 1/31/2002 19,240 18,132 14968.05 2/28/2002 19,240 18,132 14836.41 3/31/2002 20,302 19,133 15519.67 4/30/2002 19,545 18,420 14963.45 5/31/2002 19,632 18,502 14988.4 6/30/2002 17,770 16,747 14076.4 7/31/2002 16,183 15,252 12888.67 8/31/2002 16,212 15,279 12910.68 9/30/2002 15,208 14,333 11489.21 10/31/2002 16,009 15,087 12335.78 11/30/2002 16,998 16,020 12999 12/31/2002 15,878 14,964 12367.43 1/31/2003 15,397 14,511 11990.54 2/28/2003 14,917 14,058 11780.69 3/31/2003 14,728 13,880 11741.8 4/30/2003 16,111 15,183 12782.34 5/31/2003 17,173 16,184 13510.09 6/30/2003 17,479 16,472 13742.21 7/31/2003 17,915 16,884 14019.66 8/31/2003 18,468 17,405 14320.84 9/30/2003 18,279 17,227 14407.03 10/31/2003 19,414 18,297 15260.53 11/30/2003 19,763 18,626 15491.18 12/31/2003 20,477 19,298 16461.87 1/31/2004 20,986 19,778 16726.01 2/29/2004 21,204 19,984 17006.09 3/31/2004 21,088 19,874 16893.25 4/30/2004 20,360 19,188 16547.25 5/31/2004 20,200 19,037 16685.33 6/30/2004 21,219 19,997 17040.8 7/31/2004 19,938 18,790 16484.42 8/31/2004 19,240 18,132 16556.87
[CHART] COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE GLOBAL GROWTH FUND CLASS B VS THE MSCI WORLD INDEX* GLOBAL GROWTH-B Inception: 9/18/95
EATAN VANCE GLOBAL GROWTH FUND CLASS B MSCI WORLD DATE OR NAV INDEX 9/30/1995 10,000 10,000 10/31/1995 10,128 9,840 11/30/1995 10,226 10,180 12/31/1995 10,285 10,475 1/31/1996 10,315 10,663 2/29/1996 10,541 10,726 3/31/1996 10,571 10,902 4/30/1996 11,112 11,156 5/31/1996 11,329 11,163 6/30/1996 11,161 11,217 7/31/1996 10,482 10,819 8/31/1996 10,866 10,941 9/30/1996 11,516 11,367 10/31/1996 11,289 11,444 11/30/1996 11,811 12,083 12/31/1996 11,685 11,887 1/31/1997 11,892 12,028 2/28/1997 11,902 12,165 3/31/1997 11,478 11,922 4/30/1997 11,567 12,309 5/31/1997 12,513 13,067 6/30/1997 12,966 13,716 7/31/1997 13,587 14,345 8/31/1997 13,126 13,384 9/30/1997 13,808 14,108 10/31/1997 13,083 13,364 11/30/1997 13,414 13,598 12/31/1997 13,655 13,761 1/31/1998 13,811 14,142 2/28/1998 14,992 15,097 3/31/1998 15,827 15,732 4/30/1998 15,872 15,883 5/31/1998 15,627 15,682 6/30/1998 15,916 16,052 7/31/1998 15,760 16,024 8/31/1998 13,399 13,884 9/30/1998 13,989 14,128 10/31/1998 14,323 15,402 11/30/1998 15,203 16,316 12/31/1998 16,647 17,110 1/31/1999 17,683 17,483 2/28/1999 17,008 17,015 3/31/1999 17,822 17,721 4/30/1999 18,905 18,417 5/31/1999 18,614 17,742 6/30/1999 20,535 18,567 7/31/1999 21,152 18,508 8/31/1999 20,686 18,473 9/30/1999 21,257 18,291 10/31/1999 22,671 19,240 11/30/1999 25,963 19,778 12/31/1999 30,389 21,377 1/31/2000 30,007 20,150 2/29/2000 33,104 20,202 3/31/2000 33,315 21,596 4/30/2000 30,429 20,680 5/31/2000 29,005 20,154 6/30/2000 30,165 20,831 7/31/2000 28,122 20,242 8/31/2000 29,493 20,898 9/30/2000 28,202 19,784 10/31/2000 27,174 19,450 11/30/2000 24,630 18,267 12/31/2000 24,983 18,560 1/31/2001 25,766 18,917 2/28/2001 23,487 17,316 3/31/2001 20,775 16,176 4/30/2001 22,117 17,368 5/31/2001 21,936 17,142 6/30/2001 21,153 16,603 7/31/2001 20,496 16,381 8/31/2001 19,447 15,592 9/30/2001 17,392 14,216 10/31/2001 17,909 14,488 11/30/2001 19,335 15,342 12/31/2001 19,629 15,437 1/31/2002 18,790 14,968 2/28/2002 18,776 14,836 3/31/2002 19,811 15,520 4/30/2002 19,056 14,963 5/31/2002 19,125 14,988 6/30/2002 17,308 14,076 7/31/2002 15,742 12,889 8/31/2002 15,756 12,911 9/30/2002 14,777 11,489 10/31/2002 15,546 12,336 11/30/2002 16,497 12,999 12/31/2002 15,393 12,367 1/31/2003 14,917 11,991 2/28/2003 14,442 11,781 3/31/2003 14,246 11,742 4/30/2003 15,588 12,782 5/31/2003 16,609 13,510 6/30/2003 16,889 13,742 7/31/2003 17,322 14,020 8/31/2003 17,839 14,321 9/30/2003 17,657 14,407 10/31/2003 18,734 15,261 11/30/2003 19,056 15,491 12/31/2003 19,755 16,462 1/31/2004 20,230 16,726 2/29/2004 20,426 17,006 3/31/2004 20,300 16,893 4/30/2004 19,601 16,547 5/31/2004 19,433 16,685 6/30/2004 20,412 17,041 7/31/2004 19,167 16,484 8/31/2004 18,482 16,557
PERFORMANCE+ CLASS A CLASS B CLASS C CLASS D -------------------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS (AT NET ASSET VALUE) One Year 4.18% 3.61% 3.58% 3.54% Five Years -1.65 -2.23 -2.23 N.A. Life of Fund+ 7.76 7.29 6.90 -6.53 SEC AVERAGE ANNUAL TOTAL RETURNS (INCLUDING SALES CHARGE OR APPLICABLE CDSC) One Year -1.78% -1.39% 2.58% -1.46% Five Years -2.81 -2.56 -2.23 N.A. Life of Fund+ 7.05 7.29 6.90 -7.34
+ Inception Dates - Class A: 9/18/95; Class B: 9/18/95; Class C:11/22/95; Class D:3/9/01 * Sources: Thomson Financial; Lipper Inc. Investment operations commenced 9/18/95. Index information is available only at month-end; therefore, the line comparison begins at the next month-end following the commencement of the Fund's investment operations. The chart compares the total return of the Fund's Class A and Bshares with that of a broad-based securities market Index. Returns are calculated by determining the percentage change in net asset value with all distributions reinvested. The lines on the chart represent the total returns of $10,000 hypothetical investments in the Fund and the Morgan Stanley Capital International (MSCI) World Index - a broad-based index of global common stocks. An investment in the Fund's Class C shares on 11/22/95 at net asset value would have grown to $17,971 on August 31, 2004. An investment in the Fund's Class D shares on 3/9/01 at net asset value would be worth $7,900 on August 31, 2004; $7,663 with the applicable CDSC. Past performance does not predict future performance. 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 Index's total returns do not reflect any commissions or expenses that would have been incurred if an investor individually purchased or sold the securities represented in it. It is not possible to invest directly in an Index. + SEC returns for Class A reflect the maximum 5.75% sales charge. SEC returns for Class B and Class D 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. Class A shares redeemed or exchanged within three months of settlement of purchase are subject to a 1% redemption fee. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR OFFERING PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO www.eatonvance.com. 6 EATON VANCE GLOBAL GROWTH FUND as of August 31, 2004 FUND EXPENSES Example: As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (March 1, 2004 - August 31, 2004). Actual Expenses: The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes: The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EATON VANCE GLOBAL GROWTH FUND
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* (3/1/04) (8/31/04) (3/1/04 - 8/31/04) ------------------------------------------------------------------------------------------------------- Actual Class A $ 1,000.00 $ 907.30 $ 11.75 Class B $ 1,000.00 $ 904.90 $ 14.13 Class C $ 1,000.00 $ 904.80 $ 14.12 Class D $ 1,000.00 $ 904.90 $ 14.13 Hypothetical (5% return before expenses) Class A $ 1,000.00 $ 1,012.80 $ 12.40 Class B $ 1,000.00 $ 1,010.30 $ 14.91 Class C $ 1,000.00 $ 1,010.30 $ 14.91 Class D $ 1,000.00 $ 1,010.30 $ 14.91
* Expenses are equal to the Fund's annualized expense ratio of 2.45% for Class A shares, 2.95% for Class B shares, 2.95% for Class C, and 2.95% for Class D shares multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on February 29, 2004. The Example reflects the expenses of both the Fund and the Portfolio. 7 EATON VANCE GLOBAL GROWTH FUND as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investment in Global Growth Portfolio, at value (identified cost, $83,366,102) $ 86,616,937 Receivable for Fund shares sold 18,198 Prepaid expenses 13,904 Tax reclaims receivable 3,743 --------------------------------------------------------------------------------------------- TOTAL ASSETS $ 86,652,782 --------------------------------------------------------------------------------------------- LIABILITIES Payable for Fund shares redeemed $ 278,955 Payable to affiliate for distribution and service fees 18,079 Accrued expenses 74,703 --------------------------------------------------------------------------------------------- TOTAL LIABILITIES $ 371,737 --------------------------------------------------------------------------------------------- NET ASSETS $ 86,281,045 --------------------------------------------------------------------------------------------- SOURCES OF NET ASSETS Paid-in capital $ 142,478,834 Accumulated net realized loss from Portfolio (computed on the basis of identified cost) (59,294,240) Accumulated net investment loss (155,342) Net unrealized appreciation 958 Net unrealized appreciation from Portfolio (computed on the basis of identified cost) 3,250,835 --------------------------------------------------------------------------------------------- TOTAL $ 86,281,045 --------------------------------------------------------------------------------------------- CLASS A SHARES NET ASSETS $ 39,113,401 SHARES OUTSTANDING 2,959,766 NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 13.22 MAXIMUM OFFERING PRICE PER SHARE (100 DIVIDED BY 94.25 of $13.22) $ 14.03 --------------------------------------------------------------------------------------------- CLASS B SHARES NET ASSETS $ 33,522,317 SHARES OUTSTANDING 2,536,159 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (NOTE 6) (net assets DIVIDED BY shares of beneficial interest outstanding) $ 13.22 --------------------------------------------------------------------------------------------- CLASS C SHARES NET ASSETS $ 12,402,461 SHARES OUTSTANDING 973,434 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (NOTE 6) (net assets DIVIDED BY shares of beneficial interest outstanding) $ 12.74 --------------------------------------------------------------------------------------------- CLASS D SHARES NET ASSETS $ 1,242,866 SHARES OUTSTANDING 157,349 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (NOTE 6) (net assets DIVIDED BY shares of beneficial interest outstanding) $ 7.90 ---------------------------------------------------------------------------------------------
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, 2004 INVESTMENT INCOME Dividends allocated from Portfolio (net of foreign taxes, $166,042) $ 1,706,810 Interest and other allocated from Portfolio 93,503 Expenses allocated from Portfolio (1,248,888) --------------------------------------------------------------------------------------------- NET INVESTMENT INCOME FROM PORTFOLIO $ 551,425 --------------------------------------------------------------------------------------------- EXPENSES Management fee $ 248,838 Trustees' fees and expenses 1,780 Distribution and service fees Class A 188,710 Class B 461,463 Class C 144,375 Class D 12,096 Transfer and dividend disbursing agent fees 282,412 Registration fees 54,341 Legal and accounting services 33,499 Printing and postage 27,698 Custodian fee 19,577 Miscellaneous 10,809 --------------------------------------------------------------------------------------------- TOTAL EXPENSES $ 1,485,598 --------------------------------------------------------------------------------------------- NET INVESTMENT LOSS $ (934,173) --------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO Net realized gain (loss) from Portfolio -- Investment transactions (identified cost basis) $ 7,104,465 Foreign currency and forward foreign currency exchange contract transactions (169,728) --------------------------------------------------------------------------------------------- NET REALIZED GAIN $ 6,934,737 --------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) -- Investments from Portfolio (identified cost basis) $ (1,566,672) Foreign currency and forward foreign currency exchange contracts from Portfolio (7,557) Foreign currency and forward foreign currency exchange contracts (2,967) --------------------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ (1,577,196) --------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN $ 5,357,541 --------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,423,368 ---------------------------------------------------------------------------------------------
See notes to financial statements 8 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 -------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment loss $ (934,173) $ (1,164,748) Net realized gain (loss) from investments and foreign currency transactions 6,934,737 (1,208,217) Net change in unrealized appreciation (depreciation) from investments and foreign currency (1,577,196) 13,860,893 -------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,423,368 $ 11,487,928 -------------------------------------------------------------------------------------- Transactions in shares of beneficial interest -- Proceeds from sale of shares Class A $ 4,790,670 $ 39,715,893 Class B 1,823,725 1,431,692 Class C 1,526,604 4,156,195 Class D 539,756 324,978 Cost of shares redeemed Class A (11,341,329) (46,765,475) Class B (9,492,726) (12,408,956) Class C (4,629,744) (8,056,374) Class D (216,764) (261,545) Net asset value of shares exchanged Class A 12,340,196 -- Class B (12,340,196) -- Redemption fees 3,893 1,827 -------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS $ (16,995,915) $ (21,861,765) -------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS $ (12,572,547) $ (10,373,837) -------------------------------------------------------------------------------------- NET ASSETS At beginning of year $ 98,853,592 $ 109,227,429 -------------------------------------------------------------------------------------- AT END OF YEAR $ 86,281,045 $ 98,853,592 -------------------------------------------------------------------------------------- ACCUMULATED NET INVESTMENT LOSS INCLUDED IN NET ASSETS AT END OF YEAR $ (155,342) $ (116,318) --------------------------------------------------------------------------------------
Certain prior year amounts have been reclassed to conform to the current year presentation. See notes to financial statements 9 FINANCIAL HIGHLIGHTS
CLASS A ----------------------------------------------------------- YEAR ENDED AUGUST 31, ----------------------------------------------------------------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ----------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 12.690 $ 11.140 $ 13.640 $ 21.840 $ 17.340 ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.072) $ (0.088) $ (0.098) $ (0.132) $ (0.213) Net realized and unrealized gain (loss) 0.602 1.638 (2.402) (6.935) 6.939 ----------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.530 $ 1.550 $ (2.500) $ (7.067) $ 6.726 ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ -- $ (1.133) $ (2.226) ----------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ -- $ (1.133) $ (2.226) ----------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.000(4) $ 0.000(4) $ -- $ -- $ -- ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 13.220 $ 12.690 $ 11.140 $ 13.640 $ 21.840 ----------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) 4.18% 13.91% (18.33)% (33.65)% 43.12% ----------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA+ Net assets, end of year (000's omitted) $ 39,113 $ 32,559 $ 35,502 $ 49,231 $ 68,208 Ratios (As a percentage of average daily net assets): Net expenses(3) 2.44% 2.39% 1.99% 1.99% 1.99% Net expenses after custodian fee reduction 2.44% 2.39% 1.99% 1.99% 1.99% Net investment loss (0.52)% (0.79)% (0.76)% (0.78)% (0.98)% Portfolio Turnover of the Portfolio 164% 93% 107% 160% 173% ----------------------------------------------------------------------------------------------------------------------- + The expenses of the Fund reflect a reimbursement of Class A distribution and service fees. Had such action not been taken, the ratios and net investment loss per share would have been as follows: Ratios (As a percentage of average daily net assets): Expenses(3) 2.52% 2.22% 2.14% 2.12% Expenses after custodian fee reduction 2.52% 2.22% 2.14% 2.12% Net investment loss (0.92)% (0.99)% (0.93)% (1.11)% Net investment loss per share $ (0.102) $ (0.128) $ (0.156) $ (0.241) -----------------------------------------------------------------------------------------------------------------------
(1) Net investment loss and redemption fees per share were computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. (4) Amounts represent less than $0.0005. See notes to financial statements 10
CLASS B ----------------------------------------------------------- YEAR ENDED AUGUST 31, ----------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ----------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 12.760 $ 11.270 $ 13.910 $ 22.380 $ 17.770 ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.169) $ (0.159) $ (0.195) $ (0.249) $ (0.353) Net realized and unrealized gain (loss) 0.629 1.649 (2.445) (7.088) 7.189 ----------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.460 $ 1.490 $ (2.640) $ (7.337) $ 6.836 ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ -- $ (1.133) $ (2.226) ----------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ -- $ (1.133) $ (2.226) ----------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.000(4) $ 0.000(4) $ -- $ -- $ -- ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 13.220 $ 12.760 $ 11.270 $ 13.910 $ 22.380 ----------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) 3.61% 13.22% (18.98)% (34.06)% 42.58% ----------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 33,522 $ 50,558 $ 55,898 $ 87,092 $ 148,603 Ratios (As a percentage of average daily net assets): Net expenses(3) 2.94% 3.02% 2.72% 2.64% 2.59% Net expenses after custodian fee reduction 2.94% 3.02% 2.72% 2.64% 2.59% Net investment loss (1.22)% (1.42)% (1.48)% (1.44)% (1.59)% Portfolio Turnover of the Portfolio 164% 93% 107% 160% 173% -----------------------------------------------------------------------------------------------------------------------
(1) Net investment loss and redemption fees per share were computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. (4) Amounts represent less than $0.0005. See notes to financial statements 11
CLASS C ----------------------------------------------------------- YEAR ENDED AUGUST 31, ----------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ----------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 12.300 $ 10.870 $ 13.400 $ 21.610 $ 17.280 ----------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.152) $ (0.154) $ (0.187) $ (0.238) $ (0.342) Net realized and unrealized gain (loss) 0.592 1.584 (2.343) (6.839) 6.898 ----------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.440 $ 1.430 $ (2.530) $ (7.077) $ 6.556 ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ -- $ (1.133) $ (2.226) ----------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ -- $ (1.133) $ (2.226) ----------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.000(4) $ 0.000(4) $ -- $ -- $ -- ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 12.740 $ 12.300 $ 10.870 $ 13.400 $ 21.610 ----------------------------------------------------------------------------------------------------------------------- Total Return(2) 3.58% 13.16% (18.88)% (34.07)% 42.42% ----------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 12,402 $ 14,817 $ 17,064 $ 27,527 $ 41,113 Ratios (As a percentage of average daily net assets): Net expenses(3) 2.94% 3.02% 2.72% 2.64% 2.60% Net expenses after custodian fee reduction 2.94% 3.02% 2.72% 2.64% 2.60% Net investment loss (1.14)% (1.42)% (1.47)% (1.44)% (1.57)% Portfolio Turnover of the Portfolio 164% 93% 107% 160% 173% -----------------------------------------------------------------------------------------------------------------------
(1) Net investment loss and redemption fees per share were computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. (4) Amounts represent less than $0.0005. See notes to financial statements 12
CLASS D ----------------------------------------------- YEAR ENDED AUGUST 31, 2004(1) 2003(1) 2002(1) 2001(1)(2) ----------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 7.630 $ 6.740 $ 8.320 $ 10.000 ----------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.086) $ (0.094) $ (0.112) $ (0.059) Net realized and unrealized gain (loss) 0.356 0.984 (1.468) (1.621) ----------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.270 $ 0.890 $ (1.580) $ (1.680) ----------------------------------------------------------------------------------------------------------- Redemption fees $ 0.000(6) $ 0.000(6) $ -- $ -- ----------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 7.900 $ 7.630 $ 6.740 $ 8.320 ----------------------------------------------------------------------------------------------------------- TOTAL RETURN(3) 3.54% 13.20% (18.99)% (16.80)% ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 1,243 $ 919 $ 764 $ 469 Ratios (As a percentage of average daily net assets): Net expenses(4) 2.94% 3.02% 2.72% 2.62%(5) Net expenses after custodian fee reduction 2.94% 3.02% 2.72% 2.62%(5) Net investment loss (1.04)% (1.40)% (1.44)% (1.37)%(5) Portfolio Turnover of the Portfolio 164% 93% 107% 160% -----------------------------------------------------------------------------------------------------------
(1) Net investment loss and redemption fees per share were computed using average shares outstanding. (2) For the period from commencement of operations, March 9, 2001, to August 31, 2001. (3) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (4) Includes the Fund's share of the Portfolio's allocated expenses. (5) Annualized. (6) Amounts represent less than $0.0005. See notes to financial statements 13 EATON VANCE GLOBAL GROWTH FUND as of August 31, 2004 NOTES TO FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES Eaton Vance Global Growth Fund (formerly known as Eaton Vance Information Age 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 four classes of shares. Class A shares are generally sold subject to a sales charge imposed at time of purchase. Class B, Class C and Class D shares are sold at net asset value and are subject to a contingent deferred sales charge (see Note 6). The Trustees have adopted a conversion feature pursuant to which Class B and Class D shares of the Fund automatically convert to Class A shares eight years after their purchase as described in the Fund's prospectus. 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 Global 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 (99.9% at August 31, 2004). 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 or loss 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 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 taxable income, including any net realized gain on investments. Accordingly, no provision for federal income or excise tax is necessary. At August 31, 2004, the Fund, for federal income tax purposes, had a capital loss carryover of $58,727,715 which will reduce the Fund's 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 carryover will expire August 31, 2011 ($16,365,439) and August 31, 2010 ($42,362,276). Additionally, at August 31, 2004, the Fund had net capital losses of $155,342 attributable to security transactions incurred after October 31, 2003. These capital losses are treated as arising on the first day of the Fund's taxable year ended August 31,2005. During the year ended August 31, 2004, capital loss carryovers of $7,609,330 were utilized to offset net realized gains. D EXPENSES -- The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds. E 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 credit balances used to reduce the Fund's custodian fees are reported as a reduction of total expenses in the Statement of Operations. There were no credit balances used to reduce the Fund's custodian fees for the year ended August 31, 2004. F REDEMPTION FEES -- Upon the redemption or exchange of shares (on or after February 1, 2003) held by Class A shareholders for less than three months, a fee of 1% of the current net asset value of the shares will be assessed and retained by the Fund for the benefit of the remaining shareholders. The redemption fee is accounted for as an addition to paid-in capital and amounted to $3,893 and $1,827 for the year ended August 31, 2004 and 2003, respectively. 14 G 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. H INDEMNIFICATIONS -- Under the Trust's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund and shareholders are indemnified against personal liability for obligations of the Trust. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. 2 DISTRIBUTIONS TO SHAREHOLDERS It is the present policy of the Fund to make at least one distribution annually (normally in December) of all or substantially all of the investment income allocated to the Fund by the Portfolio, less the Fund's direct and allocated expenses and at least one distribution annually of all or substantially all of the net realized capital gains (reduced by any available capital loss carryforwards from prior years) allocated by the Portfolio to the Fund, if any. Shareholders may reinvest all distributions in additional shares of the same class of the Fund at the net asset value as of the ex-dividend date. Distributions are paid in the form of additional shares of the same class or, at the election of the shareholder, in cash. The Fund distinguishes between distributions on a tax basis and a financial reporting basis. Accounting principles generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be 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. There were no distributions paid for the year ended August 31, 2004 or 2003. During the year ended August 31, 2004, accumulated paid-in capital was decreased by $1,064,876, accumulated net investment loss was decreased by $895,149 and accumulated net realized loss on investments was decreased by $169,727 due to differences between book and tax accounting for net operating losses and foreign currency gain/loss. This change had no effect on the net assets or the net asset value per share. At August 31, 2004, the components of distributable earnings (accumulated losses) on a tax basis were as follows: Undistributed ordinary income $ -0- Capital loss carryforwards (58,727,715) Post October loss (155,342)
The temporary differences between book and tax basis distributable earnings (accumulated losses) are primarily due to wash sales. 3 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, 2004, the fee was equivalent to 0.25% of the Fund's average net assets for such period and amounted to $248,838. Except as to Trustees of the Fund who are not members of EVM's organization, officers and Trustees receive remuneration for their services to the Fund out of such management fee. EVM serves as the sub-transfer agent of the Fund and receives from the transfer agent an aggregate fee based upon the actual expenses incurred by EVM in the performance of those services. During the year ended August 31, 2004, EVM earned $24,863 in sub-transfer agent fees. In addition, investment adviser and administrative fees are paid by the Portfolio to EVM and its affiliates. See Note 2 of the Portfolio's Notes to Financial Statements which are included elsewhere in this report. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's principal underwriter, received $6,132 from the Fund as its portion of the sales charge on sales of Class A shares for the year ended August 31, 2004. Certain officers and Trustees of the Fund and of the Portfolio are officers or directors of EVM or EVD. 4 SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Such shares may be issued in 15 a number of different series (such as the Fund) and classes. Transactions in Fund shares were as follows:
YEAR ENDED AUGUST 31, ------------------------------------- CLASS A 2004 2003 ---------------------------------------------------------------------------- Sales 343,696 3,652,000 Redemptions (821,079) (4,274,648) Exchange from Class B shares 872,164 -- ---------------------------------------------------------------------------- NET INCREASE (DECREASE) 394,781 (622,648) ----------------------------------------------------------------------------
YEAR ENDED AUGUST 31, ------------------------------------- CLASS B 2004 2003 ---------------------------------------------------------------------------- Sales 129,843 127,764 Redemptions (685,152) (1,125,480) Exchange to Class A shares (869,967) -- ---------------------------------------------------------------------------- NET DECREASE (1,425,276) (997,716) ----------------------------------------------------------------------------
YEAR ENDED AUGUST 31, ------------------------------------- Class C 2004 2003 ---------------------------------------------------------------------------- Sales 113,961 386,897 Redemptions (344,934) (752,920) ---------------------------------------------------------------------------- NET DECREASE (230,973) (366,023) ----------------------------------------------------------------------------
YEAR ENDED AUGUST 31, ------------------------------------- Class D 2004 2003 ---------------------------------------------------------------------------- Sales 63,191 47,152 Redemptions (26,365) (39,921) ---------------------------------------------------------------------------- NET INCREASE 36,826 7,231 ----------------------------------------------------------------------------
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), Class C shares (Class C Plan), and Class D shares (Class D Plan) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The Class A Plan provides for the payment of a monthly distribution fee to the Principal Underwriter, EVD, in an amount equal to the aggregate of (a) 0.50% of that portion of the Fund's average daily net assets attributable to Class A shares which have remained outstanding for less than one year and (b) 0.25% of that portion of the Fund's average daily net assets attributable to Class A shares which have remained outstanding for more than one year. The Class B, Class C and Class D Plans provide for the payment of a monthly distribution fee to EVD at an annual rate not to exceed 0.75% of the Fund's average daily net assets attributable to Class B, Class C, and Class D shares, respectively, 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%, 6.25%, and 5% of the aggregate amount received by the Fund for the Class B, Class C and Class D 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 therefore paid to EVD by each respective class. The Fund paid or accrued $100,057, $346,097, $108,281 and $9,072, for Class A, Class B, Class C and Class D shares, respectively, to or payable to EVD for the year ended August 31, 2004, representing 0.26%, 0.75%, 0.75% and 0.75% of the average daily net assets for Class A, Class B, Class C and Class D shares, respectively. At August 31, 2004, the amount of Uncovered Distribution Charges of EVD calculated under the Plans was approximately $2,094,000, $2,910,000 and $35,000 for Class B, Class C and Class D shares, respectively. The Plans authorize the Fund to make payments of service fees to EVD, investment dealers, and other persons in an amount equal to 0.25%, on an annual basis, of the Fund's average daily net assets attributable to Class A shares (except those converted from Class D shares) which have remained outstanding for more than one year and in an amount equal to 0.25%, on an annual basis, of the Fund's average daily net assets attributable to Class B, Class C and Class D shares for any fiscal year. Class D shares converted to Class A shares are subject to a service fee of 0.25% annually immediately upon conversion. Service fee payments are made for personal services and/or the maintenance of shareholder accounts. Service fees are separate and distinct from the sales commissions and distribution fees payable by the Fund to EVD, and, as such are not subject to automatic discontinuance when there are no outstanding Uncovered Distribution Charges of EVD. Service fees for the year ended August 31, 2004 amounted to $88,653, $115,366, $36,094 and $3,024 for Class A, Class B, Class C and Class D shares, respectively. 6 CONTINGENT DEFERRED SALES CHARGE A contingent deferred sales charge (CDSC) generally is imposed on redemptions of Class B shares and Class D 16 shares made within six years of purchase and on redemptions of Class C shares made within one year of purchase. Class A shares purchased at net asset value in amounts of $1 million or more (other than shares purchased in a single transaction of $5 million or more) are subject to a 1% CDSC if redeemed within one year of purchase. Investors who purchase Class A shares in a single fund purchased in a single transaction at net asset value in amounts of $5 million or more will not be subject to any CDSC for such investment or any subsequent investment in the same fund. 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. The Class B and Class D CDSC is imposed at declining rates that begin at 5% in the case of redemptions in the first and second year after purchase, declining one percentage point each subsequent year. Class C shares will be subject to a 1% CDSC if redeemed within one year of purchase. No CDSC is levied on shares which have been sold to EVM or its affiliates or to their respective employees or clients and may be waived under certain other limited conditions. CDSC charges are paid to EVD to reduce the amount of Uncovered Distribution Charges calculated under the Fund's Distribution Plan (see Note 5). CDSC charges received when no Uncovered Distribution Charges exist will be credited to the Fund. The Fund was informed that EVD received approximately $85,000, $400 and $7,000 of CDSC paid by shareholders for Class B shares, Class C shares and Class D shares, respectively, for the year ended August 31, 2004. 7 INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in the Portfolio aggregated $8,698,998 and $27,066,514, respectively, for the year ended August 31, 2004. 8 NAME CHANGE Effective January 1, 2004, Eaton Vance Information Age Fund's name was changed to Eaton Vance Global Growth Fund. 9 SUBSEQUENT EVENT Effective September 10, 2004, Class D shares of the Fund were closed and any Class D shares outstanding on that date were merged into Class A. 17 EATON VANCE GLOBAL GROWTH FUND as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE TRUSTEES AND SHAREHOLDERS OF EATON VANCE GLOBAL GROWTH FUND: In our opinion, the accompanying statement of assets and liabilities, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Eaton Vance Global Growth Fund (formerly Eaton Vance Information Age Fund) ("the Fund"), a series of Eaton Vance Growth Trust at August 31, 2004, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts October 26, 2004 18 EATON VANCE GLOBAL GROWTH FUND as of August 31, 2004 FEDERAL TAX INFORMATION (Unaudited) The Form 1099-DIV you receive in January 2005 will show the tax status of all distributions paid to your account in calendar 2004. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Fund. As required by the Internal Revenue Code regulations, shareholders must be notified within 60 days of the Fund's fiscal year end regarding the status of qualified dividend income for individuals, the dividends received deduction for corporations, and the foreign tax credit. FOREIGN TAX CREDIT. For the fiscal year ended August 31, 2004 the Fund paid foreign taxes of $166,042 and recognized foreign source income of $166,042. 19 GLOBAL GROWTH PORTFOLIO as of August 31, 2004 PORTFOLIO OF INVESTMENTS COMMON STOCKS -- 96.4%
SECURITY SHARES VALUE -------------------------------------------------------------------------------- ADVERTISING -- 3.8% Havas Advertising 300,000 $ 1,435,288 WPP Group PLC 205,850 1,848,287 -------------------------------------------------------------------------------- $ 3,283,575 -------------------------------------------------------------------------------- AEROSPACE AND DEFENSE -- 2.9% Precision Castparts Corp. 11,000 $ 605,990 Thales SA 57,000 1,930,168 -------------------------------------------------------------------------------- $ 2,536,158 -------------------------------------------------------------------------------- AUTOMOBILES -- 2.4% Toyota Motor Corp. 53,000 $ 2,092,217 -------------------------------------------------------------------------------- $ 2,092,217 -------------------------------------------------------------------------------- BEVERAGES -- 0.6% Cott Corp.(1) 18,000 $ 487,980 -------------------------------------------------------------------------------- $ 487,980 -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 1.0% Celgene Corp.(1) 15,000 $ 851,250 -------------------------------------------------------------------------------- $ 851,250 -------------------------------------------------------------------------------- BROADCASTING -- 3.2% British Sky Broadcasting Group PLC 133,240 $ 1,149,893 Television Broadcasts, Ltd. 396,000 1,646,127 -------------------------------------------------------------------------------- $ 2,796,020 -------------------------------------------------------------------------------- BUILDING MATERIALS -- 1.3% Eagle Materials, Inc. 7,000 $ 454,370 Sumitomo Osaka Cement Co., Ltd. 287,000 669,809 -------------------------------------------------------------------------------- $ 1,124,179 -------------------------------------------------------------------------------- BUSINESS SERVICES -- 9.6% CheckFree Corp.(1) 18,400 $ 501,400 Cognizant Technology Solutions Corp.(1) 22,000 603,240 Dun & Bradstreet Corp.(1) 17,600 970,464 MDC Partners, Inc., Class A(1) 33,000 396,363 PMI Group, Inc., (The) 26,000 1,079,780 Providian Financial Corp.(1) 33,000 476,520 Singapore Post Ltd. 3,540,000 1,624,352 Sirva, Inc.(1) 69,400 1,469,892 Sotheby's Holdings, Inc.(1) 72,000 1,151,280 -------------------------------------------------------------------------------- $ 8,273,291 -------------------------------------------------------------------------------- CHEMICALS -- 1.1% Kingboard Chemical Holdings Ltd. 492,000 $ 927,653 -------------------------------------------------------------------------------- $ 927,653 -------------------------------------------------------------------------------- COMMERCIAL BANKS -- 3.0% ABN AMRO Holdings NV 76,691 $ 1,633,141 Commerce Bancorp, Inc. 9,300 487,971 Mitsubishi Tokyo Financial Group, Inc., ADR 50,000 453,000 -------------------------------------------------------------------------------- $ 2,574,112 -------------------------------------------------------------------------------- COMMERCIAL SERVICES -- 1.4% Coinstar, Inc.(1) 38,000 $ 749,360 Intersections, Inc.(1) 33,100 419,708 -------------------------------------------------------------------------------- $ 1,169,068 -------------------------------------------------------------------------------- COMPUTERS AND BUSINESS EQUIPMENT -- 9.1% PalmOne, Inc.(1) 134,314 $ 4,385,352 Research in Motion Ltd.(1) 37,300 2,246,206 Sindo Ricoh Co. 25,400 1,214,736 -------------------------------------------------------------------------------- $ 7,846,294 -------------------------------------------------------------------------------- DATA PROCESSING & Outsourced Services -- 0.1% Intellisync Corp.(1) 57,400 $ 128,576 -------------------------------------------------------------------------------- $ 128,576 -------------------------------------------------------------------------------- DISTRIBUTION / WHOLESALE -- 0.3% Central European Distribution Corp.(1) 12,000 $ 293,880 -------------------------------------------------------------------------------- $ 293,880 -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 8.7% Citizens Communications Co. 83,000 $ 1,048,290 KT Corp. ADR 82,907 1,452,531 Leap Wireless International, Inc.(1) 17,000 470,050
See notes to financial statements 20
SECURITY SHARES VALUE -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED) NII Holdings, Inc., Class B(1) 51,000 $ 1,869,150 NTL, Inc.(1) 10,500 570,255 Swisscom AG(1) 6,400 2,116,961 -------------------------------------------------------------------------------- $ 7,527,237 -------------------------------------------------------------------------------- EDUCATION -- 0.9% EVCI Career Colleges Holding Corp.(1) 43,800 $ 317,112 Laureate Education, Inc.(1) 14,000 478,660 -------------------------------------------------------------------------------- $ 795,772 -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT -- 2.1% Fujikura Ltd. 391,000 $ 1,775,152 -------------------------------------------------------------------------------- $ 1,775,152 -------------------------------------------------------------------------------- ELECTRONIC COMPONENTS -- 0.1% Min Aik Technology Co., Ltd. 38,700 $ 67,438 -------------------------------------------------------------------------------- $ 67,438 -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 0.3% FLIR Systems, Inc.(1) 5,000 $ 291,850 -------------------------------------------------------------------------------- $ 291,850 -------------------------------------------------------------------------------- FINANCIAL SERVICES -- 0.1% Student Loan Corp., (The) 400 $ 57,500 -------------------------------------------------------------------------------- $ 57,500 -------------------------------------------------------------------------------- GAMING EQUIPMENT -- 1.4% WMS Industries, Inc.(1) 60,200 $ 1,216,642 -------------------------------------------------------------------------------- $ 1,216,642 -------------------------------------------------------------------------------- GENERIC DRUGS -- 1.0% Taro Pharmaceutical Industries Ltd.(1) 43,000 $ 891,390 -------------------------------------------------------------------------------- $ 891,390 -------------------------------------------------------------------------------- HARDWARE - NETWORKING -- 0.5% Blue Coat Systems, Inc.(1) 12,000 $ 175,440 RADWARE Ltd.(1) 12,500 234,375 -------------------------------------------------------------------------------- $ 409,815 -------------------------------------------------------------------------------- HEALTH CARE - PROVIDERS & SERVICES -- 1.3% PacifiCare Health Systems, Inc.(1) 34,000 $ 1,108,740 -------------------------------------------------------------------------------- $ 1,108,740 -------------------------------------------------------------------------------- INSURANCE -- 3.4% Prudential PLC 250,600 $ 1,990,574 Radian Group, Inc. 22,000 974,600 -------------------------------------------------------------------------------- $ 2,965,174 -------------------------------------------------------------------------------- INVESTMENT COMPANIES -- 0.5% Japan Asia Investment Co., Ltd. 107,100 $ 388,669 -------------------------------------------------------------------------------- $ 388,669 -------------------------------------------------------------------------------- IT CONSULTING & SERVICES -- 2.8% Affiliated Computer Services, Inc.(1) 24,000 $ 1,303,920 Answerthink, Inc.(1) 50,000 282,500 Kanbay International, Inc.(1) 42,300 842,193 -------------------------------------------------------------------------------- $ 2,428,613 -------------------------------------------------------------------------------- MEDICAL PRODUCTS -- 0.8% DENTSPLY International, Inc. 11,000 $ 560,450 I-Flow Corp.(1) 11,227 170,426 -------------------------------------------------------------------------------- $ 730,876 -------------------------------------------------------------------------------- MINING -- 0.5% Bema Gold Corp.(1) 180,000 $ 469,800 -------------------------------------------------------------------------------- $ 469,800 -------------------------------------------------------------------------------- OIL AND GAS - EQUIPMENT AND SERVICES -- 0.6% Baker Hughes, Inc. 13,000 $ 511,290 -------------------------------------------------------------------------------- $ 511,290 -------------------------------------------------------------------------------- OIL COMPANIES - EXPLORATION & PRODUCTION -- 4.2% BP PLC 189,000 $ 1,679,388 Harvest Natural Resources, Inc.(1) 70,000 929,600 Plains Exploration & Production Co.(1) 30,000 582,300 Spinnaker Exploration Co.(1) 14,000 477,960 -------------------------------------------------------------------------------- $ 3,669,248 --------------------------------------------------------------------------------
See notes to financial statements 21
SECURITY SHARES VALUE -------------------------------------------------------------------------------- PERSONAL PRODUCTS -- 2.3% Estee Lauder Cos., Inc. (The), Class A 6,500 $ 285,675 Gillette Co. (The) 40,000 1,700,000 -------------------------------------------------------------------------------- $ 1,985,675 -------------------------------------------------------------------------------- PHARMACEUTICALS -- 0.7% Isolagen, Inc.(1) 38,400 $ 322,560 Oscient Pharmaceuticals Corp.(1) 50,000 210,500 Pharmion Corp.(1) 800 39,336 -------------------------------------------------------------------------------- $ 572,396 -------------------------------------------------------------------------------- PRINTING -- 2.2% St. Ives PLC 285,430 $ 1,904,028 -------------------------------------------------------------------------------- $ 1,904,028 -------------------------------------------------------------------------------- PUBLISHING -- 6.7% Promotora de Informaciones S.A. (Prisa) 145,740 $ 2,315,889 Trinity Mirror PLC 215,650 2,505,109 Wolters Kluwer N.V. - CVA 60,650 1,001,106 -------------------------------------------------------------------------------- $ 5,822,104 -------------------------------------------------------------------------------- RETAIL -- 1.6% Metro Cash & Carry Ltd.(1) 3,566,762 $ 1,393,214 -------------------------------------------------------------------------------- $ 1,393,214 -------------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT AND PRODUCTS -- 1.1% NVIDIA Corp.(1) 74,000 $ 922,040 -------------------------------------------------------------------------------- $ 922,040 -------------------------------------------------------------------------------- SOFTWARE -- 0.8% Microsoft Corp. 16,500 $ 450,450 Salesforce.com, Inc.(1) 800 10,400 VERITAS Software Corp.(1) 16,000 267,520 -------------------------------------------------------------------------------- $ 728,370 -------------------------------------------------------------------------------- SPECIALTY RETAIL -- 6.1% CVS Corp. 26,000 $ 1,040,000 Pep Boys - Manny, Moe & Jack (The) 26,500 421,350 Select Comfort Corp.(1) 30,000 476,400 Tesco PLC 433,000 2,077,837 Tweeter Home Entertainment Group, Inc.(1) 86,500 493,915 Walgreen Co. 22,000 801,900 -------------------------------------------------------------------------------- $ 5,311,402 -------------------------------------------------------------------------------- TELECOMMUNICATION EQUIPMENT -- 0.6% ECI Telecom Ltd.(1) 81,000 $ 558,900 -------------------------------------------------------------------------------- $ 558,900 -------------------------------------------------------------------------------- TRANSPORTATION -- 4.6% BAA PLC 212,000 $ 2,120,859 Nippon Konpo Unyu Soko Co., Ltd. 177,000 1,862,146 -------------------------------------------------------------------------------- $ 3,983,005 -------------------------------------------------------------------------------- UTILITIES -- 0.7% NRG Energy, Inc.(1) 22,000 $ 601,700 -------------------------------------------------------------------------------- $ 601,700 -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST $80,212,069) $ 83,472,293 --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 1.9%
PRINCIPAL AMOUNT SECURITY (000'S OMITTED) VALUE -------------------------------------------------------------------------------- Investors Bank and Trust Time Deposit, 1.58%, 9/1/04 $ 1,694 $ 1,694,000 -------------------------------------------------------------------------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST, $1,694,000) $ 1,694,000 -------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 98.3% (IDENTIFIED COST $81,906,069) $ 85,166,293 -------------------------------------------------------------------------------- OTHER ASSETS, LESS LIABILITIES -- 1.7% $ 1,450,797 -------------------------------------------------------------------------------- NET ASSETS -- 100.0% $ 86,617,090 --------------------------------------------------------------------------------
ADR - American Depositary Receipt (1) Non-income producing security. See notes to financial statements 22 COUNTRY CONCENTRATION OF PORTFOLIO
PERCENTAGE COUNTRY OF NET ASSETS VALUE ------------------------------------------------------------- United States 44.6% $ 38,605,707 United Kingdom 17.6 15,275,975 Japan 8.4 7,240,993 Canada 4.1 3,600,349 France 3.9 3,365,456 Republic of Korea 3.1 2,667,267 Netherlands 3.0 2,634,247 Hong Kong 3.0 2,573,780 Spain 2.7 2,315,889 Switzerland 2.4 2,116,961 Israel 1.9 1,684,665 Singapore 1.9 1,624,352 South Africa 1.6 1,393,214 Taiwan 0.1 67,438
See notes to financial statements 23 GLOBAL GROWTH PORTFOLIO as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investments, at value (identified cost, $81,906,069) $ 85,166,293 Cash 1,202 Foreign currency, at value (identified cost, $753,647) 743,977 Receivable for investments sold 481,041 Interest and dividends receivable 250,660 Tax reclaim receivable 32,776 ---------------------------------------------------------------------------------------- TOTAL ASSETS $ 86,675,949 ---------------------------------------------------------------------------------------- LIABILITIES Payable for investments purchased $ 24,872 Accrued expenses 33,987 ---------------------------------------------------------------------------------------- TOTAL LIABILITIES $ 58,859 ---------------------------------------------------------------------------------------- NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $ 86,617,090 ---------------------------------------------------------------------------------------- SOURCES OF NET ASSETS Net proceeds from capital contributions and withdrawals $ 83,365,995 Net unrealized appreciation (computed on the basis of identified cost) 3,251,095 ---------------------------------------------------------------------------------------- TOTAL $ 86,617,090 ----------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2004 INVESTMENT INCOME Dividends (net of foreign taxes, $166,042) $ 1,706,813 Interest and other 93,503 ---------------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME $ 1,800,316 ---------------------------------------------------------------------------------------- EXPENSES Investment adviser fee $ 748,081 Administration fee 249,351 Trustees' fees and expenses 14,356 Custodian fee 195,838 Legal and accounting services 37,076 Miscellaneous 4,216 ---------------------------------------------------------------------------------------- TOTAL EXPENSES $ 1,248,918 ---------------------------------------------------------------------------------------- Deduct -- Reduction of custodian fee $ 27 ---------------------------------------------------------------------------------------- TOTAL EXPENSE REDUCTIONS $ 27 ---------------------------------------------------------------------------------------- NET EXPENSES $ 1,248,891 ---------------------------------------------------------------------------------------- NET INVESTMENT INCOME $ 551,425 ---------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) -- Investment transactions (identified cost basis) $ 7,104,476 Foreign currency and forward foreign currency exchange contract transactions (169,728) ---------------------------------------------------------------------------------------- NET REALIZED GAIN $ 6,934,748 ---------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) -- Investments (net of foreign taxes of ($20,307)) (identified cost basis) $ (1,566,676) Foreign currency and forward foreign currency exchange contracts (7,557) ---------------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ (1,574,233) ---------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN $ 5,360,515 ---------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 5,911,940 ----------------------------------------------------------------------------------------
See notes to financial statements 24 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 -------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment income $ 551,425 $ 340,425 Net realized gain (loss) from investments and foreign currency transactions 6,934,748 (1,215,767) Net change in unrealized appreciation (depreciation) from investments and foreign currency (1,574,233) 13,858,554 -------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 5,911,940 $ 12,983,212 -------------------------------------------------------------------------------------------- Capital transactions -- Contributions $ 8,698,998 $ 45,660,906 Withdrawals (27,066,514) (69,128,396) -------------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (18,367,516) $ (23,467,490) -------------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS $ (12,455,576) $ (10,484,278) -------------------------------------------------------------------------------------------- NET ASSETS At beginning of year $ 99,072,666 $ 109,556,944 -------------------------------------------------------------------------------------------- AT END OF YEAR $ 86,617,090 $ 99,072,666 --------------------------------------------------------------------------------------------
See notes to financial statements 25 SUPPLEMENTARY DATA
YEAR ENDED AUGUST 31, ---------------------------------------------------------------------- 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Ratios (As a percentage of average daily net assets): Expenses 1.25% 1.24% 1.15% 1.11% 1.13% Expenses after custodian fee reduction 1.25% 1.24% 1.15% 1.11% 1.13% Net investment income (loss) 0.55% 0.35% 0.08% 0.08% (0.13)% Portfolio Turnover 164% 93% 107% 160% 173% ------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN(1) 5.42% 15.23% (17.67)% -- -- ------------------------------------------------------------------------------------------------------------------------------ NET ASSETS, END OF YEAR (000'S OMITTED) $ 86,617 $ 99,073 $ 109,557 $ 204,969 $ 334,611 ------------------------------------------------------------------------------------------------------------------------------
(1) Total return is required to be disclosed for fiscal years beginning after December 15, 2000. See notes to financial statements 26 GLOBAL GROWTH PORTFOLIO as of August 31, 2004 NOTES TO FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES Global Growth Portfolio (formerly known as Information Age Portfolio) (the Portfolio) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company, which was organized as a trust under the laws of the State of New York on June 1, 1995. The Portfolio seeks to provide long-term capital growth by investing in a global and diversified portfolio of securities expected to grow in value. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At August 31, 2004, the Eaton Vance Global Growth Fund held an approximate 99.9% interest 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 -- Securities listed on a U.S. securities exchange generally are valued at the last sale price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on NASDAQ National Market System generally are valued at the official NASDAQ closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by an independent pricing service. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on the principal exchange or board of trade on which the options are traded or, in the absence of sales on such date, at the mean between the latest bid and asked prices therefore. Futures positions on securities and currencies generally are valued at closing settlement prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. If short-term debt securities were acquired with a remaining maturity of more than 60 days, their amortized cost value will be based on their value on the sixty-first day prior to maturity. 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. The daily valuation of foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. The Portfolio may rely on an independent fair valuation service in adjusting the valuations of foreign securities. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by an independent quotation service. Investments held by the Portfolio 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 of the Portfolio considering relevant factors, data and information including the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded. B INCOME TAXES -- The Portfolio has elected to be treated as a partnership for federal tax purposes. No provision is made by the Portfolio for federal or state taxes on any taxable income of the Portfolio because each investor in the Portfolio is ultimately responsible for the payment of any taxes. Since 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 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. D OPTIONS ON FINANCIAL FUTURES -- Upon the purchase of a put option on foreign currency by the Portfolio, the premium paid is recorded as an investment, the value of which is marked-to-market daily. When the 27 purchased option expires, the Portfolio will realize a loss in the amount of the cost of the option. When the Portfolio enters into a closing sales transaction, the Portfolio will realize a gain or loss depending upon whether the sales proceeds from the closing sales transaction are greater or less than the cost of the option. When the Portfolio exercises a put option, settlement is made in cash. The risk associated with purchasing options is limited to the premium originally paid. E 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 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. F 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. G 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 balance the Portfolio maintains with IBT. All credit balances used to reduce the Portfolio's custodian fees are reported as a reduction of total expenses on the Statement of Operations. H 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. I INDEMNIFICATIONS -- Under the Portfolio's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Interestholders in the Portfolio are jointly and severally liable for the liabilities and obligations of the Portfolio in the event that the Portfolio fails to satisfy such liabilities and obligations; provided, however, that, to the extent assets are available in the Portfolio, the Portfolio may, under certain circumstances, indemnify interestholders from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in the Portfolio. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred. J 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 Boston Management and Research (BMR), a wholly-owned subsidiary of Eaton Vance Management (EVM), and Lloyd George Investment Management (Bermuda) Limited, an affiliate of EVM (the Advisers), as compensation for management and investment advisory services rendered to the Portfolio. Under the advisory agreement, the Advisers receive a monthly fee, divided equally between them, 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, 2004, the adviser fee was 0.75% of average net assets for such period and amounted to $748,081. In addition, an administrative fee is earned by 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% (equal to 0.25% annually) of the average 28 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, 2004, the administration fee was 0.25% of average net assets for such period and amounted to $249,351. Except as to the Trustees of the Portfolio who are not members of the Advisers or EVM's organization, officers and Trustees receive remuneration for their services to the Portfolio out of such investment adviser and administrative fees. Trustees of the Portfolio that are not affiliated with the Advisers may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the year ended August 31, 2004, no significant amounts have been deferred. 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 $153,922,338 and $169,883,420, respectively, for the year ended August 31, 2004. 4 FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION) The cost and unrealized appreciation (depreciation) in value of the investments owned at August 31, 2004, as computed on a federal income tax basis, are as follows: AGGREGATE COST $ 82,473,891 ----------------------------------------------------------------------------- Gross unrealized appreciation $ 7,729,934 Gross unrealized depreciation (5,037,532) ----------------------------------------------------------------------------- NET UNREALIZED APPRECIATION $ 2,692,402 -----------------------------------------------------------------------------
The net unrealized depreciation on foreign currency was $9,129. 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. 6 FINANCIAL INSTRUMENTS The Portfolio regularly trades 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 may include written options, forward foreign currency exchange contracts and financial futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Portfolio has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. The Portfolio did not have any open obligations under these financial instruments at August 31, 2004. 7 LINE OF CREDIT The Portfolio participates with other portfolios and funds managed by BMR 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 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 facility is allocated among the participating funds and portfolios at the end of each quarter. The Portfolio did not have any significant borrowings or allocated fees during the year ended August 31, 2004. 8 NAME CHANGE Effective January 1, 2004, the Information Age Portfolio's name was changed to Global Growth Portfolio. 29 GLOBAL GROWTH PORTFOLIO as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE TRUSTEES AND INVESTORS OF GLOBAL GROWTH PORTFOLIO: In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the supplementary data present fairly, in all material respects, the financial position of Global Growth Portfolio (formerly Information Age Portfolio) (the "Portfolio") at August 31, 2004, and the results of its operations, the changes in its net assets and the supplementary data for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and supplementary data (hereafter referred to as "financial statements") are the responsibility of the Portfolio's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts October 26, 2004 30 EATON VANCE GLOBAL GROWTH FUND MANAGEMENT AND ORGANIZATION FUND MANAGEMENT. The Trustees of Eaton Vance Growth Trust (the Trust) and Global 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 "noninterested Trustees" consist of those Trustees who are not "interested persons" of the Trust and the Portfolio, as that term is defined under the 1940 Act. The business address of each Trustee and officer, with the exception of Messrs. Chen and Lloyd George, is The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. As used below, "EVC" refers to Eaton Vance Corp., "EV" refers to Eaton Vance, Inc., "EVM" refers to Eaton Vance Management, "BMR" refers to Boston Management and Research, "EVD" refers to Eaton Vance Distributors, Inc., "Atlanta Capital" refers to Atlanta Capital Management Company, LLC, "LGM" refers to Lloyd George Management (B.V.I.) Limited and "Lloyd George" refers to Lloyd George Management (Bermuda) Limited. EVC and EV are the corporate parent and trustee, respectively, of EVM and BMR. EVD is the Fund's principal underwriter, the Portfolio's placement agent and a wholly-owned subsidiary of EVM. Lloyd George is a wholly-owned subsidiary of LGM.
POSITION(S) TERM OF NUMBER OF PORTFOLIOS WITH THE OFFICE AND IN FUND COMPLEX NAME AND TRUST AND THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DATE OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD --------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE(S) James B. Hawkes Trustee Trustee of Chairman, President and 195 Director of EVC 11/9/41 the Trust Chief Executive Officer since 1989; of BMR, EVC, EVM of the and EV; Director of EV; Portfolio Vice President and since 1995 Director of EVD. Trustee and/or officer of 195 registered investment companies in the Eaton Vance Fund Complex. Mr. Hawkes is an interested person because of his positions with BMR, EVM, EVC and EV which are affiliates of the Trust and the Portfolio. Hon. Robert Lloyd Trustee and Trustee Chief Executive Officer 5 Chairman of LGM George(2) Vice of since 1996; of LGM and Lloyd George. 8/13/52 President the Vice Mr. LloydGeorge is an Portfolio President interested person because since 1995 of his positions with LGM and Lloyd George, which are affiliates of the Portfolio. NONINTERESTED TRUSTEE(S) Edward K.Y. Chen(2) Trustee of Since 1996 President of Lingnan 5 Director of First Pacific 1/14/45 the Portfolio University in Hong Kong. Company, Asia Satellite Telecommunications Holdings Ltd. and Wharf Holdings Limited (property management and communications) Samuel L. Hayes, III Trustee Trustee of Jacob H. Schiff Professor 196 Director of Tiffany & Co. 2/23/35 the Trust of Investment Banking (specialty retailer) and since 1989; Emeritus, Harvard Telect, Inc. of the University Graduate (telecommunication services Portfolio School of Business company) since 1995 Administration. William H. Park Trustee Since 2003 President and Chief 194 None 9/19/47 Executive Officer, Prizm Capital Management, LLC (investment management firm) (since 2002). Executive Vice President and Chief Financial Officer, United Asset Management Corporation (a holding company owning institutional investment management firms) (1982-2001). Ronald A. Pearlman Trustee Since 2003 Professor of Law, 194 None 7/10/40 Georgetown University Law Center (since 1999). Tax Partner, Covington & Burling, Washington, DC (1991-2000).
31
POSITION(S) TERM OF NUMBER OF PORTFOLIOS WITH THE OFFICE AND IN FUND COMPLEX NAME AND TRUST AND THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DATE OF BIRTH PORTFOLIO SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD --------------------------------------------------------------------------------------------------------------------------------- NONINTERESTED TRUSTEE(S) (CONTINUED) Norton H. Reamer Trustee Trustee of President, Chief 195 None 9/21/35 the Trust Executive Officer and a since 1989; Director of Asset of the Management Finance Corp. Portfolio (a specialty finance since 1995 company serving the investment management industry) (since October 2003). President, Unicorn Corporation (an investment and financial advisory services company) (since September 2000). Formerly, Chairman, Hellman, Jordan Management Co., Inc. (an investment management company) (2000-2003). Formerly, Advisory Director of Berkshire Capital Corporation (investment banking firm) (2002-2003). 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) (1980-2000). Lynn A. Stout Trustee Since 1998 Professor of Law, 195 None 9/14/57 University of California at Los Angeles School of Law (since July2001). Formerly, Professor of Law, Georgetown University Law Center.
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
POSITION(S) TERM OF WITH THE OFFICE AND NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) DATE OF BIRTH THE PORTFOLIO SERVICE DURING PAST FIVE YEARS --------------------------------------------------------------------------------------------------------------------------------- Thomas E. Faust Jr. President of the Since 2002(3) Executive Vice President of EVM, BMR, EVC and EV; Chief Investment 5/31/58 Trust Officer of EVM and BMR and Director of EVC. Chief Executive Officer of Belair Capital Fund LLC, Belcrest Capital Fund LLC, Belmar Capital Fund LLC, Belport Capital Fund LLC and Belrose Capital Fund LLC (private investment companies sponsored by EVM). Officer of 57 registered investment companies managed by EVM or BMR. Gregory L. Coleman Vice President of Since 2001 Partner of Atlanta Capital. Officer of 10 registered investment 10/28/49 theTrust companies managed by EVM or BMR. Arieh Coll Vice President of Since 2003 Vice President of EVM and BMR. Officer of 7 registered investment 11/9/63 the Portfolio companies managed by EVM and BMR. Duncan W. Richardson President of Since 2002 Senior Vice President and Chief Equity Investment Officer of EVM 10/26/57 the Portfolio and BMR. Officer of 43 registered investment companies managed by EVM or BMR. James A. Womack Vice President of Since 2001 Vice President of Atlanta Capital. Officer of 10 registered 11/20/68 the Trust investment companies managed by EVM or BMR. Alan R. Dynner Secretary Since 1997 Vice President, Secretary and Chief Legal Officer of BMR, EVM, EVD, 10/10/40 EV and EVC. Officer of 195 registered investment companies managed by EVM or BMR. William J. Austin, Jr. Treasurer of Since 2002(3) Vice President of EVM and BMR. Officer of 56 registered investment 12/27/51 the Portfolio companies managed by EVM or BMR.
32
POSITION(S) TERM OF WITH THE OFFICE AND NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) DATE OF BIRTH THE PORTFOLIO SERVICE DURING PAST FIVE YEARS --------------------------------------------------------------------------------------------------------------------------------- James L. OConnor Treasurer of the Since 1989 Vice President of BMR, EVM and EVD. Officer of 116 registered 4/1/45 Trust investment companies managed by EVM or BMR.
(1) Includes both master and feeder funds in a master-feeder structure. (2) The business address for Mr. Lloyd George is 3803 One Exchange Square, Central, Hong Kong and for Mr. Chen is President's Office, Lingnan College, Tuen Mun, Hong Kong. (3) Prior to 2002, Mr. Faust served as Vice President of the Trust since 1999 and Mr. Austin served as Assistant Treasurer of the Portfolio since 2001. 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. 33 SPONSOR AND MANAGER OF EATON VANCE GLOBAL GROWTH FUND AND ADMINISTRATOR OF GLOBAL GROWTH PORTFOLIO EATON VANCE MANAGEMENT The Eaton Vance Building 255 State Street Boston, MA 02109 CO-ADVISERS OF GLOBAL GROWTH PORTFOLIO BOSTON MANAGEMENT AND RESEARCH The Eaton Vance Building 255 State Street Boston, MA 02109 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 REGISTERED PUBLIC ACCOUNTING FIRM PRICEWATERHOUSECOOPERS LLP 125 High Street Boston, MA 02110 EATON VANCE GLOBAL GROWTH FUND THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 This report must be preceded or accompanied by a current prospectus. Before investing, investors should consider carefully the Fund's investment objective(s), risks, and charges and expenses. The Fund's current prospectus contains this and other information about the Fund and is available through your financial advisor. Please read the prospectus carefully before you invest or send money. For further information please call 800-225-6265. [EV LOGO] [GRAPHIC IMAGE] ANNUAL REPORT AUGUST 31, 2004 [GRAPHIC IMAGE] EATON VANCE GREATER CHINA GROWTH FUND [GRAPHIC IMAGE] 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. IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS The Securities and Exchange Commission permits 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. The Fund will file a schedule of its portfolio holdings on Form N-Q with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year. The Fund's Form N-Q will be available on the Eaton Vance website www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC's public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room). From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios vote proxies according to a set of policies and procedures approved by the Funds' and Portfolios' Boards. You may obtain a description of these policies and procedures without charge, upon request, by calling 1-800-262-1122. This description is also available on the Securities and Exchange Commission's website at http://www.sec.gov. EATON VANCE GREATER CHINA GROWTH FUND as of August 31, 2004 LETTER TO SHAREHOLDERS [PHOTO OF THOMAS E. FAUST] Thomas E. Faust President Eaton Vance Greater China Growth Fund Class A shares had a total return of 18.51% for the year ended August 31, 2004. That return was the result of an increase in net asset value per share (NAV) from $10.21 on August 31, 2003 to $12.07 on August 31, 2004 and the reinvestment of $0.028 in dividends.(1) Class B shares had a total return of 18.03% for the same period, the result of an increase in NAV from $8.93 on August 31, 2003 to $10.54 on August 31, 2004.1 Class C shares had a total return of 17.82% for the same period, the result of an increase in NAV from $6.06 on August 31, 2003 to $7.14 on August 31, 2004.(1) The Morgan Stanley Capital International Golden Dragon Index - a broad-based, unmanaged index of common stocks traded in China, Hong Kong and Taiwan - had a return of 13.42% for the year ended August 31, 2004.(2) GREATER CHINA MARKETS CONTINUED TO POST IMPRESSIVE RESULTS IN 2004... The China region markets turned in strong performances again in 2004, although the advances were less robust than those registered in 2003. The area continued to generate GDP growth rates that were among the world's fastest, while many companies enjoyed enviable earnings growth. However, fast growth and the sharp rise in energy prices has become an increasing worry to investors concerned about the possibility of inflation. Mainland China's economy was firmly on track and remained an engine for the rest of the region. China's GDP rate slowed in the second quarter of 2004, but largely as a result of government efforts to make growth more manageable, a strategy that appears to have been successful. While Taiwan's economy achieved its fastest growth rate in four years, investors kept a wary eye on U.S. demand, a key factor in Taiwan's export-based economy. Meanwhile, Hong Kong's recovery was boosted by a rebound in consumer spending and a surge in investment. AMID SURGING GROWTH, CHINA CONTINUES TO ADOPT ECONOMIC REFORMS... Countries in the Greater China region have continued to embrace economic reforms and modernization programs. We believe that these trends may foster further growth and development and present additional interesting investment opportunities. In the following pages, portfolio manager Pamela Chan discusses the past fiscal year and developments in the Fund. Sincerely, /s/ Thomas E. Faust Thomas E. Faust President October 6, 2004 FUND INFORMATION as of August 31, 2004
PERFORMANCE(3) CLASS A CLASS B CLASS C ---------------------------------------------------------------------------------------------------------------- Average Annual Total Returns (at net asset value) One Year 18.51% 18.03% 17.82% Five Years 1.20 0.54 0.45 Ten Years -1.53 -2.09 -2.30 Life of Fund+ 2.57 0.58 -3.08 SEC Average Annual Total Returns (including sales charge or applicable CDSC) One Year 11.72% 13.03% 16.82% Five Years 0.00 0.15 0.45 Ten Years -2.11 -2.09 -2.30 Life of Fund+ 2.06 0.58 -3.08
+ Inception Dates - Class A: 10/28/92; Class B: 6/7/93; Class C: 12/28/93 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. (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. IF SALES CHARGES WERE INCLUDED, PERFORMANCE WOULD HAVE BEEN LOWER. (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 OR EXCHANGED WITHIN 3 MONTHS OF SETTLEMENT OF PURCHASE 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. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO www.eatonvance.com. 2 EATON VANCE GREATER CHINA GROWTH FUND as of August 31, 2004 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 AND INVESTMENT CLIMATE IN THE CHINA REGION DURING THE PAST FISCAL YEAR? A: China's economy has continued to perform strongly across the board. Following GDP growth of 9.1% year-over-year in 2003, GDP rose 11.1% in the first quarter of 2004, while gross investment rose 23%. Exports rose 34.6% year-over-year in 2003, 34.1% in the first quarter of 2004 and 35.7% year-over-year in the first half of 2004. With this dramatic growth as a backdrop, the Chinese government has been taking steps to slow growth in certain areas in order to prevent the development of a bubble. This policy started last year, when the bank deposit reserve requirement was raised to slow credit growth. In the first half of this year, restrictions on new projects were introduced in certain sectors, notably in steel, cement and property. The Chinese government has also remained committed to reforms designed to overhaul the institutional framework of the economy, in particular the banking system. At the end of 2003, $45 billion was injected into the Bank of China and China Construction Bank on the condition that they improve their capital adequacy. In January, a number of taxes on farmers were lifted to improve rural living conditions, something the leadership has identified as a priority. Q: WHAT HAVE BEEN THE CATALYSTS BEHIND CHINA'S GROWTH THIS YEAR? A: The major catalysts of China's economic growth have not changed significantly from last year: fixed asset investment (FAI) continued to drive GDP growth. Private consumption has also contributed to China's expanding GDP in 2004, although to a smaller extent than FAI growth. Q: HONG KONG IS THE PORTFOLIO'S LARGEST COUNTRY WEIGHTING. HOW HAS THE ECONOMY FARED IN THE FORMER COLONY? A: In Hong Kong, GDP rose 12.1% in the second quarter of 2004, ahead of market expectations, even when compared to last year's severe acute resiratory syndrome (SARS)-related slowdown. Private consumption rose 10.9% during the same period, the highest rate in almost 13 years. Investment rose 13.2%, the highest rate in three years, while exports rose 18%. FIVE LARGEST INDUSTRY WEIGHTINGS(1) By total net assets [CHART] DIVERSIFIED OPERATIONS 13.9% ELECTRIC - INTEGRATED 12.1% BANKS 11.3% TELECOMMUNICATION SERVICES 8.0% DISTRIBUTION - WHOLESALE 5.0%
REGIONAL DISTRIBUTION(1) As a percentage of common stock investments [CHART] Japan 0.1% Hong Kong 60.8% Taiwan 27.6% China 11.5%
TEN LARGEST HOLDINGS(1) CLP Holdings Ltd. 5.8% Jardine Matheson Holdings, Ltd. 4.9 Chunghwa Telecom Co., Ltd. 4.7 Hong Kong Electric Holdings, Ltd. 4.4 Esprit Holdings, Ltd. 3.7 Shun Tak Holdings, Ltd. 3.2 Hong Kong and China Gas, Ltd. 3.1 Swire Pacific, Ltd. - Class A 2.8 Chinatrust Financial Holding Co. Ltd. 2.7 Hang Seng Bank Ltd. 2.7
(1) Because the Fund is actively managed, Industry Weightings, Regional Distribution and Ten Largest Holdings are subject to change. All data as of 8/31/04. 3 The signing of the Closer Economic Partnership Arrangement between China and Hong Kong has continued to generate benefits. To facilitate trade and tourism, Beijing announced in January that Hong Kong banks could perform a wider variety of Renminbi-denominated services, such as credit card remittances. Tourism has received a major boost as individual tourists from certain mainland China provinces and cities may now travel to Hong Kong independently, whereas they were previously obliged to travel in groups. This trend has contributed to the strengthening of retail sales, up 10.8% in July 2004. Almost 2 million tourists visited Hong Kong in July, an increase of 54% from the previous year. Importantly, it is not only mainland Chinese tourism that is increasing; arrivals from the U.S. rose 87% in July 2004. July of 2004 saw a definite turnaround in the Hong Kong economy, with the first signs of positive inflation emerging after over five years of deflation: July's Consumer Price Index rose 0.9%. Unemployment in the quarter ending July 2004 remained at a two-year low of 6.9%. Q: AND WHAT ABOUT TAIWAN, ANOTHER LARGE PORTFOLIO WEIGHTING? A: Taiwan registered impressive growth. In the second quarter of 2004, Taiwan's GDP grew 7.7%, slightly lower than in the first quarter. Unemployment fell to a three year low of 4.5% in July, and exports rose 20% in August. Taiwan's politics in 2004 were notable for the disruptions to the Presidential election. Relations with Beijing have soured as a result of President Chen's encouragement of discussions about independence. At the same time, however, the value of Taiwan's exports to, and investments in, mainland China mean that the Taiwanese business community is likely to have a restraining influence on any tensions. The Portfolio has been underweighted in Taiwan, as we have been cautious on the technology sector in the face of uncertainties over U.S. demand. Within the Portfolio's Taiwan investments, we have focused on the pick-up in domestic demand, with an emphasis on banks and telecom services. Q: THE FUND REGISTERED A STRONGLY POSITIVE PERFORMANCE IN THE YEAR ENDED AUGUST 31, 2004. WHAT SECTORS WERE PRIMARILY RESPONSIBLE FOR THAT PERFORMANCE? A: Performance was primarily supported by commodity stocks driven by China's demand for raw materials. Certain telecom stocks, chosen for their defensive qualities in a generally uncertain market environment, also fared well. Finally, some of the Portfolio's energy stocks performed strongly, benefiting from the high oil price and China's need for energy. Q: DID THE PORTFOLIO HAVE ANY NOTEWORTHY LAGGARD PERFORMERS? A: There were relatively few companies that could be described as poor performers. Several of the Portfolio's Hong Kong-based consumer stocks -primarily consumer staples - were somewhat disappointing. However, over the longer term, we remain positive on the consumer-related area as a whole. Q: AS OF AUGUST 31, 2004, WHERE HAVE YOU BEEN FOCUSING THE PORTFOLIO'S INVESTMENTS? A: From a country standpoint, as of August 31, 2004, 60.8% of the Portfolio's investments were in Hong Kong; another 27.6% of the Portfolio was invested in Taiwan, with 11.5% in mainland China. From a sector standpoint, the Portfolio's largest weighting was diversified operations, at 13.9%, followed by integrated electric companies, at 12.1%, and banks, at 11.3%. 4 We continued to focus on three particular themes where China is concerned: outsourcers that are using China as a production base to gain global market share; companies that are potential beneficiaries of domestic demand and the growing affluence of the Chinese consumer; and companies that are likely to benefit from industry restructurings. Q: COULD YOU GIVE AN EXAMPLE OF THE PORTFOLIO'S INVESTMENTS IN OUTSOURCING COMPANIES? A: Yes. Among China's outsourcers, the textile sector appears poised to receive a boost early next year when import quotas - imposed by World Trade Organization members on China's clothing and textiles - are scheduled to be lifted. Major global buyers are expected to halve the number of countries they source from. The textile sector is also undergoing restructuring. We have focused the Portfolio's investments on companies within the textile space that we believe are dominant players and are continually strengthening their market position, despite the competitive landscape. We have added to our positions in the upstream textile segment, as cotton prices have fallen and subsequently stabilized. Q: YOU ALSO MENTIONED THAT DOMESTIC DEMAND IS A CENTRAL THEME. COULD YOU EXPAND ON THAT? A: Yes. As an example of the potential of domestic demand, automobile penetration stands at just 2% in China, as compared with 18% in Korea and 44% in Japan. Low interest rates and the growing availability of financing have continued to support growth in auto sales. One industry estimate indicates that 10 million new households could enter the car market between 2004 and 2010. Another theme within the domestic consumer sector that we have focused on recently is that of branding. As modern retail channels replace the older convoluted system, and as foreign brands enter China, strong local brands will be well-placed to compete. We have increased our position in companies with strong brands involved in the fashion retail business in Hong Kong and China. We believe that same-store sales growth, new-store growth and operating leverage from economies of scale are improving margins for these retailers. Q: REPORTS SUGGEST THAT FOREIGN DIRECT INVESTMENT INTO CHINA REMAINS VERY STRONG. ARE ANY SECTORS IN THE PORTFOLIO AFFECTED BY THE CONTINUING FOREIGN INVESTMENT? A: Yes, the Portfolio's position in independent power producers should benefit from continuing foreign investment, as power demand from factories has increased and continues to exceed electricity supply. Our exposure in the coal industry has also benefited from the continuing foreign investment as the power producers continue to use coal as fuel for their power plants. Q: WHAT SORT OF THREAT DOES THE SURGE IN OIL PRICES POSE TO CHINA AND HONG KONG? ARE ANY STOCKS IN THE PORTFOLIO POSSIBLE BENEFICIARIES OF THAT TREND? A: We believe that the surge in oil prices will directly impact the aviation industry in China and Hong Kong. Sustained oil prices could also hurt the U.S. consumer and, thus, indirectly impact the China and Hong Kong exporters whose key markets are in the U.S. Sustained high oil prices could slow global growth. That would ultimately slow Hong Kong, to a larger extent, through lower export growth, but [SIDENOTE] THE VIEWS EXPRESSED IN THIS REPORT ARE THOSE OF THE PORTFOLIO MANAGER AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS, AND EATON VANCE DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR AN EATON VANCE FUND ARE BASED ON MANY FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY EATON VANCE FUND. 5 would also affect China's export industry. The Portfolio has positions in the upstream energy exploration and production sectors. These companies are direct beneficiaries of higher oil prices. While some are integrated, i.e., with both upstream and downstream (marketing and refining) assets, they have generally benefited on a net basis from the rise in oil prices from their upstream divisions.
PERFORMANCE CLASS A CLASS B CLASS C -------------------------------------------------------------------------------------------------------------------- Average Annual Total Returns (at net asset value) One Year 18.51% 18.03% 17.82% Five Years 1.20 0.54 0.45 Ten Years -1.53 -2.09 -2.30 Life of Fund+ 2.57 0.58 -3.08 SEC Average Annual Total Returns (including sales charge or applicable CDSC) One Year 11.72% 13.03% 16.82% Five Years 0.00 0.15 0.45 Ten Years -2.11 -2.09 -2.30 Life of Fund+ 2.06 0.58 -3.08
+ Inception Dates - Class A: 10/28/92; Class B: 6/7/93; Class C:12/28/93 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 OR EXCHANGED WITHIN 3 MONTHS OF SETTLEMENT OR PURCHASE 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. [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 GOLDEN DRAGON INDEX AND THE MORGAN STANLEY CAPITAL INTERNATIONAL ALL COUNTRY FAR EAST FREE EX-JAPAN INDEX*
EATON VANCE MCSI ALL MCSI GREATER CHINA FUND, INCLUDING COUNTRY FAR GOLDEN GROWTH FUND, MAXIMUM SALES EAST FREE EX-JAPAN DRAGON DATE CLASS A CHARGE INDEX INDEX 8/31/1994 10,000 9,425 10,000 I 9/30/1994 9923.61 9352.13 9839.18 I 10/31/1994 9885.42 9316.14 10030.27 I 11/30/1994 8975.17 8458.31 9075.05 V 12/31/1994 8893.14 8380.99 8850.82 1/31/1995 7932.06 7475.27 7901.58 2/28/1995 8604.82 8109.28 8700.15 3/31/1995 8726.55 8224 8741.89 4/30/1995 8611.22 8115.31 8659.16 5/31/1995 9392.9 8851.97 9714.20 6/30/1995 9245.53 8713.09 9568.13 7/31/1995 9521.04 8972.74 9719.20 8/31/1995 9117.39 8592.33 9256.77 9/30/1995 9264.75 8731.21 9417.40 10/31/1995 9053.32 8531.95 9274.33 11/30/1995 8854.7 8344.76 9176.92 12/31/1995 9207.09 8676.86 9633.56 1/31/1996 10104.1 9522.21 10516.48 2/29/1996 9943.91 9371.26 10480.37 3/31/1996 9841.4 9274.64 10564.73 4/30/1996 10059.2 9479.94 10860.37 5/31/1996 10148.9 9564.48 10754.68 6/30/1996 9879.84 9310.87 10537.98 7/31/1996 9264.75 8731.21 9778.77 8/31/1996 9597.93 9045.19 10131.85 9/30/1996 9867.03 9298.8 10387.73 10,000 10/31/1996 9802.95 9238.42 10191.50 10,205 11/30/1996 10475.7 9872.42 10775.00 10,983 12/31/1996 10666.2 10051.89 10706.40 11,019 1/31/1997 10804.2 10181.95 10861.98 10,970 2/28/1997 11119.6 10479.23 10902.36 11,148 3/31/1997 10442.7 9841.31 10306.48 10,599 4/30/1997 10685.9 10070.47 10043.45 10,944 5/31/1997 11875.4 11191.47 10553.45 11,735 6/30/1997 13032 12281.51 10835.58 12,602 7/31/1997 13505.2 12727.44 10888.36 13,484 8/31/1997 12550.3 11827.5 8883.60 12,122 9/30/1997 12032.9 11339.97 8816.84 12,135 10/31/1997 8461.33 7974.05 6665.97 8,903 11/30/1997 8099.92 7633.45 6241.99 8,814 12/31/1997 8014.88 7553.3 5962.63 8,945 1/31/1998 6852.68 6458.04 5460.50 7,919 2/28/1998 8454.24 7967.37 6713.31 9,542 3/31/1998 8255.82 7780.37 6549.45 9,240 4/30/1998 7511.73 7079.14 5875.03 8,298 5/31/1998 6519.62 6144.16 4965.14 7,282 6/30/1998 6009.39 5663.31 4424.69 6,851 7/31/1998 5591.28 5269.28 4301.93 6,458 8/31/1998 4861.37 4581.4 3637.19 5,760 9/30/1998 5470.81 5155.75 4029.07 6,581 10/31/1998 6328.28 5963.84 5129.29 8,303 11/30/1998 6462.92 6090.73 5596.46 8,453 12/31/1998 6257.41 5897.05 5675.28 8,065 1/31/1999 5704.66 5376.14 5484.41 7,593 2/28/1999 5669.23 5342.74 5378.90 7,746 3/31/1999 6066.08 5716.74 5983.54 8,683 4/30/1999 7249.53 6832.03 7366.27 10,277 5/31/1999 6916.46 6518.15 7063.56 9,575 6/30/1999 8241.65 7767.01 8278.78 10,954 7/31/1999 7858.97 7406.38 7949.61 10,242 8/31/1999 8078.66 7613.41 8079.54 10,718 9/30/1999 7575.51 7139.24 7430.83 10,191 10/31/1999 7929.84 7473.16 7790.69 10,632 11/30/1999 9162.9 8635.21 8575.03 11,538 12/31/1999 10041.6 9463.34 9192.62 12,621 1/31/2000 10147.9 9563.51 8987.88 12,687 2/29/2000 10955.8 10324.85 8506.30 12,884 3/31/2000 11806.2 11126.26 8915.25 13,288 4/30/2000 9906.98 9336.45 8191.54 11,965 5/31/2000 9446.36 8902.35 7537.81 11,220 6/30/2000 10169.2 9583.55 7895.80 11,538 7/31/2000 10211.7 9623.62 7607.10 11,755 8/31/2000 10055.8 9476.69 7515.78 11,460 9/30/2000 9035.34 8515 6644.88 10,132 10/31/2000 8319.6 7840.48 6125.32 9,280 11/30/2000 7979.44 7519.91 5821.92 8,657 12/31/2000 8043.22 7580.02 5808.94 8,836 1/31/2001 8865.26 8354.72 6589.20 10,005 2/28/2001 8291.25 7813.76 6268.84 9,477 3/31/2001 7419.61 6992.32 5599.42 8,687 4/30/2001 7688.9 7246.1 5621.02 8,591 5/31/2001 7568.42 7132.56 5588.90 8,374 6/30/2001 7277.88 6858.75 5470.22 8,122 7/31/2001 6795.99 6404.61 5260.17 7,609 8/31/2001 6115.68 5763.49 5175.83 7,144 9/30/2001 5343.25 5035.54 4352.41 6,009 10/31/2001 5704.66 5376.14 4575.76 6,352 11/30/2001 6328.28 5963.84 5206.96 7,164 12/31/2001 6647.17 6264.37 5678.65 7,881 1/31/2002 6824.34 6431.33 5911.24 7,842 2/28/2002 6675.52 6291.08 5926.34 7,562 3/31/2002 6944.81 6544.86 6356.49 8,105 4/30/2002 7058.19 6651.72 6447.87 8,287 5/31/2002 7100.71 6691.79 6322.51 8,023 6/30/2002 6618.83 6237.65 5981.24 7,500 7/31/2002 6221.98 5863.66 5760.90 7,126 8/31/2002 5888.91 5549.78 5633.28 6,815 9/30/2002 5421.2 5109 4992.85 6,121 10/31/2002 5527.5 5209.18 5260.58 6,464 11/30/2002 5704.66 5376.14 5526.11 6,746 12/31/2002 5562.93 5242.57 5146.38 6,322 1/31/2003 5796.79 5462.96 5207.25 6,671 2/28/2003 5733.01 5402.85 4971.58 6,297 3/31/2003 5598.37 5275.96 4743.70 6,071 4/30/2003 5541.67 5222.53 4916.86 6,006 5/31/2003 6151.12 5796.88 5343.07 6,609 6/30/2003 6413.32 6043.98 5652.68 6,910 7/31/2003 6881.03 6484.76 6136.45 7,547 8/31/2003 7235.36 6818.68 6585.48 8,289 9/30/2003 7334.57 6912.18 6615.75 8,518 10/31/2003 7936.92 7479.84 7176.08 9,140 11/30/2003 7915.67 7459.81 7067.97 8,937 12/31/2003 8560.21 8067.23 7437.42 9,382 1/31/2004 8965.13 8448.84 7935.37 10,025 2/29/2004 9412.68 8870.61 8228.66 10,442 3/31/2004 9114.32 8589.43 8063.74 9,883 4/30/2004 8268.95 7792.75 7594.38 9,149 5/31/2004 8233.43 7759.27 7488.60 9,211 6/30/2004 8283.16 7806.14 7344.42 9,103 7/31/2004 8268.95 7792.75 7144.07 8,918 8/31/2004 8574.42 8080.62 7516.48 9,402
*For the period from 8/31/94 -12/31/98, the MSCI Index data was calculated using gross dividends, without consideration for taxes; from 12/31/98-8/31/04, 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. **For the period from 9/30/96 -12/31/00, the MSCI Index data was calculated using gross dividends, without consideration for taxes; from 12/31/00-8/31/04, the Index data was calculated using dividends net of taxes. The calculation of dividends net of taxes was first available on 12/31/00. The Index line on the chart reflects that adjustment. * SOURCES: THOMSON FINANCIAL; BLOOMBERG; LIPPER INC. INVESTMENT OPERATIONS COMMENCED 10/28/92. 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 THE MSCIGOLDEN DRAGON INDEX - A BROAD-BASED INDEX OF COMMON STOCKS TRADED IN CHINA, HONG KONG AND TAIWAN. THE MSCIGOLDEN DRAGON INDEX COMMENCED ON SEPTEMBER 30, 1996; FOR THE PERIOD FROM 9/30/96 -12/31/00, THE MSCI GOLDEN DRAGON INDEX DATA WERE CALCULATED USING GROSS DIVIDENDS, WITHOUT CONSIDERATION FOR TAXES; FROM 12/31/00-8/31/04, THE INDEX DATA WERE CALCULATED USING DIVIDENDS NET OF TAXES. THE CALCULATION OF DIVIDENDS NET OF TAXES WAS FIRST AVAILABLE ON 12/31/00. THE INDEX LINE ON THE CHART REFLECTS THAT ADJUSTMENT. BECAUSE THE MSCI GOLDEN DRAGON INDEX BEGINS ON 9/31/96, WE ARE ALSO INLCUDED THE FUND'S PREVIOUS BENCHMARK, THE MSCI ALL COUNTRY FAR EAST FREE EX-JAPAN INDEX - A BROAD-BASED INDEX OF COMMON STOCKS TRADED IN THE ASIAN MARKETS - FOR A COMPARISON DATING FROM 8/31/94. A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES ON 8/31/94 AT NET ASSET VALUE WOULD HAVE BEEN WORTH $8,098 ON AUGUST 31, 2004. A $10,000 INVESTMENT IN THE FUND'S CLASS C SHARES ON 8/31/94 AT NET ASSET VALUE WOULD HAVE BEEN WORTH $7,927 ON AUGUST 31, 2004. 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 INDEX'S TOTAL RETURN DOES NOT REFLECT ANY COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN THE INDEX. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR OFFERING PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO www.eatonvance.com. 6 EATON VANCE GLOBAL GROWTH FUND as of August 31, 2004 FUND EXPENSES Example: As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (March 1, 2004 - August 31, 2004). Actual Expenses: The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes: The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EATON VANCE GLOBAL GROWTH FUND
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* (3/1/04) (8/31/04) (3/1/04 - 8/31/04) ----------------------------------------------------------------------------------------------------------- Actual Class A $ 1,000.00 $ 907.30 $ 11.75 Class B $ 1,000.00 $ 904.90 $ 14.13 Class C $ 1,000.00 $ 904.80 $ 14.12 Class D $ 1,000.00 $ 904.90 $ 14.13 Hypothetical (5% return before expenses) Class A $ 1,000.00 $ 1,012.80 $ 12.40 Class B $ 1,000.00 $ 1,010.30 $ 14.91 Class C $ 1,000.00 $ 1,010.30 $ 14.91 Class D $ 1,000.00 $ 1,010.30 $ 14.91
* Expenses are equal to the Fund's annualized expense ratio of 2.45% for Class A shares, 2.95% for Class B shares, 2.95% for Class C, and 2.95% for Class D shares multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on February 29, 2004. The Example reflects the expenses of both the Fund and the Portfolio. EATON VANCE GREATER CHINA GROWTH FUND as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investment in Greater China Growth Portfolio, at value (identified cost, $82,136,648) $ 95,455,925 Receivable for Fund shares sold 91,573 --------------------------------------------------------------------------------------------- TOTAL ASSETS $ 95,547,498 --------------------------------------------------------------------------------------------- LIABILITIES Payable for Fund shares redeemed $ 130,082 Payable to affiliate for distribution and service fees 7,652 Accrued expenses 96,332 --------------------------------------------------------------------------------------------- TOTAL LIABILITIES $ 234,066 --------------------------------------------------------------------------------------------- NET ASSETS $ 95,313,432 --------------------------------------------------------------------------------------------- SOURCES OF NET ASSETS Paid-in capital $ 123,868,953 Accumulated net realized loss from Portfolio (computed on the basis of identified cost) (42,068,530) Accumulated undistributed net investment income 193,732 Net unrealized appreciation from Portfolio (computed on the basis of identified cost) 13,319,277 --------------------------------------------------------------------------------------------- TOTAL $ 95,313,432 --------------------------------------------------------------------------------------------- CLASS A SHARES NET ASSETS $ 70,922,669 SHARES OUTSTANDING 5,877,059 NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 12.07 MAXIMUM OFFERING PRICE PER SHARE (100 DIVIDED BY 94.25 of $12.07) $ 12.81 --------------------------------------------------------------------------------------------- CLASS B SHARES NET ASSETS $ 13,364,795 SHARES OUTSTANDING 1,268,288 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 10.54 --------------------------------------------------------------------------------------------- CLASS C SHARES NET ASSETS $ 11,025,968 SHARES OUTSTANDING 1,543,244 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 7.14 ---------------------------------------------------------------------------------------------
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, 2004 INVESTMENT INCOME Dividends allocated from Portfolio (net of foreign taxes, $244,082) $ 2,718,315 Interest allocated from Portfolio 18,526 Expenses allocated from Portfolio (1,157,693) --------------------------------------------------------------------------------------------- NET INVESTMENT INCOME FROM PORTFOLIO $ 1,579,148 --------------------------------------------------------------------------------------------- EXPENSES Management fee $ 232,543 Trustees' fees and expenses 1,434 Distribution and service fees Class A 266,271 Class B 301,345 Class C 96,290 Transfer and dividend disbursing agent fees 355,626 Printing and postage 87,373 Registration fees 51,240 Legal and accounting services 18,362 Custodian fee 18,201 Miscellaneous 6,005 --------------------------------------------------------------------------------------------- TOTAL EXPENSES $ 1,434,690 --------------------------------------------------------------------------------------------- Deduct -- Reduction of custodian fee $ 18,201 --------------------------------------------------------------------------------------------- TOTAL EXPENSE REDUCTIONS $ 18,201 --------------------------------------------------------------------------------------------- NET EXPENSES $ 1,416,489 --------------------------------------------------------------------------------------------- NET INVESTMENT INCOME $ 162,659 --------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO Net realized gain (loss) -- Investment transactions (identified cost basis) $ 12,170,136 Foreign currency transactions (94,447) --------------------------------------------------------------------------------------------- NET REALIZED GAIN $ 12,075,689 --------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) -- Investments (identified cost basis) $ 373,992 Foreign currency (84,275) --------------------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 289,717 --------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN $ 12,365,406 --------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 12,528,065 ---------------------------------------------------------------------------------------------
See notes to financial statements 8 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 ------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment income $ 162,659 $ 2,578 Net realized gain (loss) from Investment transactions, and foreign currency 12,075,689 (5,289,451) Net change in unrealized appreciation (depreciation) from investments, and foreign currency 289,717 17,474,384 ------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 12,528,065 $ 12,187,511 ------------------------------------------------------------------------------------------------- Distributions to shareholders -- From net investment income Class A $ (91,467) $ -- ------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (91,467) $ -- ------------------------------------------------------------------------------------------------- Transactions in shares of beneficial interest -- Proceeds from sale of shares Class A* $ 52,543,892 $ 15,693,512 Class B 8,009,968 4,759,370 Class C 11,040,474 10,943,709 Net asset value of shares issued to shareholders in payment of distributions declared Class A 71,815 -- Cost of shares redeemed Class A (16,002,942) (15,248,258) Class B (40,494,201) (6,629,497) Class C (4,373,209) (10,831,188) Redemption Fees* 235,642 36,146 ------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS $ 11,031,439 $ (1,276,206) ------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS $ 23,468,037 $ 10,911,305 ------------------------------------------------------------------------------------------------- NET ASSETS At beginning of year $ 71,845,395 $ 60,934,090 ------------------------------------------------------------------------------------------------- AT END OF YEAR $ 95,313,432 $ 71,845,395 ------------------------------------------------------------------------------------------------- ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME INCLUDED IN NET ASSETS AT END OF YEAR $ 193,732 $ (151,280) -------------------------------------------------------------------------------------------------
* Certain prior year amounts have been reclassified to conform to the current year presentation. See notes to financial statements 9 FINANCIAL HIGHLIGHTS
CLASS A ---------------------------------------------------------------------- YEAR ENDED AUGUST 31, ---------------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ------------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 10.210 $ 8.310 $ 8.630 $ 14.190 $ 11.400 ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment income (loss) $ 0.104 $ 0.026 $ (0.042) $ (0.045) $ (0.069) Net realized and unrealized gain (loss) 1.761 1.862 (0.278) (5.515) 2.859 ------------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 1.865 $ 1.888 $ (0.320) $ (5.560) $ 2.790 ------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net investment income $ (0.028) $ -- $ -- $ -- $ -- ------------------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ (0.028) $ -- $ -- $ -- $ -- ------------------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.023 $ 0.012 $ -- $ -- $ -- ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 12.070 $ 10.210 $ 8.310 $ 8.630 $ 14.190 ------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(3) 18.51% 22.86% (3.71)% (39.18)% 24.47% ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 70,923 $ 30,892 $ 25,091 $ 31,649 $ 66,428 Ratios (As a percentage of average daily net assets): Expenses(4) 2.67% 3.07% 2.68% 2.42% 2.30% Expenses after custodian fee reduction(4) 2.55% 2.87% 2.37% 2.20% 2.08% Net investment income (loss) 0.88% 0.31% (0.46)% (0.40)% (0.51)% Portfolio Turnover of the Portfolio 124% 114% 155% 35% 34% -------------------------------------------------------------------------------------------------------------------------------
(1) Net investment income (loss) per share was computed using average shares outstanding. (2) Calculated based on average shares outstanding during the period. (3) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (4) Includes the Fund's share of the Portfolio's allocated expenses. See notes to financial statements 10
CLASS B ---------------------------------------------------------------------- YEAR ENDED AUGUST 31, ---------------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ------------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 8.930 $ 7.320 $ 7.660 $ 12.710 $ 10.260 ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.105) $ (0.016) $ (0.078) $ (0.092) $ (0.120) Net realized and unrealized gain (loss) 1.680 1.626 (0.262) (4.958) 2.570 ------------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 1.575 $ 1.610 $ (0.340) $ (5.050) $ 2.450 ------------------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.035 $ -- $ -- $ -- $ -- ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 10.540 $ 8.930 $ 7.320 $ 7.660 $ 12.710 ------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) 18.03% 21.99% (4.44)% (39.73)% 23.88% ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 13,365 $ 37,282 $ 32,946 $ 41,907 $ 90,742 Ratios (As a percentage of average daily net assets): Expenses(3) 3.17% 3.57% 3.18% 2.93% 2.77% Expenses after custodian fee reduction(3) 3.05% 3.37% 2.87% 2.71% 2.55% Net investment loss (1.02)% (0.22)% (0.96)% (0.91)% (0.97)% Portfolio Turnover of the Portfolio 124% 114% 155% 35% 34% -------------------------------------------------------------------------------------------------------------------------------
(1) Net investment loss per share was computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. 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
CLASS C ---------------------------------------------------------------------- YEAR ENDED AUGUST 31, ---------------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ------------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 6.060 $ 4.970 $ 5.210 $ 8.640 $ 6.980 ------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ --(4) $ (0.008) $ (0.049) $ (0.063) $ (0.083) Net realized and unrealized gain (loss) 1.060 1.098 (0.191) (3.367) 1.743 ------------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 1.060 $ 1.090 $ (0.240) $ (3.430) $ 1.660 ------------------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.020 $ -- $ -- $ -- $ -- ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 7.140 $ 6.060 $ 4.970 $ 5.210 $ 8.640 ------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) 17.82% 21.93% (4.61)% (39.70)% 23.78% ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 11,026 $ 3,672 $ 2,897 $ 3,489 $ 8,851 Ratios (As a percentage of average daily net assets): Expenses(3) 3.17% 3.57% 3.18% 2.92% 2.80% Expenses after custodian fee reduction(3) 3.05% 3.37% 2.87% 2.70% 2.58% Net investment loss (0.01)% (0.15)% (0.89)% (0.91)% (0.99)% Portfolio Turnover of the Portfolio 124% 114% 155% 35% 34% -------------------------------------------------------------------------------------------------------------------------------
(1) Net investment loss per share was computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. (4) Equal to less than $0.001 per share. See notes to financial statements 12 EATON VANCE GREATER CHINA GROWTH FUND as of August 31, 2004 NOTES TO FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES Eaton Vance Greater China Growth Fund (the Fund) is a non-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 (99.9% at August 31, 2004). 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 Trustees have adopted a conversion feature pursuant to which Class B shares of the Fund automatically convert to Class A shares eight years after their purchase as described in the Fund's prospectus. 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 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, 2004, 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, August 31, 2008 and August 31, 2011 ($37,588,522, $1,617,906 and $3,315,639), respectively. 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 INDEMNIFICATIONS -- Under the Trust's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund and shareholders are indemnified against personal liability for obligations of the Trust. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. G OTHER -- Investment transactions are accounted for on a trade-date basis. 13 H EXPENSES -- The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds. I REDEMPTION FEES -- Upon the redemption or exchange of shares held by Class A shareholders for less than three months, a fee of 1% of the current net asset value of the shares will be assessed and retained by the Fund for the benefit of the remaining shareholders. The redemption fee is accounted for as an addition to paid-in capital and amounted to $235,642 for the year ended August 31, 2004. 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 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. The tax character of distributions paid for the year ended August 31, 2004 was as follows:
YEAR ENDED AUGUST 31, ---------------------- 2004 --------------------------------------------------------------- Distributions declared from: Ordinary income $ 91,467
The Fund paid no distributions for the year ended August 31, 2003. During the year ended August 31, 2004, accumulated net investment income was increased by $273,820, accumulated undistributed net realized loss increased by $274,138, and paid-in-capital increased by $318 primarily due to differences between book and tax accounting for investment transactions. This change had no effect on the net assets or the net asset value per share. As of August 31, 2004, the components of distributable earnings (accumulated losses) on a tax basis were as follows: Undistributed ordinary income $ 193,732 Capital loss carryforwards $ (42,522,067) Unrealized appreciation $ 13,324,675 Other temporary differences $ 453,540
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 2004 2003 ----------------------------------------------------------------------- Sales 4,217,751 1,857,411 Issued to shareholders electing to receive payments of distributions in Fund shares 6,289 -- Redemptions (1,373,769) (1,848,777) ----------------------------------------------------------------------- NET INCREASE 2,850,271 8,634 ----------------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------- CLASS B 2004 2003 ----------------------------------------------------------------------- Sales 759,986 626,084 Redemptions (3,668,021) (948,779) ----------------------------------------------------------------------- NET DECREASE (2,908,035) (322,695) ----------------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------- CLASS C 2004 2003 ----------------------------------------------------------------------- Sales 1,558,554 2,234,319 Redemptions (621,433) (2,210,671) ----------------------------------------------------------------------- NET INCREASE 937,121 23,648 -----------------------------------------------------------------------
14 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, 2004, the fee was equivalent to 0.25% of the Fund's average net assets for such period and amounted to $232,543. 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. EVM serves as the sub-transfer agent of the Fund and receives from the transfer agent an aggregate fee based upon the actual expenses incurred by EVM in the performance of those services. During the year ended August 31, 2004, EVM earned $23,530 in sub-transfer agent fees. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's principal underwriter, received approximately $56,399 as its portion of the sales charge on sales of Class A shares for the year ended August 31, 2004. 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 $163,085, $226,009 and $72,219 for Class A, Class B, and Class C shares, respectively to or payable to EVD for the year ended August 31, 2004, representing approximately 0.31%, 0.75%, and 0.75% of the average daily net assets for Class A, Class B, and Class C shares, respectively. At August 31, 2004, the amount of Uncovered Distribution Charges EVD calculated under the Plan was approximately $2,234,000 and $7,128,000 for Class B and Class C shares, respectively. 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, 2004 amounted to approximately $103,186, $75,336 and $24,071 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 A shares made within three months of purchase, Class B shares made within six years of purchase and 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 A shares will be subject to a 1% CDSC if redeemed within three months of purchase. 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 15 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 $700, $32,000 and $14,000 of CDSC paid by shareholders for Class A shares, Class B shares and Class C shares, respectively, for the year ended August 31, 2004. 7 INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in the Portfolio aggregated $39,805,742 and $30,123,035, respectively, for the year ended August 31, 2004. 16 EATON VANCE GREATER CHINA GROWTH FUND as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE TRUSTEES OF EATON VANCE GROWTH TRUST AND SHAREHOLDERS OF EATON VANCE GREATER CHINA GROWTH FUND: 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, 2004, 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 standards of the Public Company Accounting Oversight Board (United States). 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, 2004, 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 19, 2004 17 EATON VANCE GREATER CHINA GROWTH FUND as of August 31, 2004 FEDERAL TAX INFORMATION (Unaudited) The Form 1099-DIV you receive in January 2005 will show the tax status of all distributions paid to your account in calendar 2004. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Fund. As required by the Internal Revenue Code regulations, shareholders must be notified within 60 days of the Fund's fiscal year end regarding the status of qualified dividend income for individuals, the dividends received deduction for corporations, and the foreign tax credit. QUALIFIED DIVIDEND INCOME. The Fund designates approximately $2,634,843, or up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income eligible for the reduced tax rate of 15%. DIVIDENDS RECEIVED DEDUCTION. Corporate shareholders are generally entitled to take the dividends received deduction on the portion of the Fund's dividend distribution that qualifies under tax law. Of the Fund's fiscal 2004 ordinary income dividends, 0% qualifies for the corporate dividends received deduction. FOREIGN TAX CREDIT. For the fiscal year ended August 31, 2004, the Fund paid foreign taxes of $244,082 and recognized foreign source income of $2,980,923. 18 GREATER CHINA GROWTH PORTFOLIO as of August 31, 2004 PORTFOLIO OF INVESTMENTS COMMON STOCKS -- 94.0%
SECURITY SHARES VALUE --------------------------------------------------------------------------------------- CHINA -- 10.8% AUTO MANUFACTURER -- 1.2% Denway Motors, Ltd. 2,781,000 $ 1,102,334 --------------------------------------------------------------------------------------- $ 1,102,334 --------------------------------------------------------------------------------------- COSMETICS & TOILETRIES -- 1.1% Hengan International Group Co., Ltd. 1,846,000 $ 1,095,040 --------------------------------------------------------------------------------------- $ 1,095,040 --------------------------------------------------------------------------------------- INSURANCE -- 1.3% China Insurance International Holdings Co., Ltd. 3,022,000 $ 1,246,480 --------------------------------------------------------------------------------------- $ 1,246,480 --------------------------------------------------------------------------------------- MINING -- 1.4% Yanzhou Coal Mining Co., Ltd. 1,232,000 $ 1,343,710 --------------------------------------------------------------------------------------- $ 1,343,710 --------------------------------------------------------------------------------------- OIL COMPANIES-INTEGRATED -- 1.9% PetroChina Co., Ltd. 3,566,000 $ 1,804,114 --------------------------------------------------------------------------------------- $ 1,804,114 --------------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES -- 2.4% China Telecom Corp., Ltd. 6,988,000 $ 2,251,487 --------------------------------------------------------------------------------------- $ 2,251,487 --------------------------------------------------------------------------------------- TEXTILES -- 1.5% Weiqiao Textile Co., Ltd. 917,000 $ 1,467,800 --------------------------------------------------------------------------------------- $ 1,467,800 --------------------------------------------------------------------------------------- TOTAL CHINA (IDENTIFIED COST $8,783,256) $ 10,310,965 --------------------------------------------------------------------------------------- HONG KONG -- 57.2% SECURITY SHARES VALUE --------------------------------------------------------------------------------------- ADVERTISING -- 0.9% Clear Media, Ltd.(1) 1,150,000 $ 847,762 --------------------------------------------------------------------------------------- $ 847,762 --------------------------------------------------------------------------------------- APPAREL AND ACCESSORIES -- 1.5% Ports Design, Ltd. 763,000 $ 1,389,060 --------------------------------------------------------------------------------------- $ 1,389,060 --------------------------------------------------------------------------------------- APPLICATIONS SOFTWARE -- 0.8% Kingdee International Software Group Co., Ltd. 2,650,000 $ 722,587 --------------------------------------------------------------------------------------- $ 722,587 --------------------------------------------------------------------------------------- BANKS -- 5.2% Dah Sing Financial Holdings, Ltd. 274,882 $ 1,978,422 Hang Seng Bank, Ltd. 192,000 2,562,578 Wing Lung Bank, Ltd. 60,700 443,192 --------------------------------------------------------------------------------------- $ 4,984,192 --------------------------------------------------------------------------------------- BUILDING MATERIALS -- 0.3% China Resources Cement Holding, Ltd.(1) 1,240,000 $ 258,083 --------------------------------------------------------------------------------------- $ 258,083 --------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 1.0% TPV Technology, Ltd. 1,422,000 $ 924,128 --------------------------------------------------------------------------------------- $ 924,128 --------------------------------------------------------------------------------------- CONSUMER ELECTRONICS -- 0.6% The Grande Holdings, Ltd. 700,000 $ 540,547 --------------------------------------------------------------------------------------- $ 540,547 --------------------------------------------------------------------------------------- DISTRIBUTION/WHOLESALE -- 5.0% Esprit Holdings, Ltd. 727,000 $ 3,506,990 Linmark Group, Ltd. 2,628,000 814,995 Pacific Andes International Holding, Ltd. 2,588,000 422,129 --------------------------------------------------------------------------------------- $ 4,744,114 --------------------------------------------------------------------------------------- DIVERSIFIED OPERATIONS -- 13.9% Jardine Matheson Holdings, Ltd. 360,000 $ 4,680,000 NWS Holdings, Ltd. 574,000 646,100 Shun Tak Holdings, Ltd. 5,728,000 3,015,267 Swire Pacific, Ltd. - Class A 371,000 2,639,373 Swire Pacific, Ltd. - Class B 660,000 809,676 Wharf Holdings, Ltd. 444,000 1,471,949 --------------------------------------------------------------------------------------- $ 13,262,365 ---------------------------------------------------------------------------------------
See notes to financial statements 19
SECURITY SHARES VALUE --------------------------------------------------------------------------------------- ELECTRIC - INTEGRATED -- 12.1% China Resources Power Holdings, Co.(1) 3,468,000 $ 1,840,716 CLP Holdings, Ltd. 954,000 5,521,690 Hong Kong Electric Holdings 944,500 4,222,607 --------------------------------------------------------------------------------------- $ 11,585,013 --------------------------------------------------------------------------------------- ELECTRIC PRODUCTS -- 1.0% Techtronic Industries Co., Ltd. 620,000 $ 977,699 --------------------------------------------------------------------------------------- $ 977,699 --------------------------------------------------------------------------------------- FURNITURE AND APPLIANCES -- 1.0% Chitaly Holdings, Ltd. 1,686,000 $ 983,506 --------------------------------------------------------------------------------------- $ 983,506 --------------------------------------------------------------------------------------- GAS PRODUCTION & DISTRIBUTION -- 3.1% Hong Kong and China Gas Co., Ltd. 1,648,000 $ 2,973,995 --------------------------------------------------------------------------------------- $ 2,973,995 --------------------------------------------------------------------------------------- HOTELS AND MOTELS -- 0.8% Shangri-La Asia, Ltd. 878,000 $ 815,711 --------------------------------------------------------------------------------------- $ 815,711 --------------------------------------------------------------------------------------- OIL COMPANIES - EXPLORATION & PRODUCTION -- 2.3% CNOOC, Ltd. 4,650,000 $ 2,180,549 --------------------------------------------------------------------------------------- $ 2,180,549 --------------------------------------------------------------------------------------- OPTICAL PRODUCTS -- 1.1% Sun Hing Vision Group Holdings, Ltd. 2,178,000 $ 1,019,199 --------------------------------------------------------------------------------------- $ 1,019,199 --------------------------------------------------------------------------------------- PAPER PRODUCTS -- 0.2% Lee & Man Paper Manufacturing, Ltd. 302,000 $ 239,030 --------------------------------------------------------------------------------------- $ 239,030 --------------------------------------------------------------------------------------- REAL ESTATE OPERATING/DEVELOPMENT -- 4.9% Hopewell Holdings, Ltd. 1,127,000 $ 2,446,371 Kerry Properties, Ltd. 1,244,000 2,256,277 --------------------------------------------------------------------------------------- $ 4,702,648 --------------------------------------------------------------------------------------- RETAIL - SPECIALTY AND APPAREL -- 1.5% Dickson Concepts International, Ltd. 1,399,200 $ 1,400,599 --------------------------------------------------------------------------------------- $ 1,400,599 --------------------------------------------------------------------------------------- TOTAL HONG KONG (IDENTIFIED COST $43,299,654) $ 54,550,787 --------------------------------------------------------------------------------------- JAPAN -- 0.1% SECURITY SHARES VALUE --------------------------------------------------------------------------------------- ELECTRONIC COMPONENTS - MISCELLANEOUS -- 0.1% Sansui Electric Co., Ltd.(1) 350,000 $ 92,487 --------------------------------------------------------------------------------------- $ 92,487 --------------------------------------------------------------------------------------- TOTAL JAPAN (IDENTIFIED COST $114,171) $ 92,487 --------------------------------------------------------------------------------------- TAIWAN -- 25.9% SECURITY SHARES VALUE --------------------------------------------------------------------------------------- BANKS -- 6.0% Bank of Kaohsiung 2,786,300 $ 1,793,999 Chinatrust Financial Holding Co., Ltd. 2,444,374 2,587,962 Taishin Financial Holdings Co. Ltd. 1,818,036 1,390,282 --------------------------------------------------------------------------------------- $ 5,772,243 --------------------------------------------------------------------------------------- BUSINESS SERVICES - MISCELLANEOUS -- 1.1% Taiwan Secom Co., Ltd. 976,000 $ 1,006,759 --------------------------------------------------------------------------------------- $ 1,006,759 --------------------------------------------------------------------------------------- CHEMICALS -- 0.8% Taiwan Fertilizer Co., Ltd. 917,000 $ 730,847 --------------------------------------------------------------------------------------- $ 730,847 --------------------------------------------------------------------------------------- CHEMICALS - PLASTICS -- 2.3% Formosa Plastics Corp. 1,493,561 $ 2,245,832 --------------------------------------------------------------------------------------- $ 2,245,832 --------------------------------------------------------------------------------------- COMPUTERS -- 2.0% Acer, Inc. 1,445,759 $ 1,932,674 --------------------------------------------------------------------------------------- $ 1,932,674 ---------------------------------------------------------------------------------------
See notes to financial statements 20
SECURITY SHARES VALUE --------------------------------------------------------------------------------------- ELECTRIC PRODUCTS -- 1.2% LITE-ON IT Corp. 512,400 $ 1,148,015 --------------------------------------------------------------------------------------- $ 1,148,015 --------------------------------------------------------------------------------------- ENGINEERING AND CONSTRUCTION -- 1.0% Continental Engineering Corp. 2,186,880 $ 946,798 --------------------------------------------------------------------------------------- $ 946,798 --------------------------------------------------------------------------------------- INSURANCE -- 2.4% Cathay Financial Holding Co., Ltd. 1,283,000 $ 2,251,690 --------------------------------------------------------------------------------------- $ 2,251,690 --------------------------------------------------------------------------------------- SOFTWARE -- 1.1% Soft-World International Corp.(1) 515,000 $ 1,031,933 --------------------------------------------------------------------------------------- $ 1,031,933 --------------------------------------------------------------------------------------- TELECOMMUNICATIONS SERVICES -- 8.0% Chunghwa Telecom Co., Ltd. 2,832,000 $ 4,501,055 Far EasTone Telecommunications Co., Ltd. 839,300 823,246 Taiwan Cellular Corp.(1) 2,480,000 2,340,084 --------------------------------------------------------------------------------------- $ 7,664,385 --------------------------------------------------------------------------------------- TOTAL TAIWAN (IDENTIFIED COST $24,081,018) $ 24,731,176 --------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST $76,278,099) $ 89,685,415 --------------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 94.0% (IDENTIFIED COST $76,278,099) $ 89,685,415 --------------------------------------------------------------------------------------- OTHER ASSETS, LESS LIABILITIES -- 6.0% $ 5,770,663 --------------------------------------------------------------------------------------- NET ASSETS -- 100.0% $ 95,456,078 ---------------------------------------------------------------------------------------
(1) Non-income producing security. See notes to financial statements 21 TOP TEN HOLDINGS
PERCENTAGE COMPANY INDUSTRY SECTOR OF NET ASSETS VALUE ------------------------------------------------------------------------------------------------- CLP Holdings, Ltd. Electric - Integrated 5.8% $ 5,521,690 Jardine Matheson Holdings, Ltd. Diversified Operations 4.9 4,680,000 Chunghwa Telecom Co., Ltd. Telecommunications Services 4.7 4,501,055 Hong Kong Electric Holdings Electric - Integrated 4.4 4,222,607 Esprit Holdings, Ltd. Distribution/Wholesale 3.7 3,506,990 Shun Tak Holdings, Ltd. Diversified Operations 3.2 3,015,267 Hong Kong and China Gas Co., Ltd. Gas Production & Distribution 3.1 2,973,995 Swire Pacific, Ltd. - Class A Diversified Operations 2.8 2,639,373 Chinatrust Financial Holding Co., Ltd. Banks 2.7 2,587,962 Hang Seng Bank, Ltd. Banks 2.7 2,562,578
INDUSTRY CONCENTRATION -- BELOW ARE THE TOP TEN INDUSTRY SECTORS REPRESENTED IN THE PORTFOLIO OF INVESTMENTS
PERCENTAGE INDUSTRY SECTOR OF NET ASSETS VALUE ------------------------------------------------------------------------- Diversified Operations 13.9% $ 13,262,365 Electric - Integrated 12.1 11,585,013 Banks 11.3 10,756,435 Telecommunications Services 8.0 7,664,385 Distribution/Wholesale 5.0 4,744,114 Real Estate Operating/Development 4.9 4,702,648 Insurance 3.7 3,498,170 Gas Production & Distribution 3.1 2,973,995 Telecommunication Services 2.4 2,251,487 Chemicals - Plastics 2.4 2,245,832
See notes to financial statements 22 GREATER CHINA GROWTH PORTFOLIO as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investments, at value (identified cost, $76,278,099) $ 89,685,415 Cash 589,330 Foreign currency, at value (identified cost, $5,800,870) 5,718,169 Interest and dividends receivable 422,425 ----------------------------------------------------------------------------- TOTAL ASSETS $ 96,415,339 ----------------------------------------------------------------------------- LIABILITIES Payable for investments purchased $ 945,751 Accrued expenses 13,510 ----------------------------------------------------------------------------- TOTAL LIABILITIES $ 959,261 ----------------------------------------------------------------------------- NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $ 95,456,078 ----------------------------------------------------------------------------- SOURCES OF NET ASSETS Net proceeds from capital contributions and withdrawals $ 82,131,400 Net unrealized appreciation (computed on the basis of identified cost) 13,324,678 ----------------------------------------------------------------------------- TOTAL $ 95,456,078 -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2004 INVESTMENT INCOME Dividends (net of foreign taxes, $244,083) $ 2,718,319 Interest 18,526 ----------------------------------------------------------------------------- TOTAL INVESTMENT INCOME $ 2,736,845 ----------------------------------------------------------------------------- EXPENSES Investment adviser fee $ 697,797 Administration fee 232,611 Trustees' fees and expenses 13,041 Custodian fee 250,524 Legal and accounting services 47,734 Miscellaneous 4,271 ----------------------------------------------------------------------------- TOTAL EXPENSES $ 1,245,978 ----------------------------------------------------------------------------- Deduct -- Reduction of custodian fee $ 88,284 ----------------------------------------------------------------------------- TOTAL EXPENSE REDUCTIONS $ 88,284 ----------------------------------------------------------------------------- NET EXPENSES $ 1,157,694 ----------------------------------------------------------------------------- NET INVESTMENT INCOME $ 1,579,151 ----------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) -- Investment transactions (identified cost basis) $ 12,170,157 Foreign currency transactions (94,448) ----------------------------------------------------------------------------- NET REALIZED GAIN $ 12,075,709 ----------------------------------------------------------------------------- Change in unrealized appreciation (depreciation)-- Investments (identified cost basis) $ 373,996 Foreign currency (84,276) ----------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 289,720 ----------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN $ 12,365,429 ----------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 13,944,580 -----------------------------------------------------------------------------
See notes to financial statements 23 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 --------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment income $ 1,579,151 $ 1,111,709 Net realized gain (loss) from Investment transactions, and foreign currency 12,075,709 (5,295,476) Net change in unrealized appreciation (depreciation) from financial futures contracts, and foreign currency 289,720 17,784,687 --------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 13,944,580 $ 13,600,920 --------------------------------------------------------------------------------------------- Capital transactions -- Contributions $ 39,805,742 $ 31,293,604 Withdrawals (30,123,035) (34,261,737) --------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 9,682,707 $ (2,968,133) --------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS $ 23,627,287 $ 10,632,787 --------------------------------------------------------------------------------------------- NET ASSETS At beginning of year $ 71,828,791 $ 61,196,004 --------------------------------------------------------------------------------------------- AT END OF YEAR $ 95,456,078 $ 71,828,791 ---------------------------------------------------------------------------------------------
See notes to financial statements 24 SUPPLEMENTARY DATA
YEAR ENDED AUGUST 31, -------------------------------------------------------------------- 2004 2003 2002 2001 2000 ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Ratios (As a percentage of average daily net assets): Expenses 1.34% 1.43% 1.40% 1.29% 1.25% Expenses after custodian fee reduction 1.24% 1.25% 1.10% 1.08% 1.06% Net investment income 1.70% 1.90% 0.81% 0.71% 0.51% Portfolio Turnover 124% 114% 155% 35% 34% ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(1) 20.02% 24.59% (2.72)% -- -- ---------------------------------------------------------------------------------------------------------------------------- NET ASSETS, END OF YEAR (000'S OMITTED) $ 95,456 $ 71,829 $ 61,196 $ 79,118 $ 169,181 ----------------------------------------------------------------------------------------------------------------------------
(1) Total return is required to be disclosed for fiscal years beginning after December 15, 2000. See notes to financial statements 25 GREATER CHINA GROWTH PORTFOLIO as of August 31, 2004 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 non-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. At August 31, 2004 the Eaton Vance Greater China Growth Fund held an approximate 99.9% interest 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 -- Securities listed on a U.S. securities exchange generally are valued at the last sale price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on NASDAQ National Market System generally are valued at the official NASDAQ closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by an independent pricing service. The value of preferred equity securities that are valued by a pricing service on a bond basis will be adjusted by an income factor, to be determined by the investment adviser, to reflect the next anticipated regular dividend. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on the principal exchange or board of trade on which the options are traded or, in the absence of sales on such date, at the mean between the latest bid and asked prices therefore. Futures positions on securities and currencies generally are valued at closing settlement prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. If short-term debt securities were acquired with a remaining maturity of more than 60 days, their amortized cost value will be based on their value on the sixty-first day prior to maturity. 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. The daily valuation of foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. The Portfolio may rely on an independent fair valuation service in adjusting the valuations of foreign securities. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by an independent quotation service. Investments held by the Portfolio 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 of the Portfolio considering relevant factors, data and information including the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded. 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 country's 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 26 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 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 INDEMNIFICATIONS -- Under the Portfolio's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Interestholders in the Portfolio are jointly and severally liable for the liabilities and obligations of the Portfolio in the event that the Portfolio fails to satisfy such liabilities and obligations; provided, however, that, to the extent assets are available in the Portfolio, the Portfolio may, under certain circumstances, indemnify interestholders from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in the Portfolio. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred. I 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 Investment 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, 2004, the adviser fee amounted to $697,797. 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, 2004, the administrative fee amounted to $232,611. 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. 27 3 INVESTMENT TRANSACTIONS Purchases and sales of investments, other than short-term obligations, aggregated $113,764,940 and $105,668,722, respectively, for the year ended August 31, 2004. 4 FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION) The cost and unrealized appreciation (depreciation) in value of the investments owned at August 31, 2004, as computed on a federal income tax basis, were as follows: AGGREGATE COST $ 76,278,102 ----------------------------------------------------- Gross unrealized appreciation $ 15,762,085 Gross unrealized depreciation (2,354,772) ----------------------------------------------------- NET UNREALIZED APPRECIATION $ 13,407,313 -----------------------------------------------------
The unrealized depreciation on foreign currency is $82,638. 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. 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, 2004. 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, 2004. 28 GREATER CHINA GROWTH PORTFOLIO as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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, 2004, 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 standards of the Public Company Accounting Oversight Board (United States). 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, 2004 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other audit procedures. 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, 2004, 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 19, 2004 29 EATON VANCE GREATER CHINA GROWTH FUND INVESTMENT MANAGEMENT (Unaudited) 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 Portfolio hold indefinite terms of office. The "noninterested Trustees" consist of those Trustees who are not "interested persons" of the Trust and the Portfolio, as that term is defined under the 1940 Act. The business address of each Trustee and officer, with the exception of Messrs. Chen, Kerr, Lloyd George and Ms. Chan is The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. As used below, "EVC" refers to Eaton Vance Corp., "EV" refers to Eaton Vance, Inc., "EVM" refers to Eaton Vance Management, "BMR" refers to Boston Management and Research, "EVD" refers to Eaton Vance Distributors, Inc., "Atlanta Capital" refers to Atlanta Capital Management Investment Company, LLC, "LGM" refers to Lloyd George Management (B.V.I.) Limited, and "Lloyd George" refers to Lloyd George Management (Bermuda) Limited. EVC and EV are the corporate parent and trustee, respectively, of EVM and BMR. EVD is the Fund's principal underwriter, the Portfolio's placement agent and a wholly-owned subsidiary of EVM. Lloyd George is a wholly-owned subsidiary of LGM.
POSITION(S) TERM OF NUMBER OF PORTFOLIOS WITH THE OFFICE AND IN FUND COMPLEX NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DATE OF BIRTH THE PORTFOLIO SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD ---------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE(S) James B. Hawkes Trustee of Trustee of the Chairman, President and 195 Director of EVC 11/9/41 the Trust; Trust since 1989; Chief Executive Officer Trustee and Trustee and Vice of BMR, EVC, EVM and EV; Vice President of the Director of EV; Vice President of Portfolio since President and Director of the Portfolio 1992 EVD. Trustee and/or officer of 195 registered investment companies in the Eaton Vance Fund Complex. Mr. Hawkes is an interested person because of his positions with BMR, EVM, EVC and EV which are affiliates of the Trust and the Portfolio. Hon. Robert Trustee and Since 1992 Chief Executive Officer 5 Chairman of LGM Lloyd George(2) President of of LGM and Lloyd George. 8/13/52 the Portfolio Mr. Lloyd George is an interested person because of his positions with LGM and Lloyd George, which are affiliates of the Portfolio. NONINTERESTED TRUSTEE(S) Edward K.Y. Trustee of Since 1992 President of Lingnan 5 Director of First Pacific Chen(2) the Portfolio University in Hong Kong. Company, Asia Satellite 1/14/45 Telecommunications Holdings Ltd. and Wharf Holdings Limited (property management and communications) Samuel L. Hayes, Trustee Trustee of the Jacob H. Schiff Professor 195 Director of Tiffany & Co. III Trust since 1989; of Investment Banking (specialty retailer) and 2/23/35 of the Portfolio Emeritus, Harvard Telect, Inc. (telecommunication since 1992 University Graduate services company) School of Business Administration. William H. Park Trustee Since 2003 President and Chief 194 None 9/19/47 Executive Officer, Prizm Capital Management, LLC (investment management firm) (since 2002). Executive Vice President and Chief Financial Officer, United Asset Management Corporation (a holding company owning institutional investment management firms) (1982-2001). Ronald A. Pearlman Trustee Since 2003 Professor of Law, 194 None 7/10/40 Georgetown University Law Center (since 1999). Tax Partner, Covington & Burling, Washington, DC (1991-2000).
30
POSITION(S) TERM OF NUMBER OF PORTFOLIOS WITH THE OFFICE AND IN FUND COMPLEX NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DATE OF BIRTH THE PORTFOLIO SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD ---------------------------------------------------------------------------------------------------------------------------------- NONINTERESTED TRUSTEE(S) (CONTINUED) Norton H. Reamer Trustee Trustee of the President, Chief 195 None 9/21/35 Trust since 1989; Executive Officer and a of the Portfolio Director of Asset since 1996 Management Finance Corp. (a specialty finance company serving the investment management industry) (since October 2003). President, Unicorn Corporation (an investment and financial advisory services company) (since September 2000). Formerly, Chairman, Hellman, Jordan Management Co., Inc. (an investment management company) (2000-2003). Formerly, Advisory Director of Berkshire Capital Corporation (investment banking firm) (2002-2003). 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) (1980-2000). Lynn A. Stout Trustee Trustee of the Professor of Law, 195 None 9/14/57 Trust since 1989; University of California of the Portfolio at Los Angeles School of since 2003 Law (since July 2001). Formerly, Professor of Law, Georgetown University Law Center.
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
POSITION(S) TERM OF WITH THE OFFICE AND NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) DATE OF BIRTH THE PORTFOLIO SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------------------- Thomas E. Faust Jr. President of Since 2002(3) Executive Vice President of EVM, BMR, EVC and EV; Chief 5/31/58 the Trust Investment Officer of EVM and BMR and Director of EVC. Chief Executive Officer of Belair Capital Fund LLC, Belcrest Capital Fund LLC, Belmar Capital Fund LLC, Belport Capital Fund LLC and Belrose Capital Fund LLC (private investment companies sponsored by EVM). Officer of 57 registered investment companies managed by EVM or BMR. Pamela Chan(2) Vice President Since 2002 Director of Lloyd George. Officer of 1 registered investment 2/7/57 of the company managed by EVM or BMR. Portfolio Gregory L. Coleman Vice President Since 2001 Partner of Atlanta Capital. Officer of 10 registered 10/28/49 of the Trust investment companies managed by EVM or BMR. William Walter Vice President Since 1992 Director, Finance Director and Chief Operating Officer of Raleigh Kerr(2) of the Lloyd George. Director of LGM. Officer of 4 registered 8/17/50 Portfolio investment companies managed by EVM or BMR. James A. Womack Vice President Since 2001 Vice President of Atlanta Capital. Officer of 10 registered 11/20/68 of the Trust investment companies managed by EVM or BMR. Alan R. Dynner Secretary Since 1997 Vice President, Secretary and Chief Legal Officer of BMR, 10/10/40 EVM, EVD, EV and EVC. Officer of 195 registered investment companies managed by EVM or BMR.
31
POSITION(S) TERM OF WITH THE OFFICE AND NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) DATE OF BIRTH THE PORTFOLIO SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------------------- PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES (CONTINUED) William J. Austin, Jr. Treasurer of Since 2002(3) Vice President of EVM and BMR. Officer of 56 registered 12/27/51 the Portfolio investment companies managed by EVM or BMR. James L. O'Connor Treasurer of Since 1989 Vice President of BMR, EVM and EVD. Officer of 116 registered 4/1/45 the Trust 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 and Messrs. Kerr and 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. (3) Prior to 2002, Mr. Faust served as Vice President of the Trust since 1999 and Mr. Austin served as Assistant Treasurer of the Portfolio since 1992. 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. 32 This Page Intentionally Left Blank SPONSOR AND MANAGER OF EATON VANCE GLOBAL GROWTH FUND AND ADMINISTRATOR OF GLOBAL 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 Once 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 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. Before investing, investors should consider carefully the Fund's investment objective(s), risks, and charges and expenses. The Fund's current prospectus contains this and other information about the Fund and is available through your financial advisor. Please read the prospectus carefully before you invest or send money. For further information please call 1-800-225-6265. [EV LOGO] [GRAPHIC IMAGE] ANNUAL REPORT AUGUST 31, 2004 EATON VANCE WORLDWIDE HEALTH SCIENCES FUND [GRAPHIC IMAGE] 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. IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS The Securities and Exchange Commission permits 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. The Fund will file a schedule of its portfolio holdings on Form N-Q with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year. The Fund's Form N-Q will be available on the Eaton Vance website www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC's public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room). From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios vote proxies according to a set of policies and procedures approved by the Funds' and Portfolios' Boards. You may obtain a description of these policies and procedures without charge, upon request, by calling 1-800-262-1122. This description is also available on the Securities and Exchange Commission's website at http://www.sec.gov. EATON VANCE WORLDWIDE HEALTH SCIENCES FUND as of August 31, 2004 LETTER TO SHAREHOLDERS [PHOTO OF THOMAS E. FAUST JR.] Thomas E. Faust Jr. President Eaton Vance Worldwide Health Sciences Fund (the "Fund") Class A shares had a total return of 5.56% during the one-year period ended August 31, 2004. That return was the result of an increase in net asset value (NAV) per share from $9.36 on August 31, 2003, to $9.88 on August 31, 2004.(1) Class B shares had a total return of 4.78% for the same period, the result of an increase in NAV per share from $10.04 to $10.52.(1) Class C shares had a total return of 4.82% for the same period, the result of an increase in NAV per share from $8.30 to $8.70.(1) Class D shares had a total return of 4.88% for the same period, the result of an increase in NAV per share from $8.81 to $9.24.(1) The Fund's Class R shares had a total return of 2.80% for the period from commencement of offering on September 8, 2003, to August 31, 2004, the result of an increase in NAV per share from $10.00 at inception to $10.28 on August 31, 2004.(1) By comparison, the S&P 500 Composite Index had a return of 11.45% during the year ended August 31, 2004, while the Morgan Stanley Capital International Europe, Australasia and Far East Index had a return of 22.64% for the same period.(2) For the same one-year period, the average return of funds in the Lipper Health/Biotechnology Classification was 7.45%.(2) RIGOROUS RESEARCH UNCOVERS EXCITING OPPORTUNITIES FOR GROWTH ... Managed by OrbiMed Advisors, the largest asset management firm dedicated solely to the life sciences sector, the Fund seeks long-term capital growth by investing primarily in a worldwide and diversified portfolio of health science companies. Starting from a universe of over 600 publicly-traded biotechnology and pharmaceutical companies worldwide, OrbiMed performs intensive fundamental research on company products, management teams, and financial statements to find compelling long-term investments. A focused portfolio is assembled after intensive quantitative and qualitative research, with the intention of holding these investments primarily for the long term. The Fund's investments range from small, developmental-stage biotechnology companies to large, diversified pharmaceutical companies. This broad universe of stocks, as well as its global exposure, provides a wide range of opportunities for OrbiMed's analysts to uncover attractive investments worldwide. Please turn to the interview with portfolio manager Samuel D. Isaly to learn more about the Fund's performance over the past year. Sincerely, Thomas E. Faust Jr. /s/ Thomas E. Faust Jr. President October 6, 2004 FUND INFORMATION as of August 31, 2004
PERFORMANCE(3) CLASS A CLASS B CLASS C CLASS D CLASS R --------------------------------------------------------------------------------------------- Average Annual Total Returns (at net asset value) One Year 5.56% 4.78% 4.82% 4.88% N.A. Five Years 13.72 12.86 12.87 N.A. N.A. Ten Years 17.97 N.A. N.A. N.A. N.A. Life of Fund+ 16.01 13.44 13.75 -0.77 2.80 SEC Average Annual Total Returns (including sales charge or applicable CDSC) One Year -0.50% -0.22% 3.82% -0.12% N.A. Five Years 12.38 12.62 12.87 N.A. N.A. Ten Years 17.27 N.A. N.A. N.A. N.A. Life of Fund+ 15.65 13.44 13.75 -1.58 1.80
+Inception Dates - Class A: 7/26/85; Class B: 9/23/96; Class C: 1/05/98; Class D: 3/02/01; Class R: 9/08/03 (1) These returns do not include the 5.75% maximum sales charge for the Fund's Class A shares or the applicable contingent deferred sales charges (CDSC) for Class B, Class C, and Class D shares. Class R shares generally have no sales charge. If the sales charge was deducted, the performance would be reduced. Class A shares and Class R shares redeemed or exchanged within 3 months of settlement of purchase are subject to a 1% redemption fee. (2) It is not possible to invest directly in an Index or a Lipper Classification. (3) SEC returns for Class A reflect the maximum 5.75% sales charge. SEC returns for Class B and Class D reflect applicable CDSC based on the following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC 1-Year return for Class C reflects 1% CDSC. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR OFFERING PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO www.eatonvance.com. 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 EATON VANCE WORLDWIDE HEALTH SCIENCES FUND as of August 31, 2004 MANAGEMENT DISCUSSION AN INTERVIEW WITH SAMUEL D. ISALY, MANAGING PARTNER, ORBIMED ADVISORS LLC, INVESTMENT ADVISER TO WORLDWIDE HEALTH SCIENCES PORTFOLIO [PHOTO OF SAMUEL D. ISALY] Samuel D. Isaly Portfolio Manager Q: SAM, WOULD YOU GIVE SHAREHOLDERS AN OVERVIEW OF THE FUND'S PERFORMANCE THIS YEAR? A: Worldwide Health Sciences Fund had mid-single digit returns for the year ended August 31, 2004. Although we lagged the Lipper group for the period, we were able to deliver positive returns, despite a down environment for heath care over recent months. For both the biotechnology and pharmaceutical sectors, the summer of 2004 really brought about the dog days. The biotech and big pharma indices hit calendar 2004 lows in the first week of August, following an almost continuous two-month slide that began in early June. The indices rebounded in the latter half of the month, along with the broad market, during a technical bounce of an oversold market. We were pleased to achieve positive returns in this market, and our long-term historical performance against the benchmark indices is outstanding (see page 5 for details). Q: WHAT SEEMED TO PRECIPITATE THE SLIDE IN HEALTH CARE STOCKS THIS SUMMER? A: During June 2004, the health care sector suffered a significant downturn, despite positive data presented by several biotechnology companies at the American Society of Clinical Oncology (ASCO) conference. Several key clinical trials highlighted the potential of emerging cancer therapies. In particular, we were enthusiastic about one company's data and believe its drug may become an important new therapeutic for the treatment of non-small cell lung cancer. Furthermore, we thought the combination data of two companies looked promising for the treatment of renal cell carcinoma. Share price performance of the health care sector remained disappointing since the conference concluded in early June 2004. During the rest of the period, there was an absence of news flow for the biotechnology sector, while headline risk regarding possible drug importation legislation hampered the pharmaceutical sector. [CHART] SECTOR DISTRIBUTION+ As a percentage of total net assets Major Capitalization - Pharmaceuticals 62.51% Specialty Capitalization 32.93% Other 4.56%
[CHART] REGIONAL DISTRIBUTION+ As a percentage of total net assets North America 69.51% Europe 15.67% Far East 10.26% Other 4.56%
+ As of August 31, 2004. Sector and Regional Distributions are subject to change due to active management. 3 Looking ahead in the short term, we are optimistically awaiting the upcoming earnings season, which we believe should meet or exceed expectations, as evidenced by data that indicate growth-rate acceleration for most therapeutic categories. In our view, the pharmaceutical and biotechnology sectors still remain at attractive levels, based on their relatively stable earnings and low valuations compared to their growth prospects. Q: WHAT'S NEW ON THE ADMINISTRATIVE/POLITICAL FRONT? A: President Bush nominated FDA Commissioner Mark McClellan to head up the Centers for Medicare and Medicaid Services. Despite the FDA losing a strong leader, we view his nomination to the Centers as a positive for the industry because of the influence Dr. McClellan will have over the Centers' drug pricing policies. Q: SAM, IT IS NOTABLE THAT THE PORTFOLIO DOES NOT OWN MANY HEALTH CARE STOCKS OUTSIDE OF PHARMACEUTICALS AND BIOTECHNOLOGY. CAN YOU SPEAK ABOUT THAT? A: Our Portfolio, for the most part, is not invested in medical device, hospital management, and medical services companies. Generally, such companies are low-margin businesses, with significant payroll expenses, and they don't represent the type of technological advance we seek in our investments. While there are some medical device companies with innovative products, in our experience, we have found that they often have short life-spans and difficulties maintaining their proprietary positions. Q: THANK YOU, SAM. ANY FINAL THOUGHTS TO SHARE? A: The technical market rebound in late August 2004 came just in time for the fourth quarter biotechnology seasonality. Historically, the abundance of scientific meetings and clinical data presentations that characterize the fourth quarter have led to positive sector returns. As the U.S. Presidential election hits the home stretch and political rhetoric peaks, pharmaceutical names will probably remain out of favor among the investment community. With an abundance of cash still being held on the sidelines, some pent-up demand for health care exposure could flow into the major biotech names due to their visible and dependable earnings growth. We believe the Fund is well positioned to benefit potentially from such a scenario, due to its sizeable major biotech exposure. TOP TEN HOLDINGS+ As a percentage of total net assets Novartis AG 7.2% Genzyme Corp. 6.3 Amgen, Inc. 5.5 Genentech, Inc. 5.2 MedImmune, Inc. 4.6 Lilly (Eli) & Co. 4.6 Biogen Idec, Inc. 4.4 Pfizer, Inc. 4.2 Takeda Chemical Industries, Ltd. 4.2 Schering-Plough Corp. 4.1
+ Top Ten Holdings represented 50.3% of total net assets of August 31, 2004. Holdings are subject to change due to active management. THE VIEWS EXPRESSED IN THIS REPORT ARE THOSE OF THE PORTFOLIO MANAGER AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS, AND EATON VANCE DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE INVESTMENT DECISIONS FOR A FUND ARE BASED ON MANY FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF ANY FUND. 4 EATON VANCE WORLDWIDE HEALTH SCIENCES FUND as of August 31, 2004 FUND PERFORMANCE [CHART] COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE WORLDWIDE HEALTH SCIENCES FUND, CLASS A VS THE S&P 500 INDEX AND THE MSCI EUROPE, AUSTRALASIA AND FAR EAST INDEX* August 31, 1994 - August 31, 2004
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND CLASS A AT NAV S&P 500 EAFE Index 8/31/1994 10000 9425 10000 10000 9/30/1994 10147.5 9562.31 9755.66 9685.04 10/31/1994 10005.5 9428.42 9974.52 10007.56 11/30/1994 10113.4 9530.17 9611.75 9526.59 12/31/1994 9971.82 9396.73 9754.06 9586.24 1/31/1995 10449.8 9847.1 10006.83 9217.98 2/28/1995 10691.7 10075.07 10396.43 9191.53 3/31/1995 10792 10169.59 10702.72 9764.81 4/30/1995 11004.4 10369.76 11017.64 10132.06 5/31/1995 11476.5 10814.57 11457.12 10011.28 6/30/1995 12160.9 11459.56 11722.99 9835.71 7/31/1995 13152.2 12393.67 12111.58 10448.05 8/31/1995 13813 13016.41 12141.81 10049.49 9/30/1995 14001.9 13194.33 12653.93 10245.76 10/31/1995 13759.9 12966.37 12608.72 9970.35 11/30/1995 14344.4 13517.09 13161.6 10247.76 12/31/1995 16075.6 15148.46 13415.13 10660.65 1/31/1996 16884.4 15910.6 13871.18 10704.41 2/29/1996 16911.1 15935.8 14000.23 10740.6 3/31/1996 17058.2 16074.37 14135.02 10968.69 4/30/1996 17840.2 16811.32 14343.23 11287.58 5/31/1996 18655.7 17579.77 14712.5 11079.87 6/30/1996 18562.1 17491.59 14768.59 11142.23 7/31/1996 17078.2 16093.27 14116.48 10816.57 8/31/1996 18100.9 17056.97 14414.68 10840.27 9/30/1996 18625.8 17551.59 15225.25 11128.25 10/31/1996 18164 17116.43 15644.89 11014.38 11/30/1996 18206 17155.99 16826.41 11452.62 12/31/1996 19031.6 17934.01 16493.09 11305.3 1/31/1997 19857.3 18712.03 17522.95 10909.64 2/28/1997 20277.1 19107.63 17660.52 11088.08 3/31/1997 19619.4 18487.85 16936.22 11128.23 4/30/1997 18849.7 17762.58 17946.39 11187.28 5/31/1997 20906.8 19701.04 19038.22 11915.28 6/30/1997 21284.6 20057.08 19890.66 12572.37 7/31/1997 22138.3 20861.48 21472.44 12775.77 8/31/1997 21299.9 20071.47 20270.42 11821.62 9/30/1997 23668.1 22303.13 21379.93 12483.85 10/31/1997 22270 20985.64 20666.7 11524.28 11/30/1997 21499.6 20259.68 21622.62 11406.8 12/31/1997 21028.8 19816.04 21993.7 11506.29 1/31/1998 21727.9 20474.78 22236.73 12032.52 2/28/1998 22455.5 21160.41 23839.61 12804.59 3/31/1998 22441.2 21146.96 25059.43 13198.87 4/30/1998 22198.7 20918.42 25311.42 13303.34 5/31/1998 21342.7 20111.8 24876.95 13238.77 6/30/1998 21043.1 19829.48 25886.7 13338.99 7/31/1998 20843.4 19641.27 25611.74 13474.23 8/31/1998 17904.5 16871.86 21912.62 11804.92 9/30/1998 20415.4 19237.96 23316.43 11443 10/31/1998 22526.8 21227.63 25211.33 12635.82 11/30/1998 23710.9 22343.46 26738.72 13283.18 12/31/1998 25959.8 24462.63 28278.52 13807.19 1/31/1999 26256.7 24742.36 29460.58 13766.42 2/28/1999 24950.5 23511.53 28545.11 13438.33 3/31/1999 24490.4 23077.95 29686.87 13999.27 4/30/1999 23896.7 22518.49 30836.47 14566.53 5/31/1999 23659.2 22294.7 30109.34 13816.35 6/30/1999 24638.8 23217.82 31779 14355.01 7/31/1999 26360.6 24840.27 30787.66 14781.69 8/31/1999 27444.1 25861.29 30635.24 14835.67 9/30/1999 27073 25511.63 29796.44 14985 10/31/1999 28227.3 26599.35 31681.18 15546.27 11/30/1999 29113.4 27434.31 32325.15 16086.43 12/31/1999 32169 30313.74 34227.85 17530.21 1/31/2000 35027.8 33007.62 32508.37 16416.36 2/29/2000 45258.2 42648.08 31893.64 16858.29 3/31/2000 43941.3 41407.08 35011.74 17511.78 4/30/2000 43138.3 40650.37 33958.76 16590.25 5/31/2000 42768.9 40302.29 33261.66 16185.06 6/30/2000 52710.3 49670.33 34081.8 16818.03 7/31/2000 52790.6 49746.02 33549.44 16112.94 8/31/2000 59423.5 55996.4 35632.17 16252.8 9/30/2000 59953.5 56495.84 33751.51 15461.42 10/31/2000 57217.7 53917.83 33608.34 15096.19 11/30/2000 56000 52770.33 30960.61 14530.08 12/31/2000 58436.4 55066.22 31112.5 15046.53 1/31/2001 55773.3 52556.76 32215.67 15038.77 2/28/2001 52758.6 49715.85 29280.08 13911.35 3/31/2001 47181.2 44460.18 27426.21 12984.01 4/30/2001 51100.4 48153.35 29555.82 13886.29 5/31/2001 54768.4 51609.79 29754.09 13396.19 6/30/2001 53512.3 50426.08 29030.18 12848.35 7/31/2001 51200.9 48248.05 28744.29 12614.57 8/31/2001 51653.2 48674.19 26946.65 12294.9 9/30/2001 49176.8 46340.68 24770.82 11049.59 10/31/2001 51765.1 48779.67 25243.45 11332.59 11/30/2001 54247.7 51119.1 27179.31 11750.34 12/31/2001 54564.6 51417.75 27417.55 11820.15 1/31/2002 50761.5 47833.94 27017.66 11192.09 2/28/2002 49916.3 47037.54 26496.51 11270.6 3/31/2002 50550.2 47634.84 27493.14 11880.25 4/30/2002 47064 44349.68 25827.02 11958.98 5/31/2002 45954.7 43304.4 25637.42 12110.51 6/30/2002 42627 40168.56 23811.9 11628.44 7/31/2002 41042.3 38675.31 21956.21 10480.48 8/31/2002 40355.6 38028.23 22099.95 10456.69 9/30/2002 37450.5 35290.6 19700.28 9333.71 10/31/2002 40514.1 38177.56 21432.59 9835.35 11/30/2002 41834.6 39421.93 22692.86 10281.74 12/31/2002 40408.5 38078.01 21360.39 9936.02 1/31/2003 40250 37928.68 20801.89 9521.21 2/28/2003 38559.7 36335.87 20489.31 9302.7 3/31/2003 40461.3 38127.78 20687.7 9119.92 4/30/2003 42943.9 40467.21 22390.94 10013.78 5/31/2003 48278.9 45494.51 23569.54 10620.55 6/30/2003 48120.4 45345.18 23870.64 10877.2 7/31/2003 50867.1 47933.49 24291.71 11140.5 8/31/2003 49440.9 46589.56 24764.51 11409.53 9/30/2003 49916.3 47037.54 24502.3 11761.25 10/31/2003 50074.8 47186.86 25887.68 12494.32 11/30/2003 50022 47137.09 26115.19 12772.09 12/31/2003 52715.9 49675.62 27483.83 13769.91 1/31/2004 54775.9 51616.85 27988.19 13964.62 2/29/2004 55621.1 52413.25 28377.11 14286.99 3/31/2004 54511.8 51367.98 27949.05 14367.38 4/30/2004 55726.7 52512.8 27510.88 14042.37 5/31/2004 54987.2 51815.95 27887.66 14089.59 6/30/2004 54881.6 51716.4 28429.77 14398.3 7/31/2004 51976.4 48978.77 27488.94 13931.02 8/31/2004 52187.7 49177.87 27599.35 13992.54
PERFORMANCE(+) CLASS A CLASS B CLASS C CLASS D CLASS R --------------------------------------------------------------------------------------------- Average Annual Total Returns (at net asset value) One Year 5.56% 4.78% 4.82% 4.88% N.A. Five Years 13.72 12.86 12.87 N.A. N.A. Ten Years 17.97 N.A. N.A. N.A. N.A. Life of Fund++ 16.01 13.44 13.75 -0.77 2.80 SEC Average Annual Total Returns (including sales charge or applicable CDSC) One Year -0.50% -0.22% 3.82% -0.12% N.A. Five Years 12.38 12.62 12.87 N.A. N.A. Ten Years 17.27 N.A. N.A. N.A. N.A. Life of Fund++ 15.65 13.44 13.75 -1.58 1.80
++Inception Dates - Class A: 7/26/85; Class B: 9/23/96; Class C:1/05/98; Class D:3/02/01; Class R: 9/08/03 * Source: Thomson Financial. Investment operations commenced 7/26/85. The performance chart above compares the Fund's total return with that of broad-based securities market indices. The lines on the chart represent the total returns of $10,000 hypothetical investments in the Fund, the S&P 500 Index - a widely recognized index of 500 common stocks traded in the U.S. - and the Morgan Stanley Capital International Europe, Australasia, and Far East Index (EAFE) - an index of common stocks traded in foreign markets. An investment in the Fund's Class B shares on 9/23/96 at net asset value would have been worth $27,222 on August 31, 2004. An investment in the Fund's Class C shares on 1/5/98 at net asset value would have been worth $23,579 on August 31, 2004. An investment in the Fund's Class D shares on 3/2/01 at net asset value would have been worth $9,734 on August 31, 2004; $9,457 including applicable CDSC. An investment in the Fund's Class R shares on 9/8/03 at net asset value would have been worth $10,280 on August 31, 2004. 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. + SEC returns for Class A reflect the maximum 5.75% sales charge. SEC returns for Class B, Class C, and Class D 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. Class R shares generally have no sales charge. Class A and Class R shares redeemed or exchanged within 3 months of settlement of purchase are subject to a 1% redemption fee. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR OFFERING PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR STATED TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN QUOTED. FOR PERFORMANCE AS OF THE MOST RECENT MONTH-END, PLEASE REFER TO www.eatonvance.com. 5 EATON VANCE WORLDWIDE HEALTH SCIENCES FUND as of August 31, 2004 FUND EXPENSES EXAMPLE: As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and redemption fees (if applicable); and (2) ongoing costs, including management fees; distribution or service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (3/1/04 - 8/31/04). ACTUAL EXPENSES: The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES: The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption fees (if applicable). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* (3/1/04) (8/31/04) (3/1/04 - 8/31/04) -------------------------------------------------------------------------------------------------------------- Actual Class A $ 1,000.00 $ 983.30 $ 8.62 Class B $ 1,000.00 $ 935.10 $ 12.26 Class C $ 1,000.00 $ 934.50 $ 12.25 Class D $ 1,000.00 $ 935.20 $ 12.26 Class R $ 1,000.00 $ 937.10 $ 9.93 Hypothetical (5% return before expenses) Class A $ 1,000.00 $ 1,016.20 $ 8.97 Class B $ 1,000.00 $ 1,012.50 $ 12.75 Class C $ 1,000.00 $ 1,012.50 $ 12.75 Class D $ 1,000.00 $ 1,012.50 $ 12.75 Class R $ 1,000.00 $ 1,014.90 $ 10.33
* Expenses are equal to the Fund's annualized expense ratio of 1.77% for Class A shares, 2.52% for Class B shares, 2.52% for Class C shares, 2.52% for Class D shares, and 2.04% for Class R shares multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). The example assumes that the $1,000 was invested at the net asset value per share determined at the close of business on February 29, 2004. The Example reflects the expenses of both the Fund and the Portfolio. 6 EATON VANCE WORLDWIDE HEALTH SCIENCES FUND as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investment in Worldwide Health Sciences Portfolio, at value (identified cost, $2,309,843,562) $ 2,505,399,641 Receivable for Fund shares sold 4,343,817 ---------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 2,509,743,458 ---------------------------------------------------------------------------------------------------- LIABILITIES Payable for Fund shares redeemed $ 4,943,748 Payable to affiliate for distribution and service fees 424,693 Accrued expenses 1,123,879 ---------------------------------------------------------------------------------------------------- TOTAL LIABILITIES $ 6,492,320 ---------------------------------------------------------------------------------------------------- NET ASSETS $ 2,503,251,138 ---------------------------------------------------------------------------------------------------- SOURCES OF NET ASSETS Paid-in capital $ 2,358,197,755 Accumulated net realized loss from Portfolio (computed on the basis of identified cost) (49,783,193) Accumulated net investment loss (719,503) Net unrealized appreciation from Portfolio (computed on the basis of identified cost) 195,556,079 ---------------------------------------------------------------------------------------------------- TOTAL $ 2,503,251,138 ---------------------------------------------------------------------------------------------------- CLASS A SHARES NET ASSETS $ 1,226,740,109 SHARES OUTSTANDING 124,135,638 NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 9.88 MAXIMUM OFFERING PRICE PER SHARE (100 DIVIDED BY 94.25 of $9.88) $ 10.48 ---------------------------------------------------------------------------------------------------- CLASS B SHARES NET ASSETS $ 756,367,343 SHARES OUTSTANDING 71,890,212 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (NOTE 6) (net assets DIVIDED BY shares of beneficial interest outstanding) $ 10.52 ---------------------------------------------------------------------------------------------------- CLASS C SHARES NET ASSETS $ 499,057,523 SHARES OUTSTANDING 57,337,108 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (NOTE 6) (net assets DIVIDED BY shares of beneficial interest outstanding) $ 8.70 ---------------------------------------------------------------------------------------------------- CLASS D SHARES NET ASSETS $ 19,492,453 SHARES OUTSTANDING 2,109,998 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (NOTE 6) (net assets DIVIDED BY shares of beneficial interest outstanding) $ 9.24 ---------------------------------------------------------------------------------------------------- CLASS R SHARES NET ASSETS $ 1,593,710 SHARES OUTSTANDING 155,002 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE (net assets DIVIDED BY shares of beneficial interest outstanding) $ 10.28 ----------------------------------------------------------------------------------------------------
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, 2004 INVESTMENT INCOME Dividends allocated from Portfolio (net of foreign taxes, $845,475) $ 14,807,845 Interest allocated from Portfolio 2,263,146 Expenses allocated from Portfolio (26,094,385) ---------------------------------------------------------------------------------------------------- NET INVESTMENT LOSS FROM PORTFOLIO $ (9,023,394) ---------------------------------------------------------------------------------------------------- EXPENSES Management fee $ 5,305,612 Trustees' fees and expenses 3,060 Distribution and service fees Class A 2,914,317 Class B 7,760,036 Class C 4,774,684 Class D 188,949 Class R 2,760 Transfer and dividend disbursing agent fees 5,288,865 Printing and postage 373,813 Registration fees 177,444 Legal and accounting services 67,263 Custodian fee 33,754 Miscellaneous 146,715 ---------------------------------------------------------------------------------------------------- TOTAL EXPENSES $ 27,037,272 ---------------------------------------------------------------------------------------------------- Deduct -- Reduction of custodian fee $ 17,865 Reduction of Management fee 7,143 ---------------------------------------------------------------------------------------------------- TOTAL EXPENSE REDUCTIONS $ 25,008 ---------------------------------------------------------------------------------------------------- NET EXPENSES $ 27,012,264 ---------------------------------------------------------------------------------------------------- NET INVESTMENT LOSS $ (36,035,658) ---------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from Portfolio -- Investment transactions (identified cost basis) $ 108,815,291 Foreign currency transactions (841,112) ---------------------------------------------------------------------------------------------------- NET REALIZED GAIN $ 107,974,179 ---------------------------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) -- Investments from Portfolio (identified cost basis) $ 31,593,374 Foreign currency (99,586) Foreign currency from Portfolio (18,276) ---------------------------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 31,475,512 ---------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN $ 139,449,691 ---------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 103,414,033 ----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 7 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 ------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment loss $ (36,035,658) $ (27,906,537) Net realized gain (loss) from investment and foreign currency transactions 107,974,179 (92,190,445) Net change in unrealized appreciation (depreciation) from investments and foreign currency 31,475,512 473,148,551 ------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS FROM OPERATIONS $ 103,414,033 $ 353,051,569 ------------------------------------------------------------------------------------------ Transactions in shares of beneficial interest -- Proceeds from sale of shares Class A $ 442,688,271 $ 273,635,116 Class B 122,754,376 95,975,947 Class C 160,385,145 90,493,237 Class D 5,482,804 4,375,026 Class R 1,863,513 -- Cost of shares redeemed Class A (267,574,285) (225,731,154) Class B (98,215,479) (98,015,108) Class C (75,224,288) (69,481,924) Class D (2,449,990) (1,961,723) Class R (236,773) -- Net asset value of shares exchanged Class A 14,777,588 -- Class B (14,777,588) -- Redemption fees 69,223 56,963 ------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS $ 289,542,517 $ 69,346,380 ------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS $ 392,956,550 $ 422,397,949 ------------------------------------------------------------------------------------------ NET ASSETS At beginning of year $ 2,110,294,588 $ 1,687,896,639 ------------------------------------------------------------------------------------------ AT END OF YEAR $ 2,503,251,138 $ 2,110,294,588 ------------------------------------------------------------------------------------------ ACCUMULATED NET INVESTMENT LOSS INCLUDED IN NET ASSETS AT END OF YEAR $ (719,503) $ (1,091,918) ------------------------------------------------------------------------------------------
Certain prior year amounts have been reclassed to conform to the current year presentation. SEE NOTES TO FINANCIAL STATEMENTS 8 FINANCIAL HIGHLIGHTS
CLASS A --------------------------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ---------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 9.360 $ 7.640 $ 10.280 $ 12.330 $ 6.160 ---------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.109) $ (0.096) $ (0.082) $ (0.094) $ (0.114) Net realized and unrealized gain (loss) 0.629 1.816 (2.108) (1.447) 6.758 ---------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.520 $ 1.720 $ (2.190) $ (1.541) $ 6.644 ---------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ (0.450) $ (0.509) $ (0.474) ---------------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ (0.450) $ (0.509) $ (0.474) ---------------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.000(4) $ 0.000(4) $ -- $ -- $ -- ---------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 9.880 $ 9.360 $ 7.640 $ 10.280 $ 12.330 ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) 5.56% 22.51% (21.87)% (13.08)% 116.52% ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 1,226,740 $ 985,769 $ 772,283 $ 783,176 $ 418,904 Ratios (As a percentage of average daily net assets): Net expenses(3) 1.80%+ 1.99% 1.69% 1.71% 1.79% Net expenses after custodian fee reduction(3) 1.79%+ 1.97% 1.67% 1.69% 1.74% Net investment loss (1.08)%+ (1.18)% (0.90)% (0.89)% (1.29)% Portfolio Turnover of the Portfolio 13% 27% 38% 24% 31% ----------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio reflect a reduction of the management and administration fees. Had such actions not been taken, the ratios and net investment loss per share would have been the same. (1) Net investment loss and redemption fees per share were computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. (4) Amounts represent less than $0.0005 per share. SEE NOTES TO FINANCIAL STATEMENTS 9
CLASS B --------------------------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ---------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 10.040 $ 8.260 $ 11.150 $ 13.670 $ 7.060 ---------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.197) $ (0.169) $ (0.164) $ (0.190) $ (0.198) Net realized and unrealized gain (loss) 0.677 1.949 (2.276) (1.589) 7.520 ---------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.480 $ 1.780 $ (2.440) $ (1.779) $ 7.322 ---------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ (0.450) $ (0.741) $ (0.712) ---------------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ (0.450) $ (0.741) $ (0.712) ---------------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.000(4) $ -- $ -- $ -- $ -- ---------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 10.520 $ 10.040 $ 8.260 $ 11.150 $ 13.670 ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) 4.78% 21.55% (22.43)% (13.75)% 114.93% ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 756,367 $ 712,385 $ 593,993 $ 621,963 $ 411,280 Ratios (As a percentage of average daily net assets): Net expenses(3) 2.55%+ 2.74% 2.44% 2.45% 2.54% Net expenses after custodian fee reduction(3) 2.54%+ 2.72% 2.42% 2.43% 2.49% Net investment loss (1.84)%+ (1.93)% (1.66)% (1.64)% (2.03)% Portfolio Turnover of the Portfolio 13% 27% 38% 24% 31% ----------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio reflect a reduction of the management and administration fees. Had such actions not been taken, the ratios and net investment loss per share would have been the same. (1) Net investment loss and redemption fees per share were computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total retun is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. (4) Amounts represent less than $0.0005 per share. SEE NOTES TO FINANCIAL STATEMENTS 10
CLASS C --------------------------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1) 2000(1) ---------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 8.300 $ 6.830 $ 9.310 $ 11.530 $ 6.070 ---------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.163) $ (0.140) $ (0.134) $ (0.158) $ (0.182) Net realized and unrealized gain (loss) 0.563 1.610 (1.896) (1.321) 6.354 ---------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.400 $ 1.470 $ (2.030) $ (1.479) $ 6.172 ---------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ (0.450) $ (0.741) $ (0.712) ---------------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ (0.450) $ (0.741) $ (0.712) ---------------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.000(4) $ -- $ -- $ -- $ -- ---------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 8.700 $ 8.300 $ 6.830 $ 9.310 $ 11.530 ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(2) 4.82% 21.52% (22.46)% (13.70)% 114.90% ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 499,058 $ 396,330 $ 310,766 $ 266,628 $ 128,973 Ratios (As a percentage of average daily net assets): Net expenses(3) 2.55%+ 2.74% 2.44% 2.46% 2.53% Net expenses after custodian fee reduction(3) 2.54%+ 2.72% 2.42% 2.44% 2.48% Net investment loss (1.83)%+ (1.93)% (1.65)% (1.64)% (2.02)% Portfolio Turnover of the Portfolio 13% 27% 38% 24% 31% ----------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio reflect a reduction of the management and administration fees. Had such actions not been taken, the ratios and net investment loss per share would have been the same. (1) Net investment loss and redemption fees per share were computed using average shares outstanding. (2) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (3) Includes the Fund's share of the Portfolio's allocated expenses. (4) Amounts represent less than $0.0005 per share. SEE NOTES TO FINANCIAL STATEMENTS 11
CLASS D ---------------------------------------------------------------- YEAR ENDED AUGUST 31, ---------------------------------------------------------------- 2004(1) 2003(1) 2002(1) 2001(1)(2) -------------------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of year $ 8.810 $ 7.260 $ 9.860 $ 10.000 -------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.172) $ (0.149) $ (0.135) $ (0.088) Net realized and unrealized gain (loss) 0.602 1.699 (2.015) (0.052) -------------------------------------------------------------------------------------------------------------------------- TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.430 $ 1.550 $ (2.150) $ (0.140) -------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS From net realized gain $ -- $ -- $ (0.450) $ -- -------------------------------------------------------------------------------------------------------------------------- TOTAL DISTRIBUTIONS $ -- $ -- $ (0.450) $ -- -------------------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.000(6) $ -- $ -- $ -- -------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF YEAR $ 9.240 $ 8.810 $ 7.260 $ 9.860 -------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(3) 4.88% 21.35% (22.43)% (1.40)% -------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $ 19,492 $ 15,811 $ 10,854 $ 3,842 Ratios (As a percentage of average daily net assets): Net expenses(4) 2.55%+ 2.74% 2.44% 2.48%(5) Net expenses after custodian fee reduction(4) 2.54%+ 2.72% 2.42% 2.46%(5) Net investment loss (1.83)%+ (1.93)% (1.59)% (1.77)%(5) Portfolio Turnover of the Portfolio 13% 27% 38% 24% --------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio reflect a reduction of the management and administration fees. Had such actions not been taken, the ratios and net investment loss per share would have been the same. (1) Net investment loss and redemption fees per share were computed using average shares outstanding. (2) For the period from the commencement of offering of Class D shares, March 2, 2001, to August 31, 2001. (3) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annualized basis. (4) Includes the Fund's share of the Portfolio's allocated expenses. (5) Annualized. (6) Amounts represent less than $0.0005 per share. SEE NOTES TO FINANCIAL STATEMENTS 12
CLASS R --------------------- PERIOD ENDED AUGUST 31, 2004(1)(2) ----------------------------------------------------------------------------------------------------------------- Net asset value -- Beginning of period $ 10.000 ----------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM OPERATIONS Net investment loss $ (0.133) Net realized and unrealized gain 0.412 ----------------------------------------------------------------------------------------------------------------- TOTAL INCOME FROM OPERATIONS $ 0.279 ----------------------------------------------------------------------------------------------------------------- Redemption fees $ 0.001 ----------------------------------------------------------------------------------------------------------------- NET ASSET VALUE -- END OF PERIOD $ 10.280 ----------------------------------------------------------------------------------------------------------------- TOTAL RETURN(3) 2.80% ----------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $ 1,594 Ratios (As a percentage of average daily net assets): Net expenses(4) 2.05%(5)+ Net expenses after custodian fee reduction(4) 2.04%(5)+ Net investment loss (1.29)%(5)+ Portfolio Turnover of the Portfolio 13% -----------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio reflect a reduction of the management and administration fees. Had such actions not been taken, the ratios and net investment loss per share would have been the same. (1) For the period from the commencement of offering of Class R shares, September 8, 2003 to August 31, 2004. (2) Net investment loss and redemption fees per share were computed using average shares outstanding. (3) Returns are historical and are calculated by determining the percentage change in net asset value with all distributions reinvested. Total return is not computed on an annual basis. (4) Includes the Fund's share of the Portfolio's allocated expenses. (5) Annualized. SEE NOTES TO FINANCIAL STATEMENTS 13 EATON VANCE WORLDWIDE HEALTH SCIENCES FUND as of August 31, 2004 NOTES TO FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES Eaton Vance Worldwide Health Sciences 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 five classes of shares. Class A shares are generally sold subject to a sales charge imposed at the time of purchase. Class B, Class C and Class D shares are sold at net asset value and are subject to a contingent deferred sales charge (see Note 6). Class R shares are offered at net asset value and are not subject to a sales charge. The Trustees have adopted a conversion feature pursuant to which Class B and Class D shares of the Fund automatically convert to Class A shares eight years after their purchase as described in the Fund's prospectus. At the close of business on September 10, 2004, the Class D shares were merged into Class B shares. Class D shares are no longer offered. 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 Worldwide Health Sciences 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 (99.9% at August 31, 2004). 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 FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year all of its taxable income, including any net realized gains on investments. Accordingly, no provision for federal income or excise tax is necessary. At August 31, 2004, the Fund, for federal income tax purposes, had a capital loss carryover of $49,539,114 which will reduce the Fund's taxable income arising from future net realized gain on investment transactions, if any, to the extent permitted by the Internal Revenue Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. The capital loss carryover will expire as follows: $46,712,321 on August 31, 2011 and $2,826,793 on August 31, 2010. At August 31, 2004, net currency losses of $579,229 attributable to foreign currency transactions incurred after October 31, 2003 are treated as arising on the first day of the Fund's taxable year ended August 31, 2005. During the year ended August 31, 2004, capital loss carryovers of $14,160,257 were utilized to offset net realized gains. D 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 credit balances used to reduce the Fund's custodian fees are reported as a reduction of total expenses in the Statement of Operations. E EXPENSES -- The majority of expenses of the Trust are directly identifiable to an individual fund. Expenses which are not readily identifiable to a specific fund are allocated taking into consideration, among other things, the nature and type of expense and the relative size of the funds. F USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial 14 statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. G INDEMNIFICATIONS -- Under the Trust's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund and shareholders are indemnified against personal liability for obligations of the Trust. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. H REDEMPTION FEES -- Upon the redemption or exchange of shares held by Class A and Class R shareholders for less than three months, a fee of 1% of the current net asset value of the shares will be assessed and retained by the Fund for the benefit of the remaining shareholders. The redemption fee is accounted for as an addition to paid-in-capital. I 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 investment income allocated to the Fund by the Portfolio, less the Fund's direct and allocated expenses and at least one distribution annually of all or substantially all of the net realized capital gain (reduced by any available capital loss carryover from prior years) allocated by the Portfolio to the Fund, 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. Accounting principles generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be 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. The Fund paid no distribution for the years ended August 31, 2004 and August 31, 2003. During the year ended August 31, 2004, accumulated paid-in capital was decreased by $37,249,180, accumulated net investment loss was decreased by $36,408,073 and accumulated net realized loss on investments was decreased by $841,107 due to differences between book and tax accounting for net operating losses and foreign currency gain/loss. This change had no effect on the net assets or the net asset value per share. At August 31, 2004, the components of distributable earnings (accumulated losses) on a tax basis were as follows: Undistributed ordinary income $ 0 Past October currency loss $ (579,229) Capital loss carry forward $ (49,539,114)
The temporary differences between book and tax basis distributable earnings (accumulated losses) are primarily due to wash sales and foreign currency contracts. 3 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 calculated at a monthly rate of 1/48th of 1% (0.25% annually) of the Fund's average daily net assets up to $500 million, 0.23% of average net assets of $500 million but less than $1 billion, 0.217% of average net assets of $1 billion but less than $1.5 billion, 0.20% of average net assets of $1.5 billion but less than $2 billion, 0.183% of average net assets of $2 billion but less than $3 billion, and 0.167% of average net assets of $3 billion or more. Effective March 15, 2004, EVM agreed to a fee reduction, such agreement being memorialized in a Fee Reduction Agreement between EVM and the Fund. EVM agreed to reduce its fee to the annual rate of 0.183% of average net assets of $2 billion but less than $2.5 billion and 0.167% of average net assets of $2.5 billion or more. For the year ended August 31, 2004, the fee was equivalent to 0.22% of the Fund's average daily net assets and amounted to $5,305,612. Pursuant to the Fee Reduction Agreement, EVM reduced its fee in the amount of $7,143 for the year ended August 31, 2004. 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. EVM serves as the sub-transfer agent of the Fund and receives from the transfer agent an aggregate fee based upon the actual expenses 15 incurred by EVM in the performance of those services. For the year ended August 31, 2004, EVM earned $418,730 in sub-transfer agent fees. The Fund was informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's principal underwriter, received $878,401 from the Fund as its portion of the sales charge on sales of Class A shares for the year ended August 31, 2004. EVD also received from the Fund approximately $119,000 in fees for share repurchase transactions for the year ended August 31, 2004. Certain officers and Trustees of the Fund and of the Portfolio are officers of the above organizations. In addition, administrative fees are paid by the Portfolio to EVM. See Note 2 of the Portfolio's Notes to Financial Statements which are included elsewhere in the report. 4 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 2004 2003 ------------------------------------------------------------ Sales 44,193,553 32,697,645 Redemptions (26,836,524) (28,447,600) Exchange from Class B shares 1,442,917 -- ------------------------------------------------------------ NET INCREASE 18,799,946 4,250,045 ------------------------------------------------------------ YEAR ENDED AUGUST 31, ------------------------------------------------------------ CLASS B 2004 2003 ------------------------------------------------------------ Sales 11,468,107 10,600,648 Redemptions (9,194,030) (11,566,481) Exchange to Class A shares (1,350,966) -- ------------------------------------------------------------ NET INCREASE (DECREASE) 923,111 (965,833) ------------------------------------------------------------ YEAR ENDED AUGUST 31, ------------------------------------------------------------ CLASS C 2004 2003 ------------------------------------------------------------ Sales 18,112,157 12,008,224 Redemptions (8,500,862) (9,774,048) ------------------------------------------------------------ NET INCREASE 9,611,295 2,234,176 ------------------------------------------------------------ YEAR ENDED AUGUST 31, ------------------------------------------------------------ CLASS D 2004 2003 ------------------------------------------------------------ Sales 580,145 561,705 Redemptions (263,953) (263,798) ------------------------------------------------------------ NET INCREASE 316,192 297,907 ------------------------------------------------------------ PERIOD ENDED CLASS R AUGUST 31, 2004(1) ------------------------------------------------------------ Sales 177,618 Redemptions (22,616) ------------------------------------------------------------ NET INCREASE 155,002 ------------------------------------------------------------
(1) For the period September 8, 2003 to August 31, 2004. Redemptions or exchanges of Class A and Class R shares made within three months of purchase are subject to a redemption fee equal to 1% of the amount redeemed. For the years ended August 31, 2003 and August 31, 2004, the Fund received $56,963 and $69,223, respectively, in redemption fees on Class A shares. For the period from the start of business, September 8, 2003 to August 31, 2004 the Fund received no redemption fees on Class R shares. 5 DISTRIBUTION PLANS Each Class of the Fund has in effect a distribution plan (the Plans) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The Plans require that the Class A shares and the Class R shares will pay a monthly distribution fee to EVD in an amount equal to 0.25% on an annual basis of the average daily net assets attributable to Class A shares and Class R shares. EVD may pay up to the entire amount of the Class A and Class R distribution fees to investment dealers for providing personal services to shareholders. For the year ended August 31, 2004, the Class A shares paid or accrued $2,914,317 payable to EVD. For the period September 8, 2003 to August 31, 2004, the Class R shares paid or accrued $1,380 payable to EVD. The Plans require the Class B, Class C and Class D shares to pay EVD amounts equal to 1/365 of 0.75% of the average daily net assets attributable to Class B, Class C and Class D shares for providing ongoing distribution services and facilities to each class. With respect to Class B, Class C and Class D, each class 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%, 6.25% and 5% of the aggregate amount received by the Fund for the Class B, Class C and Class D 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 16 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 $5,820,027, $3,581,013 and $141,712 for Class B, Class C and Class D shares, respectively, payable to EVD for the year ended August 31, 2004, representing 0.75% of the average daily net assets for Class B, Class C and Class D shares, respectively. At August 31, 2004, the amount of Uncovered Distribution Charges of EVD calculated under the Plans was approximately $26,645,000, $42,400,000 and $826,000 for Class B, Class C and Class D shares, respectively. The Plans authorize the Class B, Class C, Class D and Class R shares to make payments of service fees to EVD, investment dealers and other persons in amounts not exceeding 0.25% (annualized) of the average daily net assets attributable to Class B, Class C, Class D and Class R shares for each fiscal year. Service fee payments are made for personal services and/or the maintenance of shareholder accounts. Service fees are separate and distinct from the sales commissions and distribution fees payable by the Fund to EVD, and, as such are not subject to automatic discontinuance when there are no outstanding Uncovered Distribution Charges of EVD. Service fee payments for the year ended August 31, 2004 amounted to $1,940,009, $1,193,671 and $47,237 for Class B, Class C and Class D shares, respectively. Service fee payments for the period September 8, 2003 to August 31, 2004, amounted to $1,380 for Class R shares. 6 CONTINGENT DEFERRED SALES CHARGE A contingent deferred sales charge (CDSC) generally is imposed on redemptions of Class B and Class D 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 A shares purchased at net asset value in amounts of $1 million or more (other than shares purchased in a single transaction of $5 million or more) are subject to a 1.00% CDSC if redeemed within one year of purchase. Class B and Class D 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 Class' Distribution Plan (see Note 5). CDSC charges received when no Uncovered Distribution Charges exist will be credited to the Fund. For the year ended August 31, 2004, the Fund was informed that EVD received approximately $10,000, $2,040,000, $81,000 and $92,000 of CDSC paid by shareholders for Class A, Class B, Class C and Class D shares, respectively. 7 INVESTMENT TRANSACTIONS Increases and decreases in the Fund's investment in the Portfolio for the year ended August 31, 2004 aggregated $735,669,885 and $469,043,233, respectively. 17 EATON VANCE WORLDWIDE HEALTH SCIENCES FUND as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE TRUSTEES AND SHAREHOLDERS OF EATON VANCE WORLDWIDE HEALTH SCIENCES FUND: In our opinion, the accompanying statement of assets and liabilities, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Eaton Vance Worldwide Health Sciences Fund, a series of Eaton Vance Growth Trust (the "Fund") at August 31, 2004, and the results of its operations, the changes in its net assets, and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts October 25, 2004 18 WORLDWIDE HEALTH SCIENCES PORTFOLIO as of August 31, 2004 PORTFOLIO OF INVESTMENTS COMMON STOCKS -- 95.38%
PERCENTAGE OF SECURITY SHARES VALUE NET ASSETS ----------------------------------------------------------------------------------------------------- MAJOR CAPITALIZATION - EUROPE -- 14.60%(1) ALTANA AG 1,750,000 $ 95,429,634 3.81% Novartis AG 3,900,000 180,982,101 7.22% Serono SA 140,000 89,420,796 3.57% ----------------------------------------------------------------------------------------------------- $ 365,832,531 14.60% ----------------------------------------------------------------------------------------------------- MAJOR CAPITALIZATION - FAR EAST -- 10.26%(1) Chugai Pharmaceuticals Co., Ltd. 4,249,700 $ 62,452,213 2.49% Fujisawa Pharmaceutical Co., Ltd. 3,800,000 90,593,606 3.62% Takeda Chemical Industries, Ltd. 2,300,000 103,983,374 4.15% ----------------------------------------------------------------------------------------------------- $ 257,029,193 10.26% ----------------------------------------------------------------------------------------------------- MAJOR CAPITALIZATION - NORTH AMERICA -- 37.65%(1) Amgen, Inc.(2) 2,341,000 $ 138,797,890 5.54% Genentech, Inc.(2) 2,668,000 130,145,040 5.19% Genzyme Corp.(2) 2,916,000 157,464,000 6.29% Lilly (Eli) & Co. 1,812,000 114,971,400 4.59% MedImmune, Inc.(2) 4,870,000 116,246,900 4.64% Pfizer, Inc. 3,241,200 105,890,004 4.23% Schering-Plough Corp. 5,500,000 101,530,000 4.05% Wyeth Corp. 2,138,500 78,204,945 3.12% ----------------------------------------------------------------------------------------------------- $ 943,250,179 37.65% ----------------------------------------------------------------------------------------------------- SPECIALTY CAPITALIZATION - EUROPE -- 1.07% Actelion, Ltd.(2) 175,300 $ 16,335,877 0.65% Berna Biotech AG(2) 1,702,812 10,610,708 0.42% ----------------------------------------------------------------------------------------------------- $ 26,946,585 1.07% ----------------------------------------------------------------------------------------------------- SPECIALTY CAPITALIZATION - NORTH AMERICA -- 31.80% Abgenix, Inc.(2) 3,937,500 $ 39,178,125 1.56% Acadia Pharmaceuticals, Inc.(2) 90,000 580,500 0.02% Acadia Pharmaceuticals, Inc.(2)(3)(4) 531,606 3,412,911 0.14% Accelrys, Inc.(2) 1,166,000 6,879,400 0.28% Affymetrix, Inc.(2) 2,700,000 75,060,000 3.00% Biogen Idec, Inc.(2) 1,851,600 109,855,428 4.39% Biovail Corp.(2) 2,052,000 31,108,320 1.24% Enzon Pharmaceuticals, Inc.(2) 3,100,000 43,152,000 1.72% Exelixis, Inc.(2) 3,100,000 24,180,000 0.97% Gen-Probe, Inc.(2) 2,100,000 75,810,000 3.03% Given Imaging Ltd.(2)(3)(4) 485,000 17,130,200 0.68% Human Genome Sciences, Inc.(2) 5,195,000 $ 55,950,150 2.23% IVAX Corp.(2) 1,875,000 36,300,000 1.45% Ligand Pharmaceuticals, Inc., Class B(2) 4,050,000 39,811,500 1.59% Memory Pharmaceuticals Corp.(2)(3)(4) 289,628 2,073,736 0.08% NPS Pharmaceuticals, Inc.(2) 2,935,300 61,641,300 2.46% Onyx Pharmaceuticals, Inc.(2) 1,115,000 41,411,100 1.65% OSI Pharmaceuticals, Inc.(2) 1,225,000 72,997,750 2.91% Pharmacopeia Drug Discovery, Inc.(2) 583,000 3,066,580 0.12% Savient Pharmaceuticals, Inc.(2) 1,701,000 3,725,190 0.15% Tanox, Inc.(2) 1,493,600 24,719,080 0.99% Transkaryotic Therapies, Inc.(2) 1,817,000 28,617,750 1.14% ----------------------------------------------------------------------------------------------------- $ 796,661,020 31.80% ----------------------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST $2,192,409,783) $ 2,389,719,508 -----------------------------------------------------------------------------------------------------
PREFERRED STOCKS -- 0.03%
PERCENTAGE OF SECURITY SHARES VALUE NET ASSETS ----------------------------------------------------------------------------------------------------- SPECIALTY CAPITALIZATION - NORTH AMERICA -- 0.03% Predix Pharmaceuticals Holdings, Inc. Series AB(2)(3)(4) 646,000 $ 142,379 0.01% Predix Pharmaceuticals Holdings, Inc. Series C(2)(3)(4) 2,337,565 515,199 0.02% ----------------------------------------------------------------------------------------------------- $ 657,578 0.03% ----------------------------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (IDENTIFIED COST $3,015,199) $ 657,578 -----------------------------------------------------------------------------------------------------
OPTIONS -- 0.00%
PERCENTAGE OF SECURITY SHARES VALUE NET ASSETS ----------------------------------------------------------------------------------------------------- SPECIALTY CAPITALIZATION - NORTH AMERICA -- 0.00% Orchid BioSciences, Inc. Options, Exp. 7/24/11, 12/21/11(2)(3) 2,898 $ 2,487 0.00% ----------------------------------------------------------------------------------------------------- $ 2,487 0.00% ----------------------------------------------------------------------------------------------------- TOTAL OPTIONS (IDENTIFIED COST $0) $ 2,487 -----------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 19 WARRANTS -- 0.03%
PERCENTAGE OF SECURITY SHARES VALUE NET ASSETS ----------------------------------------------------------------------------------------------------- SPECIALTY CAPITALIZATION - NORTH AMERICA -- 0.03% Given Imaging Warrants, Exp. 9/15/11(2)(3)(4) 1,283 $ 41,056 0.00% Predix Pharmaceuticals Holding, Inc. Warrants, Exp. 8/9/09(2)(3)(4) 3,252,806 683,089 0.03% ----------------------------------------------------------------------------------------------------- $ 724,145 0.03% ----------------------------------------------------------------------------------------------------- TOTAL WARRANTS (IDENTIFIED COST $0) $ 724,145 -----------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 5.45%
PRINCIPAL AMOUNT PERCENTAGE OF SECURITY (000'S OMITTED) VALUE NET ASSETS ----------------------------------------------------------------------------------------------------- Barton Capital Corp., 1.53%, 9/14/04 $ 38,520 $ 38,498,718 1.54% Ciesco LLC, 1.55%, 10/6/04 65,000 64,902,048 2.59% Investors Bank and Trust Time Deposit, 1.58%, 9/1/04 33,203 33,203,000 1.32% ----------------------------------------------------------------------------------------------------- TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST, $136,603,766) $ 136,603,766 ----------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (IDENTIFIED COST $2,332,028,748) $ 2,527,707,484 100.89% ----------------------------------------------------------------------------------------------------- OTHER ASSETS, LESS LIABILITIES $ (22,307,618) (0.89)% ----------------------------------------------------------------------------------------------------- NET ASSETS $ 2,505,399,866 100.00% -----------------------------------------------------------------------------------------------------
(1) Major capitalization is defined as market value of $5 billion or more. (2) Non-income producing security. (3) Security valued at fair value using methods determined in good faith by or at the direction of the Trustees. (4) Restricted security. SEE NOTES TO FINANCIAL STATEMENTS 20 WORLDWIDE HEALTH SCIENCES PORTFOLIO as of August 31, 2004 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AS OF AUGUST 31, 2004 ASSETS Investments, at value (identified cost, $2,332,028,748) $ 2,527,707,484 Cash 707 Foreign currency, at value (identified cost, $21,371,977) 21,428,439 Interest and dividends receivable 2,274,456 Tax reclaim receivable 1,109,950 ------------------------------------------------------------------------------- TOTAL ASSETS $ 2,552,521,036 ------------------------------------------------------------------------------- LIABILITIES Payable for investments purchased $ 47,047,103 Accrued expenses 74,067 ------------------------------------------------------------------------------- TOTAL LIABILITIES $ 47,121,170 ------------------------------------------------------------------------------- NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $ 2,505,399,866 ------------------------------------------------------------------------------- SOURCES OF NET ASSETS Net proceeds from capital contributions and withdrawals $ 2,309,776,730 Net unrealized appreciation (computed on the basis of identified cost) 195,623,136 ------------------------------------------------------------------------------- TOTAL $ 2,505,399,866 -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2004 INVESTMENT INCOME Dividends (net of foreign taxes, $845,475) $ 14,807,846 Interest 2,263,146 ------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME $ 17,070,992 ------------------------------------------------------------------------------- EXPENSES Investment adviser fee $ 20,049,896 Administration fee 5,305,794 Trustees' fees and expenses 27,577 Custodian fee 765,079 Legal and accounting services 48,669 Miscellaneous 39,886 ------------------------------------------------------------------------------- TOTAL EXPENSES $ 26,236,901 ------------------------------------------------------------------------------- Deduct -- Reduction of custodian fee $ 135,321 Reduction of administration fee 7,195 ------------------------------------------------------------------------------- TOTAL EXPENSE REDUCTIONS $ 142,516 ------------------------------------------------------------------------------- NET EXPENSES $ 26,094,385 ------------------------------------------------------------------------------- NET INVESTMENT LOSS $ (9,023,393) ------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) -- Investment transactions (identified cost basis) $ 108,815,296 Foreign currency transactions (841,112) ------------------------------------------------------------------------------- NET REALIZED GAIN $ 107,974,184 ------------------------------------------------------------------------------- Change in unrealized appreciation (depreciation) -- Investments (identified cost basis) $ 31,593,377 Foreign currency (18,276) ------------------------------------------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 31,575,101 ------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN $ 139,549,285 ------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 130,525,892 -------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 21 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED AUGUST 31, 2004 AUGUST 31, 2003 ----------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS From operations -- Net investment loss $ (9,023,393) $ (6,265,714) Net realized gain (loss) from investment and foreign currency transactions 107,974,184 (92,200,204) Net change in unrealized appreciation (depreciation) from investments and foreign currency 31,575,101 473,159,282 ----------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 130,525,892 $ 374,693,364 ----------------------------------------------------------------------------------- Capital transactions -- Contributions $ 735,669,885 $ 461,854,115 Withdrawals (469,043,233) (415,838,181) ----------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 266,626,652 $ 46,015,934 ----------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS $ 397,152,544 $ 420,709,298 ----------------------------------------------------------------------------------- NET ASSETS At beginning of year $ 2,108,247,322 $ 1,687,538,024 ----------------------------------------------------------------------------------- AT END OF YEAR $ 2,505,399,866 $ 2,108,247,322 -----------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 22 SUPPLEMENTARY DATA
YEAR ENDED AUGUST 31, ---------------------------------------------------------------------- 2004 2003 2002 2001 2000 ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Ratios (As a percentage of average daily net assets): Net expenses 1.08%+ 1.16% 1.05% 1.05% 1.09% Net expenses after custodian fee reduction 1.07%+ 1.15% 1.03% 1.03% 1.05% Net investment loss (0.37)%+ (0.36)% (0.26)% (0.27)% (0.64)% Portfolio Turnover 13% 27% 38% 24% 31% ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN(1) 6.33% 23.51% (21.37)% -- -- ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS, END OF YEAR (000'S OMITTED) $ 2,505,400 $ 2,108,247 $ 1,687,538 $ 1,705,650 $ 962,712 -----------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Portfolio reflect a reduction of the administration fee. Had such action not been taken, the ratios would have been the same. (1) Total return is required to be disclosed for fiscal years beginning after December 15, 2000. SEE NOTES TO FINANCIAL STATEMENTS 23 WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 2004 NOTES TO FINANCIAL STATEMENTS 1 SIGNIFICANT ACCOUNTING POLICIES Worldwide Health Sciences Portfolio (the Portfolio) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company which was organized as a trust under the laws of the State of New York on March 26, 1996. The Portfolio seeks long-term capital growth by investing in a worldwide and diversified portfolio of health sciences companies. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At August 31, 2004, the Eaton Vance Worldwide Health Sciences Fund had an approximate 99.9% interest 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 -- Securities listed on a U.S. securities exchange generally are valued at the last sale price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on NASDAQ National Market System generally are valued at the official NASDAQ closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by an independent pricing service. The value of preferred equity securities that are valued by a pricing service on a bond basis will be adjusted by an income factor, to be determined by the investment adviser, to reflect the next anticipated regular dividend. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on the principal exchange or board of trade on which the options are traded or, in the absence of sales on such date, at the mean between the latest bid and asked prices therefore. Futures positions on securities and currencies generally are valued at closing settlement prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. If short-term debt securities were acquired with a remaining maturity of more than 60 days, their amortized cost value will be based on their value on the sixty-first day prior to maturity. 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. The daily valuation of foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. The Portfolio may rely on an independent fair valuation service in adjusting the valuations of foreign securities. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by an independent quotation service. Investments held by the Portfolio 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 of the Portfolio considering relevant factors, data and information including the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded. B INCOME -- Interest income is determined on the basis of interest accrued, adjusted for amortization of premium or accretion of discount. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Portfolio is informed of the ex-dividend date. C INCOME TAXES -- The Portfolio has elected to be treated as a partnership for federal tax purposes. No provision is made by the Portfolio for federal or state taxes on any taxable income of the Portfolio because each investor in the Portfolio is ultimately responsible for the payment of any taxes. Since 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. D EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee reduced by credits which are determined based on the average daily cash balance the Portfolio maintains with IBT. All credit balances used to reduce the Portfolio's custodian fees are reflected as a reduction of total operating expenses on the Statement of Operations. 24 E USE OF ESTIMATES -- The preparation of 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 revenue 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 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 nonhedging purposes. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains and losses are recorded for financial statement purposes as unrealized until such time as the contracts have been closed. H OTHER -- Investment transactions are accounted for on a trade date basis. Realized gains and losses are computed based on the specific identification of the securities sold. I INDEMNIFICATIONS -- Under the Portfolio's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Interestholders in the Portfolio are jointly and severally liable for the liabilities and obligations of the Portfolio in the event that the Portfolio fails to satisfy such liabilities and obligations; provided, however, that, to the extent assets are available in the Portfolio, the Portfolio may, under certain circumstances, indemnify interestholders from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in the Portfolio. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred. 2 INVESTMENT ADVISORY FEES, ADMINISTRATOR'S FEES AND OTHER TRANSACTIONS WITH AFFILIATES Pursuant to the Advisory Agreement, OrbiMed Advisors, LLC (OrbiMed) serves as the Investment Adviser of the Portfolio. Under this agreement, OrbiMed receives a monthly fee at the annual rate of 1% of the Portfolio's first $30 million in average net assets, 0.90% of the next $20 million in average net assets, 0.75% of the next $450 million in average net assets, 0.70% of average net assets of $500 million but less than $1 billion, 0.65% of average net assets of $1 billion but less than $1.5 billion, 0.60% of average net assets of $1.5 billion but less than $2 billion and 0.55% of average net assets of $2 billion but less than $3 billion. The fee rate declines for net assets of $3 billion and greater. In addition, effective September 1, 1997, OrbiMed's fee is subject to an upward or downward performance fee adjustment of up to 0.25% of the average daily net assets of the Portfolio based upon the investment performance of the Portfolio compared to the Standard & Poor's Index of 500 Common Stocks over specified periods. For the year ended August 31, 2004, the fee was equivalent to 0.82% of the Portfolio's average daily net assets and amounted to $20,049,896. Under an Administration Agreement between the Portfolio and its Administrator, Eaton Vance Management (EVM), EVM manages and administers the affairs of the Portfolio. The fee is calculated at a monthly rate of 1/48th of 1% (0.25% annually) of the Portfolio's average daily net assets up to $500 million, 0.23% of average net assets of $500 million but less than $1 billion, 0.217% of average net assets of $1 billion but less than $1.5 billion, 0.20% of average net assets of $1.5 billion but less than $2 billion, 0.183% of average net assets of $2 billion but less than $3 billion, and 0.167% of average net assets of $3 billion or more. Effective March 15, 2004, EVM agreed to a fee reduction, such agreement being memorialized in a Fee Reduction Agreement between EVM and the Portfolio. EVM agreed to reduce its fee to the annual rate of 0.183% 25 of average net assets of $2 billion but less than $2.5 billion and 0.167% of average net assets of $2.5 billion or more. For the year ended August 31, 2004, the administration fee was 0.22% of average net assets and amounted to $5,305,794. Pursuant to this Fee Reduction Agreement, EVM reduced its fee in the amount of $7,195 for the year ended August 31, 2004. Except for 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. Trustees of the Portfolio that are not affiliated with the Investment Adviser may elect to defer receipt of all or a portion of their annual fees in accordance with the terms of the Trustee Deferred Compensation Plan. For the year ended August 31, 2004, no significant amounts have been deferred. 3 INVESTMENTS Purchases and sales of investments, other than U.S. Government securities and short-term obligations, aggregated $779,200,782 and $558,468,092, respectively, for the year ended August 31, 2004. 4 FEDERAL INCOME TAX BASIS OF UNREALIZED APPRECIATION (DEPRECIATION) The cost and unrealized appreciation (depreciation) in value of the investments owned at August 31, 2004, as computed on a federal income tax basis, were as follows: AGGREGATE COST $ 2,332,273,931 ------------------------------------------------------ Gross unrealized appreciation $ 449,337,235 Gross unrealized depreciation (253,903,682) ------------------------------------------------------ NET UNREALIZED APPRECIATION $ 195,433,553 ------------------------------------------------------
The net unrealized depreciation on foreign currency is $(55,600). 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. 6 LINE OF CREDIT The Portfolio participates with other portfolios and funds managed by 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 portfolio or fund based on its borrowings at an amount above the Eurodollar rate or federal funds rate. In addition, a fee computed at an annual rate of 0.10% on the daily unused portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. The Portfolio did not have any significant borrowings or allocated fees during the year ended August 31, 2004. 7 RESTRICTED SECURITIES At August 31, 2004, the Portfolio owned the following securities (representing 0.96% of net assets) which were restricted as to public resale and not registered under the Securities Act of 1933. The Fund has various registration rights (exercisable under a variety of circumstances) with respect to these securities. The fair value of these securities is determined based on valuations provided by brokers when available, or if not available, they are valued at fair value using methods determined in good faith by or at the direction of the Trustees. This valuation may differ from the value that would be realized if the securities were sold and the difference could be material to the financial statements. 26
DATE OF DESCRIPTION ACQUISITION SHARES/FACE COST FAIR VALUE ------------------------------------------------------------------------------------------------------- COMMON STOCKS Acadia 5/05/00 - Pharmaceuticals, Inc.. 3/27/03 531,606 $ 4,500,000 $ 3,412,911 Given Imaging Ltd. 9/15/00 485,000 1,699,929 17,130,200 Memory 6/21/00 - Pharmaceuticals Corp. 3/04/02 289,628 1,950,001 2,073,736 ------------------------------------------------------------------------------------------------------- $ 8,149,930 $ 22,616,847 ------------------------------------------------------------------------------------------------------- PREFERRED STOCKS Predix Pharmaceuticals 8/12/03 - Holdings, Inc. Series AB 8/06/04 646,000 $ 2,500,000 $ 142,379 Predix Pharmaceuticals Holdings, Inc. Series C 8/06/04 2,337,565 515,199 515,199 ------------------------------------------------------------------------------------------------------- $ 3,015,199 $ 657,578 ------------------------------------------------------------------------------------------------------- WARRANTS AND OPTIONS Given Imaging Warrants, Exp. 9/15/11 8/30/01 1,283 $ 0 $ 41,056 Predix Pharmaceuticals Holdings, Inc. Warrants, Exp. 8/9/09 8/06/04 3,252,806 0 683,089 ------------------------------------------------------------------------------------------------------- $ 0 $ 724,145 ------------------------------------------------------------------------------------------------------- $ 11,165,129 $ 23,998,570 -------------------------------------------------------------------------------------------------------
8 FINANCIAL INSTRUMENTS The Portfolio regularly trades 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 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. At August 31, 2004, there were no outstanding obligations under these financial instruments. 27 WORLDWIDE HEALTH SCIENCES PORTFOLIO as of August 31, 2004 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE TRUSTEES AND INVESTORS OF WORLDWIDE HEALTH SCIENCES PORTFOLIO: In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the supplementary data present fairly, in all material respects, the financial position of Worldwide Health Sciences Portfolio (the "Portfolio") at August 31, 2004, and the results of its operations, the changes in its net assets, and the supplementary data for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and supplementary data (hereafter referred to as "financial statements") are the responsibility of the Portfolio's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts October 25, 2004 28 EATON VANCE WORLDWIDE HEALTH SCIENCES FUND MANAGEMENT AND ORGANIZATION Fund Management. The Trustees of Eaton Vance Growth Trust (the Trust) and Worldwide Health Sciences 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 "noninterested Trustees" consist of those Trustees who are not "interested persons" of the Trust and the Portfolio, as that term is defined under the 1940 Act. The business address of each Trustee and officer, with the exception of Mr. Isaly, is The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. As used below, "EVC" refers to Eaton Vance Corp., "EV" refers to Eaton Vance, Inc., "EVM" refers to Eaton Vance Management, "BMR" refers to Boston Management and Research, "EVD" refers to Eaton Vance Distributors, Inc. and "Atlanta Capital" refers to Atlanta Capital Management Company, LLC. EVC and EV are the corporate parent and trustee, respectively, of EVM and BMR. EVD is the Trust's principal underwriter, the Portfolio's placement agent and a wholly-owned subsidiary of EVM.
POSITION(S) TERM OF NUMBER OF PORTFOLIOS WITH THE OFFICE AND IN FUND COMPLEX NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DATE OF BIRTH THE PORTFOLIO SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD --------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE James B. Hawkes Trustee Trustee of Chairman, President and 195 Director of EVC 11/9/41 the Trust Chief Executive Officer since 1989; of BMR, EVC, EVM and of the EV; Director of EV; Portfolio Vice President and since 1996 Director of EVD. Trustee and/or officer of 195 registered investment companies in the Eaton Vance Fund Complex. Mr. Hawkes is an interested person because of his positions with BMR, EVM, EVC and EV which are affiliates of the Trust and the Portfolio. NONINTERESTED TRUSTEE(S) Samuel L. Hayes, Trustee Trustee of Jacob H. Schiff 195 Director of Tiffany & Co. III the Trust Professor of Investment (specialty retailer) and 2/23/35 since 1989; Banking Emeritus, Telect, Inc. of the Harvard University (telecommunication Portfolio Graduate School of services company) since 1996 Business Administration. William H. Park Trustee Since 2003 President and Chief 194 None 9/19/47 Executive Officer, Prizm Capital Management, LLC (investment management firm) (since 2002). Executive Vice President and Chief Financial Officer, United Asset Management Corporation (a holding company owning institutional investment management firms) (1982-2001). Ronald A. Pearlman Trustee Since 2003 Professor of Law, 194 None 7/10/40 Georgetown University Law Center (since 1999). Tax Partner, Covington & Burling, Washington, DC (1991-2000). Norton H. Reamer Trustee Trustee of President, Chief 195 None 9/21/35 the Trust Executive Officer and a since 1989; Director of Asset of the Management Finance Portfolio Corp. (a specialty since 1996 finance company serving the investment management industry) (since October 2003). President, Unicorn Corporation (an investment and financial advisory services company) (since September 2000). Formerly, Chairman, Hellman, Jordan Management Co., Inc. (an investment management company) (2000-2003). Formerly, Advisory Director of Berkshire Capital Corporation (investment banking firm) (2002-2003). 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) (1980-2000). Lynn A. Stout Trustee Since 1998 Professor of Law, 195 None 9/14/57 University of California at Los Angeles School of Law (since July 2001). Formerly, Professor of Law, Georgetown University Law Center.
29 PRINCIPAL OFFICERS WHO ARE NOT TRUSTEE(S)
POSITION(S) TERM OF WITH THE OFFICE AND NAME AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) DATE OF BIRTH THE PORTFOLIO SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------------------------------- Thomas E. Faust President of the Trust Since 2002(3) Executive Vice President of EVM, BMR, EVC and EV; Jr. Chief Investment Officer of EVM and BMR and Director 5/31/58 of EVC. Chief Executive Officer of Belair Capital Fund LLC, Belcrest Capital Fund LLC, Belmar Capital Fund LLC, Belport Capital Fund LLC and Belrose Capital Fund LLC (private investment companies sponsored by EVM). Officer of 57 registered investment companies managed by EVM or BMR. Gregory L. Vice President of Since 2001 Partner of Atlanta Capital. Officer of 10 registered Coleman the Trust investment companies managed by EVM or BMR. 10/28/49 Samuel D. President of Since 2002(3) Managing Partner of OrbiMed Advisors LLC. Officer of Isaly(2) the Portfolio 4 registered investment companies managed by EVM or BMR. 3/12/45 Duncan W. Vice President of the Since 2002 Senior Vice President and Chief Equity Investment Richardson Portfolio Officer of EVM and BMR. Officer of 43 registered 10/26/57 investment companies managed by EVM or BMR. James A. Womack Vice President of the Since 2001 Vice President of Atlanta Capital. Officer of 10 11/20/68 Trust registered investment companies managed by EVM or BMR. Alan R. Dynner Secretary Since 1997 Vice President, Secretary and Chief Legal Officer of 10/10/40 BMR, EVM, EVD, EV and EVC. Officer of 195 registered investment companies managed by EVM or BMR. Barbara E. Treasurer of the Since 2002(3) Vice President of EVM and BMR. Officer of 195 Campbell Portfolio registered investment companies managed by EVM or BMR. 6/19/57 James L. O'Connor Treasurer of the Trust Since 1989 Vice President of BMR, EVM and EVD. Officer of 116 4/1/45 registered investment companies managed by EVM or BMR.
(1) Includes both master and feeder funds in a master-feeder structure. (2) The business address for Mr. Isaly is 767 Third Avenue, New York, NY 10017. (3) Prior to 2002, Mr. Isaly served as Vice President of the Portfolio since 1996, Mr. Faust served as Vice President of the Trust since 1999 and Ms. Campbell served as Assistant Treasurer of the Portfolio since 1996. 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 This Page Intentionally Left Blank This Page Intentionally Left Blank This Page Intentionally Left Blank SPONSOR AND MANAGER OF EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AND ADMINISTRATOR OF WORLDWIDE HEALTH SCIENCES PORTFOLIO EATON VANCE MANAGEMENT THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 ADVISER OF WORLDWIDE HEALTH SCIENCES PORTFOLIO ORBIMED ADVISORS LLC 767 3RD AVENUE NEW YORK, NY 10017 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 REGISTERED PUBLIC ACCOUNTING FIRM PRICEWATERHOUSECOOPERS LLP 125 HIGH STREET BOSTON, MA 02110 EATON VANCE WORLDWIDE HEALTH SCIENCES FUND THE EATON VANCE BUILDING 255 STATE STREET BOSTON, MA 02109 THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. BEFORE INVESTING, INVESTORS SHOULD CONSIDER CAREFULLY THE FUND'S INVESTMENT OBJECTIVE(S), RISKS, AND CHARGES AND EXPENSES. THE FUND'S CURRENT PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND AND IS AVAILABLE THROUGH YOUR FINANCIAL ADVISOR. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. FOR FURTHER INFORMATION PLEASE CALL 1-800-225-6265. 426-10/04 HSSRC ITEM 2. CODE OF ETHICS The registrant has adopted a code of ethics applicable to its Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-262-1122. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT The registrant's Board has designated William H. Park, Samuel L. Hayes, III and Norton H. Reamer, each an independent trustee, as its audit committee financial experts. Mr. Park is a certified public accountant who is the President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm). Previously, he served as Executive Vice President and Chief Financial Officer of United Asset Management Corporation ("UAM") (a holding company owning institutional investment management firms). Mr. Hayes is the Jacob H. Schiff Professor of Investment Banking Emeritus of the Harvard University Graduate School of Business Administration. Mr. Reamer is the President, Chief Executive Officer and a Director of Asset Management Finance Corp. (a specialty finance company serving the investment management industry) and is President of Unicorn Corporation (an investment and financial advisory services company). Formerly, Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment management company) and Advisory Director of Berkshire Capital Corporation (an investment banking firm), Chairman of the Board of UAM and Chairman, President and Director of the UAM Funds (mutual funds). ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES (a) -(d) Each of Eaton Vance Asian Small Companies Fund, Eaton Vance Growth Fund, Eaton Vance Global Growth Fund, Eaton Vance Greater China Growth Fund and Eaton Vance Worldwide Health Sciences Fund (the "Fund(s)") is a series of Eaton Vance Growth Trust (the "Trust"), a Massachusetts business trust. The Trust is registered under the Investment Company Act of 1940 as an open-end management investment company. Including the Funds, the Trust contains a total of 8 series (collectively, the "Series"). This Form N-CSR relates to the Fund annual reports. The following tables present the aggregate fees billed to each Fund for the Fund's respective fiscal years ended August 31, 2003 and August 31, 2004 by the Fund's principal accountants for professional services rendered for the audit of the Fund's annual financial statements and fees billed for other services rendered by the principal accountant during those periods. Eaton Vance Asian Small Companies Fund
FISCAL YEARS ENDED 8/31/03 8/31/04 ------------------------------------------------------ Audit Fees $ 2,060 $ 8,652 Audit-Related Fees(1) $ 0 $ 0 Tax Fees(2) $ 5,200 $ 5,300 All Other Fees(3) $ 0 $ 0 --------------------- Total $ 7,260 $ 13,952 =====================
Eaton Vance Growth Fund
FISCAL YEARS ENDED 8/31/03 8/31/04 ------------------------------------------------------ Audit Fees $ 20,500 $ 21,050 Audit-Related Fees(1) $ 0 $ 0 Tax Fees(2) $ 8,750 $ 8,975 All Other Fees(3) $ 0 $ 0 --------------------- Total $ 29,250 $ 30,025 =====================
Eaton Vance Global Growth Fund
FISCAL YEARS ENDED 8/31/03 8/31/04 ------------------------------------------------------ Audit Fees $ 21,100 $ 21,350 Audit-Related Fees(1) $ 0 $ 0 Tax Fees(2) $ 9,150 $ 9,375 All Other Fees(3) $ 0 $ 0 --------------------- Total $ 30,250 $ 30,725 =====================
Eaton Vance Greater China Growth Fund
FISCAL YEARS ENDED 8/31/03 8/31/04 ------------------------------------------------------ Audit Fees $ 9,373 $ 10,918
Audit-Related Fees(1) $ 0 $ 0 Tax Fees(2) $ 5,200 $ 5,300 All Other Fees(3) $ 0 $ 0 --------------------- Total $ 14,573 $ 16,218 =====================
Eaton Vance Worldwide Health Sciences Fund
FISCAL YEARS ENDED 8/31/03 8/31/04 ------------------------------------------------------ Audit Fees $ 21,100 $ 21,650 Audit-Related Fees(1) $ 0 $ 0 Tax Fees(2) $ 9,450 $ 9,675 All Other Fees(3) $ 0 $ 0 --------------------- Total $ 30,550 $ 31,325 =====================
(1) Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit of financial statements and are not reported under the category of audit fees. (2) Tax fees consist of the aggregate fees billed for professional services rendered by the principal accountant relating to tax compliance, tax advice, and tax planning and specifically include fees for tax return preparation. (3) All other fees consist of the aggregate fees billed for products and services provided by the principal accountant other than audit, audit-related, and tax services. The various Series comprising the Trust have differing fiscal year ends (August 31 or September 30). In addition, the Series differ as to principal accountant; i.e., certain Series have PricewaterhouseCoopers LLP ("PWC) as a principal accountant and other Series have Deloitte & Touche LLP ("D&T") as a principal accountant. The following table presents the aggregate audit, audit-related, tax, and other fees billed to all of the Series in the Trust by each Series' respective principal accountant for the last two fiscal years of each Series.
FISCAL YEARS 8/31/03 9/30/03 8/31/04 9/30/04 ENDED PWC D&T PWC D&T PWC D&T PWC D&T -------------------------------------------------------------------------------------------------------------------- AUDIT FEES $ 62,700 $ 11,433 $ 0 $ 32,600 $ 64,050 $ 19,570 $ 0 $ 32,840 AUDIT-RELATED 0 0 0 0 0 0 0 0 FEES(1)
TAX FEES(2) 27,350 10,400 0 28,400 28,025 10,600 0 17,700 ALL OTHER 0 0 0 0 0 0 0 0 FEES(3) --------------------------------------------------------------------------------------------- TOTAL $ 90,050 $ 21,833 $ 0 $ 61,000 $ 92,075 $ 30,170 $ 0 $ 50,540 =============================================================================================
(1) Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit of financial statements and are not reported under the category of audit fees. (2) Tax fees consist of the aggregate fees billed for professional services rendered by the principal accountant relating to tax compliance, tax advice, and tax planning and specifically include fees for tax return preparation. (3) All other fees consist of the aggregate fees billed for products and services provided by the principal accountant other than audit, audit-related, and tax services. During the fiscal year ended August 31, 2004, $35,000 was billed by D&T, the principal accountant for certain of the Series, for work done in connection with its Rule 17Ad-13 examination of Eaton Vance Management's assertion that it has maintained an effective internal control structure over the sub-transfer agent and registrar functions, such services being pre-approved in accordance with Rule 2-01(c) (7) (ii) of Regulation S-X. (e)(1) The registrant's audit committee has adopted policies and procedures relating to the pre-approval of services provided by the registrant's principal accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a framework intended to assist the audit committee in the proper discharge of its pre-approval responsibilities. As a general matter, the Pre-Approval Policies (i) specify certain types of audit, audit-related, tax, and other services determined to be pre-approved by the audit committee; and (ii) delineate specific procedures governing the mechanics of the pre-approval process, including the approval and monitoring of audit and non-audit service fees. Unless a service is specifically pre-approved under the Pre-Approval Policies, it must be separately pre-approved by the audit committee. The Pre-Approval Policies and the types of audit and non-audit services pre-approved therein must be reviewed and ratified by the registrant's audit committee at least annually. The registrant's audit committee maintains full responsibility for the appointment, compensation, and oversight of the work of the registrant's principal accountant. (e)(2) No services described in paragraphs (b)-(d) above were approved by the registrant's audit committee pursuant to the "de minimis exception" set forth in Rule 2-01(c)(7)(i)(C) of Regulation S-X. (f) Not applicable. (g) The following table presents (i) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to all of the Series in the Trust by each Series' respective principal accountant (either PWC or D&T) for the last two fiscal years of each Series; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to the Eaton Vance organization by PWC and D&T for the last two fiscal years of each Series.
FISCAL YEARS 8/31/03 9/30/03 8/31/04 9/30/04 ENDED PWC D&T PWC D&T PWC D&T PWC D&T -------------------------------------------------------------------------------------------------------------------- REGISTRANT(1) $ 27,350 $ 10,400 $ 0 $ 28,400 $ 28,025 $ 10,600 $ 0 $ 17,700 EATON VANCE(2) $ 0 $ 435,295 $ 0 $ 448,295 $ 4,490 $ 291,084 $ 4,490 $ 298,084
(1) Includes all of the Series in the Trust. (2) Certain of the Series are "feeder" fund in a "master-feeder" fund structure. Various subsidiaries of Eaton Vance Corp. act in either an investment advisory and/or service provider capacity with respect to the Series and/or their respective "master" funds. (h) The registrant's audit committee has considered whether the provision by the registrant's principal accountant of non-audit services to the registrant's investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c) (7) (ii) of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not required in this filing. ITEM 6. SCHEDULE OF INVESTMENTS Please see schedule of investments contained in the Reports to Stockholders included under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not required in this filing. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not required in this filing. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Effective February 9, 2004, the Governance Committee of the Board of Trustees formalized the procedures by which a Fund's shareholders may recommend nominees to the registrant's Board of Trustees. The Governance Committee shall, when identifying candidates for the position of Independent Trustee, consider any such candidate recommended by a shareholder of a Fund if such recommendation contains sufficient background information concerning the candidate, and is received in a sufficiently timely manner (and in any event no later than the date specified for receipt of shareholder proposals in any applicable proxy statement with respect to a Fund). Shareholders shall be directed to address any such recommendations to the attention of the Governance Committee, c/o the Secretary of the Fund. ITEM 10. CONTROLS AND PROCEDURES (a) It is the conclusion of the registrant's principal executive officer and principal financial officer that the effectiveness of the registrant's current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission's rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant's principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure. (b) There have been no changes in the registrant's internal controls over financial reporting during the period that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting. ITEM 11. EXHIBITS (a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2). (a)(2)(i) Treasurer's Section 302 certification. (a)(2)(ii) President's Section 302 certification. (b) Combined Section 906 certification. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EATON VANCE GROWTH TRUST By: /s/ Thomas E. Faust Jr. ---------------------------------------- Thomas E. Faust Jr. President Date: October 19, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ James L. O'Connor ---------------------------------------- James L. O'Connor Treasurer Date: October 19, 2004 By: /s/ Thomas E. Faust Jr. ---------------------------------------- Thomas E. Faust Jr. President Date: October 19, 2004