<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS
COMMON STOCKS -- 85.3%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
</TABLE>
AUSTRALIA -- 7.3%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Diversified Financial Services -- 1.9%
------------------------------------------------------------------
Hart Australia Ltd. 1,500,000 $ 1,201,690
------------------------------------------------------------------
$ 1,201,690
------------------------------------------------------------------
Industrial Goods -- 0.0%
------------------------------------------------------------------
Kinetic Power Ltd.(1)(2) 350,000 $ 0
------------------------------------------------------------------
$ 0
------------------------------------------------------------------
Software -- 5.4%
------------------------------------------------------------------
Keycorp Ltd.(1) 252,234 $ 1,744,501
Open Telecommunications Ltd.(1) 1,350,000 1,742,882
------------------------------------------------------------------
$ 3,487,383
------------------------------------------------------------------
Total Australia
(identified cost $2,993,720) $ 4,689,073
------------------------------------------------------------------
</TABLE>
HONG KONG -- 27.3%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Apparel -- 5.7%
------------------------------------------------------------------
Giordano International Ltd. 6,629,102 $ 3,633,631
------------------------------------------------------------------
$ 3,633,631
------------------------------------------------------------------
Automotive -- 3.8%
------------------------------------------------------------------
Denway Motors Ltd. 15,000,000 $ 2,442,558
------------------------------------------------------------------
$ 2,442,558
------------------------------------------------------------------
Electrical and Electronics -- 0.2%
------------------------------------------------------------------
United Pacific Industries 1,870,000 $ 155,849
------------------------------------------------------------------
$ 155,849
------------------------------------------------------------------
Engineering -- 2.0%
------------------------------------------------------------------
Hong Kong Aircraft Engineering Co. 700,800 $ 1,280,439
------------------------------------------------------------------
$ 1,280,439
------------------------------------------------------------------
Media -- 1.9%
------------------------------------------------------------------
CIM Co., Ltd.(2) 300,000 $ 0
Sun Television Cybernetworks Holdings
Ltd. 34,000,000 1,220,638
------------------------------------------------------------------
$ 1,220,638
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
Medical Services -- 3.5%
------------------------------------------------------------------
ehealthcareasia Ltd. 357,500 $ 25,669
Quality Healthcare Asia Ltd. 7,150,000 2,246,064
------------------------------------------------------------------
$ 2,271,733
------------------------------------------------------------------
Printing -- 2.8%
------------------------------------------------------------------
Leefung-Asco Printers Holdings Ltd. 9,349,000 $ 1,798,069
------------------------------------------------------------------
$ 1,798,069
------------------------------------------------------------------
Retail - Food and Drug -- 2.7%
------------------------------------------------------------------
Cafe de Coral Holdings Ltd. 4,495,000 $ 1,700,206
------------------------------------------------------------------
$ 1,700,206
------------------------------------------------------------------
Wholesale and International Trade -- 4.7%
------------------------------------------------------------------
Li & Fung, Ltd. 692,000 $ 3,016,720
------------------------------------------------------------------
$ 3,016,720
------------------------------------------------------------------
Total Hong Kong
(identified cost $11,449,022) $17,519,843
------------------------------------------------------------------
</TABLE>
INDIA -- 25.9%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Banking and Finance -- 5.5%
------------------------------------------------------------------
HDFC Bank Ltd. 675,000 $ 3,535,258
------------------------------------------------------------------
$ 3,535,258
------------------------------------------------------------------
Computer Software -- 9.7%
------------------------------------------------------------------
Geometric Software 44,561 $ 371,334
Infosys Technologies Ltd. 22,600 4,131,278
VisualSoft (India) Ltd. 44,300 1,759,427
------------------------------------------------------------------
$ 6,262,039
------------------------------------------------------------------
Food and Beverages -- 1.4%
------------------------------------------------------------------
United Breweries Ltd. 576,500 $ 916,258
------------------------------------------------------------------
$ 916,258
------------------------------------------------------------------
Media -- 3.0%
------------------------------------------------------------------
UTV Software Solutions Communications
Co. Ltd. 175,700 $ 1,917,913
------------------------------------------------------------------
$ 1,917,913
------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
Medical Products -- 1.6%
------------------------------------------------------------------
Dr. Reddy's Laboratories 36,500 $ 1,056,193
------------------------------------------------------------------
$ 1,056,193
------------------------------------------------------------------
Medical Services -- 2.2%
------------------------------------------------------------------
Apollo Hospitals 240,000 $ 1,419,670
------------------------------------------------------------------
$ 1,419,670
------------------------------------------------------------------
Transport - Services -- 2.5%
------------------------------------------------------------------
Blue Dart Express Ltd. 283,000 $ 1,594,636
------------------------------------------------------------------
$ 1,594,636
------------------------------------------------------------------
Total India
(identified cost $12,978,159) $16,701,967
------------------------------------------------------------------
</TABLE>
INDONESIA -- 3.5%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Food/Retail -- 0.5%
------------------------------------------------------------------
Hero Supermarkets 1,811,500 $ 332,725
------------------------------------------------------------------
$ 332,725
------------------------------------------------------------------
Soap & Cleaning Preparations -- 3.0%
------------------------------------------------------------------
Unilever NV 119,000 $ 1,928,571
------------------------------------------------------------------
$ 1,928,571
------------------------------------------------------------------
Total Indonesia
(identified cost $2,203,721) $ 2,261,296
------------------------------------------------------------------
</TABLE>
JAPAN -- 2.9%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Industrial Goods -- 2.9%
------------------------------------------------------------------
Star Micronics 131,000 $ 1,888,012
------------------------------------------------------------------
$ 1,888,012
------------------------------------------------------------------
Total Japan
(identified cost $760,037) $ 1,888,012
------------------------------------------------------------------
</TABLE>
MALAYSIA -- 4.4%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Building and Construction - Misc. -- 1.0%
------------------------------------------------------------------
Dialog Group Berhad 266,667 $ 617,545
------------------------------------------------------------------
$ 617,545
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
Electronics - Semiconductors -- 3.4%
------------------------------------------------------------------
Unisem (M) Berhad 413,000 $ 2,151,947
------------------------------------------------------------------
$ 2,151,947
------------------------------------------------------------------
Total Malaysia
(identified cost $2,446,777) $ 2,769,492
------------------------------------------------------------------
</TABLE>
REPUBLIC OF KOREA -- 6.1%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Food and Beverages -- 2.8%
------------------------------------------------------------------
Hite Brewery Co. Ltd. 42,160 $ 1,806,178
------------------------------------------------------------------
$ 1,806,178
------------------------------------------------------------------
Glass Manufacturing -- 3.3%
------------------------------------------------------------------
Hankuk Electric Glass Co. 27,470 $ 2,118,318
------------------------------------------------------------------
$ 2,118,318
------------------------------------------------------------------
Total Republic of Korea
(identified cost $3,328,255) $ 3,924,496
------------------------------------------------------------------
</TABLE>
SINGAPORE -- 5.0%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Aerospace and Defense -- 2.0%
------------------------------------------------------------------
Avimo Group Ltd. 670,000 $ 1,292,429
------------------------------------------------------------------
$ 1,292,429
------------------------------------------------------------------
Electrical Equipment -- 3.0%
------------------------------------------------------------------
Creative Technology Ltd. 10,500 $ 228,168
OMNI Industries Ltd. 800,000 1,729,127
------------------------------------------------------------------
$ 1,957,295
------------------------------------------------------------------
Total Singapore
(identified cost $1,814,696) $ 3,249,724
------------------------------------------------------------------
</TABLE>
THAILAND -- 2.9%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Foods -- 1.6%
------------------------------------------------------------------
Thai President Food Co. (Foreign) 226,050 $ 995,571
------------------------------------------------------------------
$ 995,571
------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
Investment Services -- 1.3%
------------------------------------------------------------------
Thai Reinsurance Co. Ltd. 873,100 $ 833,152
------------------------------------------------------------------
$ 833,152
------------------------------------------------------------------
Total Thailand
(identified cost $1,648,379) $ 1,828,723
------------------------------------------------------------------
Total Common Stocks -- 85.3%
(identified cost $39,622,766) $54,832,626
------------------------------------------------------------------
Other Assets, Less Liabilities -- 14.7% $ 9,462,051
------------------------------------------------------------------
Net Assets -- 100.0% $64,294,677
------------------------------------------------------------------
</TABLE>
(1) Non-income producing security.
(2) Security valued at fair value using methods determined in good faith by
or at the direction of the Trustees.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF AUGUST 31, 2000
<S> <C>
Assets
-----------------------------------------------------
Investments, at value
(identified cost, $39,622,766) $54,832,626
Cash 9,027,252
Foreign currency, at value
(identified cost, $1,793,215) 1,766,293
Receivable for investments sold 1,786,703
Dividends receivable 91,730
Tax reclaim receivable 307
-----------------------------------------------------
TOTAL ASSETS $67,504,911
-----------------------------------------------------
Liabilities
-----------------------------------------------------
Payable for investments purchased $ 3,208,885
Accrued expenses 1,349
-----------------------------------------------------
TOTAL LIABILITIES $ 3,210,234
-----------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $64,294,677
-----------------------------------------------------
Sources of Net Assets
-----------------------------------------------------
Net proceeds from capital contributions
and withdrawals $49,118,767
Net unrealized appreciation (computed on
the basis
of identified cost) 15,175,910
-----------------------------------------------------
TOTAL $64,294,677
-----------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31, 2000
<S> <C>
Investment Income
-----------------------------------------------------
Dividends (net of foreign taxes,
$14,995) $ 502,608
-----------------------------------------------------
TOTAL INVESTMENT INCOME $ 502,608
-----------------------------------------------------
Expenses
-----------------------------------------------------
Investment adviser fee $ 458,883
Administration fee 153,418
Trustees fees and expenses 2,500
Custodian fee 176,278
Legal and accounting services 26,562
Miscellaneous 6,753
-----------------------------------------------------
TOTAL EXPENSES $ 824,394
-----------------------------------------------------
DEDUCT --
Reduction of custodian fee $ 131,482
-----------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 131,482
-----------------------------------------------------
NET EXPENSES $ 692,912
-----------------------------------------------------
NET INVESTMENT LOSS $ (190,304)
-----------------------------------------------------
Realized and Unrealized Gain (Loss)
-----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis)
(net of foreign taxes, $978,242) $14,547,538
Foreign currency transactions (287,590)
-----------------------------------------------------
NET REALIZED GAIN $14,259,948
-----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 6,766,000
Foreign currency (33,950)
-----------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $ 6,732,050
-----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $20,991,998
-----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $20,801,694
-----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS AUGUST 31, 2000 AUGUST 31, 1999
<S> <C> <C>
--------------------------------------------------------------------------
From operations --
Net investment income (loss) $ (190,304) $ 262,669
Net realized gain 14,259,948 1,160,361
Net change in unrealized
appreciation (depreciation) 6,732,050 13,694,526
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 20,801,694 $ 15,117,556
--------------------------------------------------------------------------
Capital transactions --
Contributions $ 29,213,229 $ 559,753
Withdrawals (14,204,876) (2,400,000)
--------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL TRANSACTIONS $ 15,008,353 $ (1,840,247)
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 35,810,047 $ 13,277,309
--------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------
At beginning of year $ 28,484,630 $ 15,207,321
--------------------------------------------------------------------------
AT END OF YEAR $ 64,294,677 $ 28,484,630
--------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------
2000 1999 1998
<S> <C> <C> <C>
---------------------------------------------------------------------
Ratios/Supplemental Data
---------------------------------------------------------------------
Ratios (As a percentage of
average daily net assets):
Expenses 1.34% 0.85% 0.50%
Expenses after custodian
fee reduction 1.13% 0.85% 0.50%
Net investment income
(loss) (0.31)% 1.32% 1.34%
Portfolio Turnover 112% 105% 101%
---------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S
OMITTED) $64,295 $28,485 $15,207
---------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
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. 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.
A Investment Valuations -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement prices. Unlisted or
listed securities for which closing sale prices are not available are valued
at the mean between the latest bid and asked prices. Short-term debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost which approximates value. Other fixed income and debt
securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined
in good faith by or at the direction of the Trustees.
B Income -- 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 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 Income Taxes -- The Portfolio has elected to be treated as a partnership for
United States Federal tax purposes. No provision is made by the Portfolio for
federal or state taxes on any taxable income of the Portfolio because each
investor in the Portfolio is ultimately responsible for the payment of any
taxes. Since one of the Portfolio's investors is a regulated investment
company that invests all or substantially all of its assets in the Portfolio,
the Portfolio normally must satisfy the applicable source of income and
diversification requirements (under the Internal Revenue Code) in order for
its investors to satisfy them. The Portfolio will allocate at least annually
among its investors each investor's distributive share of the Portfolio's net
investment income, net realized capital gains, and any other items of income,
gain, loss, deduction or credit. Withholding taxes on foreign dividends and
capital gains have been provided for in accordance with the Portfolio's
understanding of the applicable countries' tax rules and rates.
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. Recognized 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
20
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
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 generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
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, 2000, the adviser fee was equivalent to 0.75% of
average daily net assets. 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, 2000, the
administrative fee was 0.25% of average daily net assets. 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 $64,597,340 and $59,289,015, respectively, for the year ended
August 31, 2000.
4 Federal Income Tax Basis of Investments
-------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at August 31, 2000, as computed on a federal income tax
basis, are as follows:
<TABLE>
<S> <C>
AGGREGATE COST $39,626,268
-----------------------------------------------------
Gross unrealized appreciation $19,045,243
Gross unrealized depreciation (3,838,885)
-----------------------------------------------------
NET UNREALIZED APPRECIATION $15,206,358
-----------------------------------------------------
</TABLE>
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, 2000.
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
21
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
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, 2000, there were no
outstanding obligations under these financial instruments.
22
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
INDEPENDENT AUDITORS' REPORT
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 as of
August 31, 2000, the related statement of operations for the year ended, the
statement of changes in net assets for each of the two years then ended and the
supplementary data for each of the years in the three-year period then ended.
These financial statements and supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and supplementary data based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and supplementary data are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 2000, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Asian Small Companies
Portfolio at August 31, 2000, 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 13, 2000
23
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
INVESTMENT MANAGEMENT
ASIAN SMALL COMPANIES PORTFOLIO
Officers
Hon. Robert Lloyd George
President and Trustee
James B. Hawkes
Vice President and Trustee
Zaheer Sitabkhan
Vice President and
Portfolio Manager
William Walter Raleigh Kerr
Vice President and Assistant Treasurer
James L. O'Connor
Vice President and Treasurer
Alan R. Dynner
Secretary
Trustees
Hon. Edward K.Y. Chen
President of Lingnan College,
University of Hong Kong
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
President, Unicorn
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
24
