<PAGE>
[LOGO OF EATON VANCE Investing
MUTUAL FUNDS APPEARS
HERE] for the
21st
Century
(PHOTO OF CITY OMITTED)
Semiannual Report February 28, 1997
(PHOTO OF DRAGON OMITTED)
EV
MARATHON
GREATER CHINA
GROWTH FUND
Eaton Vance
Global Management--Global Distribution
(PHOTO OF GREAT WALL OF CHINA OMITTED)
Marathon
<PAGE>
EV Marathon Greater China Growth Fund as of February 28, 1997
INVESTMENT UPDATE
Investment Environment
- --------------------------------------------------------------------------------
The China Region Market
. In advance of the July 1 turnover of Hong Kong from Great Britain to China,
China announced the appointment of Tung Chee-hwa as the territory's new chief
executive. The selection of Tung, a shipping magnate who once worked in the
U.S. for General Electric, was applauded by investors and the Hong Kong
business community.
. The Hong Kong markets rallied sharply following the death of Deng Xiaoping,
China's paramount leader and architect of economic reform. That encouraging
reaction was reinforced by President Jiang Zemin, who assured that market
reforms would continue.
. China's economy expanded at its slowest rate in five years in 1996 -- 9.7%,
according to the China State Statistical Bureau. Due to the government's
successful inflation-fighting efforts, inflation measured just 6%, down from
14% in 1995. That is good news for investors because it suggests that China
will be able to sustain a strong rate of growth while keeping the danger of
inflation at bay.
The Fund
- --------------------------------------------------------------------------------
Performance for the Past Six Months
. The Fund had a total return of 15.5% during the six months ended February 28,
1997./1/ That return was the result of a rise in net asset value per share
from $12.45 on August 31, 1996 to $14.32 on February 28, 1997, and the
reinvestment of $0.06 per share in dividends.
. In comparison, the Peregrine Asia 100 Index -- an unmanaged index of common
stocks traded in the China region -- had a total return of 4.5% during the
same period.*
- --------------------------------------------------------------------------------
Fund shares are not guaranteed by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are
subject to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
Recent Portfolio Shifts
. The Portfolio increased its commitments in Hong Kong to 57.2% of the
Portfolio. with tensions easing over the scheduled July 1 turnover and China
having eased its credit restrictions, Hong Kong companies should see a pick-
up in consumer activity and a resumption of infrastructure projects.
. Malaysia was the largest investment outside of Hong Kong. The government has
engineered a soft landing for the economy, bringing GDP growth down to a more
manageable 8.2% for 1996. The Portfolio has identified a number of companies
-- some led by "overseas Chinese" with close ties to the mainland -- that are
likely to be strong beneficiaries of economic growth and development in
China.
Selected investments in the China region
. HSBC Holdings, the parent of Hong Kong & Shanghai Bank, is the premier
lending institution in Hong Kong and a bridge between China and other global
regions. New World Development has $1.2 billion in China projects including
hotels, power stations, roads, and an airport. The Portfolio's largest
Malaysian holding was Sime Darby Berhad, a conglomerate with interests in
financial services, plantations, chemical production, and industrial
products.
. The Portfolio maintained selective investments in "red chips," Hong Kong-
listed companies controlled by Chinese interests. China Overseas Land &
Investment is among the largest construction companies in Hong Kong. Ng Fung
Hong is a food distributor and supermarket operator that currently has a 30%
share of the territory's frozen meat market.
- --------------------------------------------------------------------------------
/1/This return does not include contingent deferred sales charge incurred by
certain redeeming shareholders.
/2/Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. SEC average annual returns collect
applicable CDSC on following schedule: 5% - 1st year; 5% - 2nd year; 4% - 3rd
year; 3% - 4th year; 2% - 5th year; 1% - 6th year. Past performance is no
guarantee of future results. The value of an investment in the Fund may
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
/3/By market value as of 2/28/97. Sector weighting subject to change due to
active management.
/4/Positions and holdings are as of 2/28/97 only and may not be representative
of the Portfolio's current or future investments. The ten largest holdings
account for 37.49% of the Fund's investments, determined by dividing the
total market value of the holdings by the total net assets of the Portfolio.
* It is not possible to invest directly in Index.
- --------------------------------------------------------------------------------
Fund Information as of February 28, 1997
Performance/2/ - periods ended 2/28/97
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One year 11.3%
Life of Fund (6/7/93) 10.5
SEC Average Annual Total Returns (including applicable CDSC)
- --------------------------------------------------------------------------------
One year 6.3%
Life of Fund (6/7/93) 9.9
Diversification by Country/3/
- --------------------------------------------------------------------------------
By total net assets
Hong Kong 57.2%
Malaysia 14.9%
Taiwan 8.0%
Singapore 7.4%
Philippines 4.7%
Thailand 3.9%
Korea 2.7%
Others 1.2%
Ten Largest Holdings/4/
- --------------------------------------------------------------------------------
By total net assets
HSBC Holdings PLC 6.57%
Hutchison Whampoa 5.86
Cheung Kong Holdings Ltd 5.51
New World Development 4.46
China Resources Enterprises 3.74
Overseas Union Bank 2.45
China Overseas Land & Investment 2.25
Sime Darby Bhd. 2.23
Sun Hung Koi Properties Ltd 2.22
Wharf Holdings 2.20
2
<PAGE>
EV Marathon Greater China Growth Fund as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of February 28, 1997
Assets
- --------------------------------------------------------------------------------
<S> <C>
Investment in Greater China Growth
Portfolio, at value (Note 1A)
(identified cost, $211,938,844) $290,505,145
Receivable for Fund shares sold 168,871
Deferred organization expenses (Note 1E) 12,502
- --------------------------------------------------------------------------------
Total assets $290,686,518
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 812,045
Payable to affiliate for Trustees' fees 527
Accrued expenses 177,859
- --------------------------------------------------------------------------------
Total liabilities $ 990,431
- --------------------------------------------------------------------------------
Net Assets for 20,231,056 shares of
beneficial interest outstanding $289,696,087
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $244,478,437
Accumulated net realized loss on investments
and foreign currency transactions
(computed on basis of identified cost) (25,191,125)
Accumulated net investment loss (8,157,526)
Net unrealized appreciation of investments
and foreign currency transactions
(computed on the basis of identified cost) 78,566,301
- --------------------------------------------------------------------------------
Total $289,696,087
- --------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price Per Share
(Note 6)
- --------------------------------------------------------------------------------
($289,696,087 / 20,231,056 shares of
beneficial interest outstanding) $ 14.32
- --------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended
February 28, 1997
Investment Income (Note 1B)
- --------------------------------------------------------------------------------
Dividend income allocated from Portfolio
(net of foreign taxes, $148,285) $ 1,940,566
Interest income allocated from Portfolio 7,345
Expenses allocated from Portfolio (1,643,496)
- --------------------------------------------------------------------------------
Total investment income $ 304,415
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Management fee (Note 3) $ 354,377
Compensation of Trustees not members of the
Administrator's organization (Note 3) 1,606
Custodian fee 30,256
Distribution fees (Note 5) 1,369,230
Transfer and dividend disbursing agent fees 160,174
Printing and postage 96,311
Legal and accounting services 11,866
Registration fees 10,159
Amortization of organization expenses (Note 1E) 4,853
Miscellaneous 26,543
- --------------------------------------------------------------------------------
Total expenses $ 2,065,375
- --------------------------------------------------------------------------------
Net investment loss $(1,760,960)
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost
basis) $ 1,677,181
Foreign currency transactions (101,836)
- --------------------------------------------------------------------------------
Net realized gain on investment transactions $ 1,575,345
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $41,705,518
Foreign currency transactions 7,855
- --------------------------------------------------------------------------------
Net change in unrealized appreciation of
Investments $41,713,373
- --------------------------------------------------------------------------------
Net realized and unrealized gain on
investments $43,288,718
- --------------------------------------------------------------------------------
Net increase in net assets from operations $41,527,758
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
3
<PAGE>
EV Marathon Greater China Growth Fund as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) February 28, 1997 Year Ended
in Net Assets (Unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment loss $ (1,760,960) $(1,591,252)
Net realized gain on investments 1,575,345 3,565,445
Change in unrealized
appreciation (depreciation) 41,713,373 13,290,138
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations $ 41,527,758 $15,264,331
- --------------------------------------------------------------------------------
Distributions to shareholders (Note 2) ---
In excess of net investment income $ (1,268,021) $ --
- --------------------------------------------------------------------------------
Total distributions to shareholders $ (1,268,021) $ --
- --------------------------------------------------------------------------------
Transactions in shares of beneficial $ 56,861,757 $ 96,216,599
interest (Note 4) --
Proceeds from sale of shares
Net asset value of shares issued
to shareholders in payment
of distributions declared 1,092,348 --
Cost of shares redeemed (93,092,451) (151,164,005)
- --------------------------------------------------------------------------------
Net decrease in net assets from
Fund share transactions $(35,138,346) $(54,947,406)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 5,121,391 $(39,683,075)
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $284,574,696 $324,257,771
- --------------------------------------------------------------------------------
At end of period $289,696,087 $284,574,696
- --------------------------------------------------------------------------------
Accumulated distributions in
excess of net investment
income included in net assets
- --------------------------------------------------------------------------------
At end of period $ (8,164,871) $ (5,128,545)
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
4
<PAGE>
EV Marathon Greater China Growth Fund as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended Year Ended August 31,
February 28, 1997 ---------------------------------------------------------
(Unaudited) 1996 1995 1994 1993 *
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value-- Beginning of period $ 12.450 $ 11.890 $ 13.160 $ 10.540 $ 10.000
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment loss $ (0.119) $ (0.087) $ (0.038) $ (0.039) $(0.015)
Net realized and unrealized gain (loss) on
investments 2.049 0.647 (1.157) 2.684 0.555
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 1.930 $ 0.560 $ (1.195) $ 2.645 $ 0.540
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income $ (0.060) $ -- $ (0.065) $ -- $ --
In excess of net realized gain on investments -- -- (0.010) (0.025) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.060 ) $ -- $ (0.075) $ (0.025) $ --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of period $ 14.320 $ 12.450 $ 11.890 $ 13.160 $10.540
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 15.54% 4.71% (9.06)% 25.08% 5.40%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $289,696 $284,575 $324,258 $392,479 $63,672
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets /(2)//(3)/ 2.65%+ 2.63% 2.47% 2.38% 2.21%+
Ratio of net expenses to average net assets after
custodian fee reduction /(2)/ 2.62%+ 2.57% -- -- --
Ratio of net investment loss to average net assets (1.24)%+ (0.51)% (0.02)% (0.55)% (1.44)%+
</TABLE>
+ Annualized.
* For the period from the start of business, June 7, 1993, to August 31,
1993.
/(1)/Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
/(3)/The expense ratios for the year ended August 31, 1996 have been adjusted to
reflect a change in reporting requirements. The new reporting guidelines
require each Fund, as well as its corresponding Portfolio, to increase its
expense ratio by the effect of any expense offset arrangements with its
service providers. The expense ratios for each of the periods ended on or
before August 31, 1995 have not been adjusted to reflect this change.
See notes to financial statements
5
<PAGE>
EV Marathon Greater China Growth Fund as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
---------------------------------------------------------------------------
EV Marathon Greater China Growth Fund (the Fund) is a diversified series of
Eaton Vance Growth Trust (the Trust). The Trust is an entity of the type
commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end, management
investment company. The Fund 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 (55.8% at February 28, 1997).
The performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the
portfolio of investments, are included elsewhere in this report and should
be read in conjunction with the Fund's financial statements. The following
is a summary of significant accounting policies consistently followed by the
Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
A Investment Valuations -- 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 generally
accepted accounting principles.
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 balance the Fund or the Portfolio
maintain with IBT. Any significant credit balance used to reduce the Fund's
custodian fee is reported as a reduction of operating 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, 1996, 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. The
amounts and expiration dates of the capital loss carryovers are as follows:
<TABLE>
<CAPTION>
Amount Expires
---------------------------------------------------------------------------
<S> <C>
$10,285,497 8/31/04
13,887,569 8/31/03
</TABLE>
E Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on
the straight-line basis over five years.
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 statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
G Other -- Investment transactions are accounted for on a trade date basis.
H Interim Financial Information -- The interim financial statements relating
to February 28, 1997 and for the six month period then ended have not been
audited by independent certified public accountants, but in the opinion of
the Fund's management, reflect all adjustments, consisting of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
6
<PAGE>
EV Marathon Greater China Growth Fund as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
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 investment income
allocated to the Fund by the Portfolio, less the Fund's direct and allocated
expenses and at least one distribution annually of all or substantially all
of the net realized capital gains (reduced by any available capital loss
carryforwards from prior years) allocated by the Portfolio to the Fund, if
any. Shareholders may reinvest all distributions in shares of the Fund at
the per share net asset value as of the close of business on the record
date. The Fund distinguishes between distributions on a tax basis and a
financial reporting basis. Generally accepted accounting principles require
that only distributions in excess of tax basis earnings and profits be
reported in the financial statements as a return of capital. Differences in
the recognition or classification of income between the financial statements
and tax earnings and profits which result in temporary over distributions
for financial statement purposes are classified as distributions in excess
of net investment income or accumulated net realized gains. Permanent
differences between book and tax accounting relating to distributions are
reclassified to paid-in capital.
3 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 six months
ended February 28, 1997 the fee was equivalent to 0.25% (annualized) of the
Fund's average net assets for such period and amounted to $354,377. Except
as to Trustees of the Fund who are not members of EVM's organization,
officers and Trustees receive remuneration for their services to the Fund
out of such management fee.
Certain officers and Trustees of the Fund and the Portfolio are
directors/trustees of the above organizations. 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.
4 Shares of Beneficial Interest
- --------------------------------------------------------------------------------
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Six Months Ended
February 28, 1997 Year Ended
(Unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales 4,303,773 7,688,643
Issued to shareholders
electing to receive
payments of distributions
in Fund shares 82,879 --
Redemptions (7,019,688) (12,102,374)
- --------------------------------------------------------------------------------
Net decrease (2,633,036) (4,413,731)
- --------------------------------------------------------------------------------
</TABLE>
5 Distribution Plan
- --------------------------------------------------------------------------------
The Fund has adopted a distribution plan (the Plan) pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay
the Principal Underwriter, Eaton Vance Distributors, Inc. (EVD) amounts
equal to 1/365 of 0.75% of the Fund's daily net assets, for providing
ongoing distribution services and facilities to the Fund. The Fund will
automatically discontinue payments to EVD during any period in which there
are no outstanding Uncovered Distribution Charges, which are equivalent to
the sum of (i) 5% of the aggregate amount received by the Fund for the
shares sold plus, (ii) distribution fees calculated by applying the rate of
1% over the prevailing prime rate to the outstanding balance of Uncovered
Distribution Charges of EVD reduced by the aggregate amount of contingent
deferred sales charges (see Note 6) and daily amounts theretofore paid to
EVD. The Fund accrued $1,063,132 as payable to EVD for the period ended
February 28, 1997, representing 0.75% (annualized)of average daily net
assets. At February 28, 1997, the amount of Uncovered Distribution Charges
EVD calculated under the Plan was approximately $7,708,000.
In addition, the Plan authorizes the Fund to make payments of service fees
to the Principal Underwriter, Authorized Firms and other persons in amounts
not exceeding 0.25% of the Fund's average daily net assets for each fiscal
year. The Trustees have initially implemented the Plan by authorizing the
Fund to make quarterly payments of service fees to the Principal Underwriter
and
7
<PAGE>
EV Marathon Greater China Growth Fund as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
Authorized Firms in amounts not expected to exceed 0.25% per annum of
the Fund's average daily net assets based on the value of Fund shares sold
by such 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. 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 period
ended February 28, 1997 amounted to $306,098.
Certain officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
----------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of
Fund 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 gains distributions. The 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. 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 $941,000 of CDSC paid by shareholders, for the period
ended February 28, 1997.
7 Investment Transactions
----------------------------------------------------------------------------
Increases and decreases in each Fund's investment in its corresponding
Portfolio aggregated $57,103,647 and $95,241,742, respectively.
8
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited)
Common Stocks -- 100.54%
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------
<S> <C> <C>
China -- 0.45%
Industrial / Manufacturing -- 0.45%
- -----------------------------------------------------------------
Shanghai Yaohua Pilkington 5,649,563 $ 2,361,517
Glass manufacturer.
- -----------------------------------------------------------------
$ 2,361,517
- -----------------------------------------------------------------
Total China (identified cost $5,785,969) $ 2,361,517
- -----------------------------------------------------------------
Hong Kong -- 57.17%
Diversified Trading -- 25.36%
- -----------------------------------------------------------------
China Everbright Pacific Ltd. 7,931,000 $ 5,889,306
Diversified company with
interests in retailing,
property investment and
development, hotels and
restaurant operations.
China Resources Enterprises 8,650,000 19,437,198
Property investment and
development.
China Travel International Ltd. 14,122,000 7,477,361
Provides freight
forwarding and
transportation services
between China and Hong
Kong, express air freight
services in China. Also
operates three scenic
parks in Shenzhen, China.
Cosco Pacific Ltd. 7,000,000 9,763,153
Transportation, container
manufacturer (through JV),
owning and leasing.
Gold Lion Holdings Ltd. 4,000,000 3,564,326
Markets and distributes
men's apparel and
accessories, ladies
handbags and shoes,
cosmetic products and
tobacco products.
Guang Nan Holdings Ltd. 7,680,000 10,810,755
Trader of foodstuffs and
non-foodstuffs, processing
and distribution of
foodstuffs.
Guangdong Investment Ltd. 4,000,000 3,900,096
Securities investment,
travel and transportation
services.
Guangzhou Investment Ltd. 7,946,000 4,027,695
Property trading,
development and investment.
Hutchison Whampoa 4,000,000 30,477,568
Diversified company with
interests in property
development, ports,
retailing, manufacturing,
telecommunications, media,
energy, finance and
investment.
- -----------------------------------------------------------------
Diversified Trading (continued)
- -----------------------------------------------------------------
Li & Fung Ltd. 7,184,000 $ 5,844,874
Export trading of consumer
products.
Moulin International Holdings 7,000,000 5,107,575
Industrial, optical
products.
NG Fung Hong Ltd. 6,336,000 7,446,031
Trader of foodstuffs and
non-foodstuffs.
Shougang Concord International
Enterprises Co. 16,000,000 4,184,208
Trader of building and
construction materials.
Manufactures and installs
kitchen equipment. Sells
steel, electrical and
electronic products.
Texwinca Holdings Ltd. 3,320,000 2,551,076
Produces and sells knitted
fabric and yarn.
Wharf Holdings Ltd. 2,581,200 11,466,963
Diversified company with
interests in property
development and investments,
terminals and warehousing,
public transportation and
communications.
- -----------------------------------------------------------------
$131,948,185
- -----------------------------------------------------------------
Financial -- 9.04%
- -----------------------------------------------------------------
Hang Seng Bank 760,000 $ 8,784,255
Provides a full range of
banking and related
financial services and
compilation of Hang Seng
Index of 33 selected
stocks listed on the HK
Stock Exchange.
HSBC Holdings PLC 1,400,000 34,171,036
Provides a comprehensive
range of banking and
related financial services
through an international
network of more than 3,000
offices in 71 countries in
Europe,the Asia Pacific
region, the Middle East
and the Americas.
National Mutual Ltd. 3,738,000 4,079,100
Banking, finance and
insurance.
- -----------------------------------------------------------------
$ 47,034,391
- -----------------------------------------------------------------
Industrial / Manufacturing -- 4.94%
- -----------------------------------------------------------------
Chen Hsong Holdings 10,820,000 $ 6,218,070
Manufactures and sells
plastic injection moulding
machines and related
products.
CIM Company Ltd./(1)/ 1,800,000 2,273,013
Diversified company with
interests in property and
investment, public
transportation, trading
and hotel operations.
</TABLE>
See Notes to financial statements
9
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------
Industrial/Manufacturing (continued)
- -----------------------------------------------------------------
<S> <C> <C>
Shanghai Industrial
Holdings Ltd. 1,500,000 $ 6,431,283
Manufacturer of cigarettes,
pharmaceuticals and car parts.
Siu Fung Ceramics Holdings Ltd. 9,850,000 725,069
Manufacturer of a line of
ceramics, machinery and
equipment.
Varitronix International Ltd. 1,982,000 3,276,287
Designs, manufactures and
sells liquid crystal
displays and related
products.
VTECH Holdings Ltd. 3,200,000 5,558,282
Designs, manufactures and
distributes electronic
toys and games, personal
computers, satellite
receivers, modems,telephones
and other electronic products.
Zhenhai Refining & Chemical Co. 3,158,000 1,223,494
Producer of petroleum and
petrochemical products.
- -----------------------------------------------------------------
$ 25,705,498
- -----------------------------------------------------------------
Media -- 0.48%
- -----------------------------------------------------------------
Oriental Press Group Ltd. 6,020,000 $ 2,507,232
Newspaper and magazine publisher.
- -----------------------------------------------------------------
$ 2,507,232
- -----------------------------------------------------------------
Properties -- 17.26%
- -----------------------------------------------------------------
Cheung Kong Holdings Ltd. 3,000,000 $ 28,669,577
Property development and
construction.
Cheung Kong Infrastructure 1,482,000 4,191,415
Property development,
ownership and operation of
infrastructure businesses.
China Overseas Land &
Investment 20,000,000 11,687,372
Property development and
investment, civil
engineering, foundation
works, project management
and general trading.
China Resources Beijing Land 1,234,000 701,191
Property development.
Hong Kong Land Holdings Ltd. 2,020,000 5,757,000
Commercial property
investment, development,
leasing and management.
Kerry Properties Ltd. 1,100,000 2,841,129
Property development,
investment and management.
Lai Sun Development REIT 800,000 1,198,440
Property development and
management.
New World Development 3,740,000 $ 23,183,614
Property investment and
development.
Sun Hung Kai Properties Ltd. 1,000,000 11,558,230
Property development and
investment, hotel ownership.
- -----------------------------------------------------------------
$ 89,787,968
- -----------------------------------------------------------------
Utilities -- 0.09%
- -----------------------------------------------------------------
Harbin Power Co. 2,600,000 $ 476,793
The largest manufacturer of
power equipment in China,
which specializes in major
components for thermal power
generating stations such as
boilers and steam turbines.
- -----------------------------------------------------------------
$ 476,793
- -----------------------------------------------------------------
Total Hong Kong (identified cost $182,094,873) $297,460,067
- -----------------------------------------------------------------
Indonesia -- 0.57%
Diversified Trading -- 0.57%
- -----------------------------------------------------------------
PT HM Sampoema (Foreign) 600,000 $ 2,978,102
Manufactures hand and machine
rolled cigarettes.
- -----------------------------------------------------------------
$ 2,978,102
- -----------------------------------------------------------------
Total Indonesia (identified cost $1,516,108) $ 2,978,102
- -----------------------------------------------------------------
Malaysia -- 14.93%
Consumer Products -- 0.01%
- -----------------------------------------------------------------
Hong Leong Industries Bhd
Warrants* 65,500 $ 82,823
Manufacturer and distributor
of building materials,
motorcycles and manufacturer
of packaging products,
integrated circuits and
semiconductors.
- -----------------------------------------------------------------
$ 82,823
- -----------------------------------------------------------------
</TABLE>
See notes to financial statements
10
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------------
<S> <C> <C>
Diversified Trading -- 9.38%
- -----------------------------------------------------------------------------
Advance Synergy Bhd 1,850,000 $ 3,590,859
Diversified company with
interests in property
development, the quarrying
and marketing of marble
and the operation of
sawmills and trading of
sawn wood.
Berjaya Group Bhd 3,730,000 5,197,141
Diversified company with
interests in bicycle
production, finance,
infrastucture and property
development, gaming and
lottery and
consumer marketing.
Ekran Bhd 830,000 2,974,731
Diversified company with
interests in property
development, timber
extraction and trading,
investment holding and
management services and
generating of electricity.
Konsortium Perkapalan Bhd 575,000 3,936,374
Container haulage services.
Kumpulan Guthrie Bhd 2,350,000 4,088,191
Plantation and property
development.
Magnum Corp. Bhd 2,700,000 5,599,517
Operates the forecast
betting game, investment
holding company (property
development).
Multi-Purpose Holdings 2,025,000 4,811,235
Diversified company with
interests in financial
services, property
development and
investment, gaming and
leisure.
Rashid Hussein Bhd 235,000 1,902,144
Investment holdings,
financial and
management services.
Sime Darby Bhd 3,072,000 11,628,632
Diversified company with
interests in plantation
operation, chemical
manufacturing, heavy
equipment and auto
distribution.
Tan Chong Motor Holdings Bhd 2,500,000 5,084,063
Diversified company with
interests in motor vehicle
manufacturing and sales,
equipment marketing,
garment and cosmetic
distribution and property
investment.
- -----------------------------------------------------------------------------
$ 48,812,887
- -----------------------------------------------------------------------------
Entertainment and Leisure -- 1.34%
- -----------------------------------------------------------------------------
Berjaya Sports Toto Bhd 1,200,000 $ 6,958,623
Runs Toto betting operations,
provides computer support
services for betting operations.
- -----------------------------------------------------------------------------
$ 6,958,623
- -----------------------------------------------------------------------------
Financial -- 2.74%
- -----------------------------------------------------------------------------
Malayan Banking Bhd 400,000 $ 4,751,837
Engaged in all aspects of
banking in over 200
branches in Asia, Europe
and the U.S. including
mobile banking units that
provide services
to rural areas.
MBF Capital Bhd 3,000,000 6,161,281
Investment holding company
(financial services,
stockbrokering, insurance,
leasing, property development).
Public Bank Bhd (Foreign) 1,425,000 3,328,300
Full range of banking
services, financial
services, and investment
services.
- -----------------------------------------------------------------------------
$ 14,241,418
- -----------------------------------------------------------------------------
Properties -- 1.46%
- -----------------------------------------------------------------------------
Land & General Bhd 3,080,000 $ 6,263,566
Property development and
investment, investment
holding company.
S P Setia Bhd 350,000 1,361,343
Prime developer with projects
located in fast growing areas
such as Selangor, Jahor and
Kuala Lumpur.
- -----------------------------------------------------------------------------
$ 7,624,909
- -----------------------------------------------------------------------------
Total Malaysia (identified cost $59,940,051) $ 77,720,660
- -----------------------------------------------------------------------------
Republic of Korea -- 2.72%
Industrial / Manufacturing -- 1.32%
- -----------------------------------------------------------------------------
Haitai Electronics Co. 188,750 $ 2,182,422
Manufacturer of turntables, car
audio and other audio equipment.
Samsung Electronics 56,906 4,666,876
Manufacturer of home
appliances, telecommunications
products, computers and
semiconductors.
- -----------------------------------------------------------------------------
$ 6,849,298
- -----------------------------------------------------------------------------
</TABLE>
See notes to financial statements
11
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C>
Insurance -- 0.52%
- -------------------------------------------------------------------------------
Samsung Fire & Marine 4,510 $ 1,755,107
Insurance
Samsung Fire & Marine Insurance (Preferred) 3,920 963,270
Fire and marine, auto and individual
pension insurance.
- --------------------------------------------------------------------------------
$ 2,718,377
- --------------------------------------------------------------------------------
Utilities -- 0.88%
- --------------------------------------------------------------------------------
Korea Electric Power Corp. 160,000 $ 4,592,593
State run electric power supplier.
- --------------------------------------------------------------------------------
$ 4,592,593
- --------------------------------------------------------------------------------
Total Republic of Korea
(identified cost $16,020,751) $ 14,160,268
- --------------------------------------------------------------------------------
Singapore -- 7.39%
Consumer - Retail -- 1.54%
- --------------------------------------------------------------------------------
Cerebos Pacific Ltd. 1,129,000 $ 7,994,742
Manufacturer and distributor of food
products.
- --------------------------------------------------------------------------------
$ 7,994,742
- --------------------------------------------------------------------------------
Financial -- 2.45%
- --------------------------------------------------------------------------------
Overseas Union Bank (Foreign) 1,640,000 $ 12,763,093
Commercial banking.
- --------------------------------------------------------------------------------
$ 12,763,093
- --------------------------------------------------------------------------------
Industrial / Manufacturing -- 1.98%
- --------------------------------------------------------------------------------
Clipsal Industries Holdings Ltd. 2,400,000 $ 9,840,000
Clipsal Industries Holdings Ltd. Warrants* 234,000 472,680
Develops, manufactures, and markets
electric installation products.
- --------------------------------------------------------------------------------
$ 10,312,680
- --------------------------------------------------------------------------------
Transportation -- 1.42%
- --------------------------------------------------------------------------------
Straits Steamship Land 1,969,000 $ 6,709,206
Straits Steamship Land Warrants* 508,000 655,346
Shipping company.
- --------------------------------------------------------------------------------
$ 7,364,552
- --------------------------------------------------------------------------------
Total Singapore (identified cost $25,077,933) $ 38,435,067
- --------------------------------------------------------------------------------
Taiwan -- 8.00%
Industrial / Manufacturing -- 5.90%
- --------------------------------------------------------------------------------
China Motor Co. Ltd. 1,688,200 $ 4,018,063
Car manufacturer.
China Steel 8,133,375 7,713,702
Leading domestic steel
manufacturer with a
dominant market share in
steel products such as hot
rolled, cold rolled and
wire rod steel.
Formosa Chemical Fiber 1,573,577 2,538,765
Second largest global
nylon fiber manufacturer.
Formosa Plastics 964,590 2,593,738
Principal supplier of
intermediate resins and
fiber to other group
members of the Formosa
Plastics Group. Producer
of high density
polyethylene and polyvinyl
chloride.
Grand Pacific Petrochemicals 226,500 272,426
The company is the second
largest styrene monomer
producer.
Nan Ya Plastic 3,813,075 9,144,729
Largest global downstream
plastics manufacturer and
Taiwan's largest polyester
fiber producer.
Standard Foods Taiwan Ltd. 2,100,000 4,425,872
Distributor of Quaker
brand oats in Taiwan,
developer of cereal
products with Quaker which
sells under a joint
Standard-Quaker brand name.
- --------------------------------------------------------------------------------
$ 30,707,295
- --------------------------------------------------------------------------------
Insurance -- 1.31%
- --------------------------------------------------------------------------------
Cathay Life Insurance 1,049,950 $ 6,829,253
Underwrites endowment, life, accident and
medical policies through a service
network of 22 branches, 341 operating units
and over 29,000 agents.
- --------------------------------------------------------------------------------
$ 6,829,253
- --------------------------------------------------------------------------------
Transportation -- 0.79%
- --------------------------------------------------------------------------------
Wan Hai Lines Ltd. 1,328,750 $ 4,104,061
Shipping company.
- --------------------------------------------------------------------------------
$ 4,104,061
- --------------------------------------------------------------------------------
Total Taiwan (identified cost $32,450,669) $ 41,640,609
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
12
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Thailand -- 3.88%
Financial -- 2.06%
- --------------------------------------------------------------------------------
Bangkok Bank Co. Ltd. (Foreign) 301,387 $ 2,654,059
Bangkok Bank Co. Ltd. (Public) 239,813 1,630,184
Largest commercial bank in Thailand.
Provides domestic, corporate,
commercial and retail banking services.
Dhana Siam Finance 1,205,800 2,200,535
Provides finance and security services
including industrial and commercial loans,
investment consultancy, underwriting and
fund management.
Siam Commercial Bank 750,000 4,258,236
Commercial bank operations in 353
domestic and 7 international branches.
- --------------------------------------------------------------------------------
$ 10,743,014
- --------------------------------------------------------------------------------
Industrial / Manufacturing -- 0.19%
- --------------------------------------------------------------------------------
Saha Union Corp. Ltd. 1,286,900 $ 894,682
Saha Union Corp. Ltd. (Foreign) 79,300 69,297
Textile, footware and plastics manufacturer.
- --------------------------------------------------------------------------------
$ 963,979
- --------------------------------------------------------------------------------
Utilities -- 1.63%
- --------------------------------------------------------------------------------
Electricity Generating (Foreign) 3,352,770 $ 8,481,960
EGCOMP was set up in 1992 for the
purpose of partly privatizing electricity
in Thailand.
- --------------------------------------------------------------------------------
$ 8,481,960
- --------------------------------------------------------------------------------
Total Thailand (identified cost $27,181,529) $ 20,188,953
- --------------------------------------------------------------------------------
Philippines -- 4.67%
Industrial / Manufacturing -- 2.98%
- --------------------------------------------------------------------------------
Bacnotan Consolidated Industries 544,272 $ 1,880,970
Owner of companies that produce building
materials, primarily cement.
Belle Corp. 30,591,000 9,758,821
Property developer, gambling concessions.
Fortune Cement Corp. 7,000,000 3,854,699
Manufactures and distributes cement.
- --------------------------------------------------------------------------------
$ 15,494,490
- --------------------------------------------------------------------------------
Telecommunications -- 1.69%
- --------------------------------------------------------------------------------
Philippine Long Distance Telephone ADR 144,700 $ 8,392,600
Fixed line operator.
Pilipino Telephone 639,100 412,612
Cellular phone operator.
- --------------------------------------------------------------------------------
$ 8,805,212
- --------------------------------------------------------------------------------
Total Philippines
(identified cost $21,071,374) $ 24,299,702
- --------------------------------------------------------------------------------
United States -- 0.75%
Industrial / Manufacturing -- 0.75%
- --------------------------------------------------------------------------------
AES China Generating Co. Class A 210,000 $ 3,885,000
Electric generating facilities.
- --------------------------------------------------------------------------------
$ 3,885,000
- --------------------------------------------------------------------------------
Total United States
(identified cost $3,405,000) $ 3,885,000
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $374,544,257) $ 523,129,945
- --------------------------------------------------------------------------------
Total Investments -- 100.54%
(identified cost $374,544,257) $ 523,129,945
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- (0.54)% $ (2,817,610)
- --------------------------------------------------------------------------------
Net Assets -- 100% $ 520,312,335
- --------------------------------------------------------------------------------
</TABLE>
ADR -- American Depositary Receipt
(1) Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
* Non-income producing security.
See notes to financial statements
13
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Top Ten Holdings
Percentage
Industry of Net
Company Sector Assets Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
HSBC Holdings PLC Financial 6.57% $ 34,171,036
Hutchison Whampoa Diversified Trading 5.86 30,477,568
Cheung Kong Holdings
Ltd. Properties 5.51 28,669,577
New World Development Properties 4.46 23,183,614
China Resources
Enterprises Diversified Trading 3.74 19,437,198
Overseas Union Bank
(Foreign) Financial 2.45 12,763,093
China Overseas Land &
Investment Properties 2.25 11,687,372
Sime Darby Bhd Diversified Trading 2.23 11,628,632
Sun Hung Kai
Properties Ltd. Properties 2.22 11,558,230
Wharf Holdings Ltd. Diversified Trading 2.20 11,466,963
</TABLE>
<TABLE>
<CAPTION>
Top Ten Industry Sectors
Percentage
of Net
Industry Sector Assets Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Diversified Trading 35.31% $ 183,739,174
Properties 18.72 97,412,877
Industrial / Manufacturing 18.50 96,279,757
Financial 16.29 84,781,916
Utilities 2.60 13,551,346
Transportation 2.20 11,468,613
Insurance 1.83 9,547,630
Telecommunications 1.69 8,805,212
Consumer - Retail 1.54 7,994,742
Entertainment and Leisure 1.34 6,958,623
</TABLE>
See notes to financial statements
14
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
As of February 28, 1997
Assets
- --------------------------------------------------------------------
Investments, at value (Note 1A)
(identified cost, $374,544,257) $523,129,945
Cash 381
Foreign currency, at value
(identified cost, $3,498,741) 3,498,092
Receivable for investments sold 1,991,498
Dividends and interest receivable 352,815
Deferred organization expenses (Note 1C) 20,313
- --------------------------------------------------------------------
Total assets $528,993,044
- --------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------
Payable for investments purchased $ 4,778,051
Payable for foreign capital gains tax 663,311
Demand note payable (Note 7) 3,083,000
Payable for open forward foreign currency
contracts 1,991
Payable to affiliate for Trustees' fees 3,309
Accrued expenses 151,047
- --------------------------------------------------------------------
Total liabilities $ 8,680,709
- --------------------------------------------------------------------
Net Assets applicable to investors' interest in
Portfolio $520,312,335
- --------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $371,729,991
Net unrealized appreciation of investments and
foreign currency transactions (computed on
the basis of identified cost) 148,582,344
- --------------------------------------------------------------------
Total $520,312,335
- --------------------------------------------------------------------
Statements of Operations
For the Six Months Ended
February 28, 1997
Investment Income
- --------------------------------------------------------------------
Dividends (net of foreign taxes, $266,431) $ 3,481,573
Interest 13,188
- --------------------------------------------------------------------
Total income $ 3,494,761
- --------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------
Investment adviser fee (Note 2) $ 1,933,737
Administration fee (Note 2) 637,057
Compensation of Trustees not members of the
Administrator's organization (Note 2) 9,437
Custodian fee 358,743
Legal and accounting services 47,452
Amortization of organization expenses (Note 1C) 14,202
Registration fees 260
Miscellaneous 20,806
- --------------------------------------------------------------------
Total expenses $ 3,021,694
- --------------------------------------------------------------------
Less Allocations --
Reduction of custodian fee $ 69,819
- --------------------------------------------------------------------
Total expense reductions $ 69,819
- --------------------------------------------------------------------
Net expenses $ 2,951,875
- --------------------------------------------------------------------
Net investment income $ 542,886
- --------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- --------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 3,021,215
Foreign currency transactions (182,978)
- --------------------------------------------------------------------
Net realized gain on investment transactions $ 2,838,237
- --------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 74,977,745
Foreign currency transactions 14,583
- --------------------------------------------------------------------
Net change in unrealized appreciation of investments $ 74,992,328
- --------------------------------------------------------------------
Net realized and unrealized gain on investments $ 77,830,565
- --------------------------------------------------------------------
Net increase in net assets from operations $ 78,373,451
- --------------------------------------------------------------------
See notes to financial statements
15
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) February 28, 1997 Year Ended
in Net Assets (Unaudited) August 31, 1996
- -----------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment income $ 542,886 $ 5,301,525
Net realized gain 2,838,237 13,787,497
on investments
Change in unrealized
appreciation
(depreciation) 74,992,328 16,641,291
- -----------------------------------------------------------------
Net increase in net
assets resulting
from operations $ 78,373,451 $ 35,730,313
- -----------------------------------------------------------------
Capital transactions --
Contributions $ 135,016,664 $ 135,099,898
Withdrawals (203,375,339) (250,949,710)
- -----------------------------------------------------------------
Net decrease in net
assets from
capital
transactions $ (68,358,675) $(115,849,812)
- -----------------------------------------------------------------
Net increase
(decrease) in net
assets $ 10,014,776 $ (80,119,499)
- -----------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------
At beginning of period $ 510,297,559 $ 590,417,058
- -----------------------------------------------------------------
At end of period $ 520,312,335 $ 510,297,559
- -----------------------------------------------------------------
</TABLE>
See notes to financial statements
16
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Six Months Ended Year Ended August 31,
February 28, 1997 --------------------------------------------------
(Unaudited) 1996 1995 1994 1993*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets
- -------------------------------------------------------------------------------------------------------------------------------
Expenses /(1)/ 1.19%+ 1.19% 1.10% 1.15% 1.38%+
Net expenses, after
custodian fee reduction 1.16%+ 1.12% -- -- --
Net investment income (loss) 0.21%+ 0.94% 1.35% 0.73% 0.38%+
Portfolio Turnover 15% 42% 32% 36% 18%
- -------------------------------------------------------------------------------------------------------------------------------
Average Commission Rate Paid /(2)/ $ 0.0044 $ 0.0070 $ -- $ -- $ --
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $520,312 $510,298 $590,417 $732,613 $208,043
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period from the start of business, October 28, 1992, to August 31,
1993.
+ Annualized.
/(1)/ The expense ratios for the year ended August 31, 1996 have been adjusted
to reflect a change in reporting requirements. The new reporting
guidelines require each Fund, as well as its corresponding Portfolio, to
increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of
the periods ended on or before August 31, 1995 have not been adjusted to
reflect this change.
/(2)/ Average commission rate paid is computed dividing the total dollar amount
of commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were
charged. For fiscal years beginning on or after September 1, 1995, a Fund
is required to disclose its average commission rate per share for security
trades on which commissions were charged.
See notes to financial statements
17
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
-----------------------------------------------------------------------------
Greater China Growth Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 as a diversified, open-end investment company
which was organized as a trust under the laws of the State of New York on
September 1, 1992. The Declaration of Trust permits the Trustees to issue
interests in the Portfolio. The following is a summary of the significant
accounting policies of the Portfolio. The policies are in conformity with
generally accepted accounting principles.
A Investment Valuations -- Marketable securities, including options, that
are listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement prices. Unlisted or
listed securities for which closing sale prices are not available are valued
at the mean between the latest bid and asked prices. Short-term debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost. 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 Federal Taxes -- The Portfolio is treated as a partnership for Federal tax
purposes. No provision is made by the Portfolio for Federal or state taxes
on any taxable income of the Portfolio because each investor in the
Portfolio is individually responsible for the payment of any taxes on its
share of such income. Since some of the Portfolios' investors are regulated
investment companies that invest all or substantially all of their assets in
the Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements (under the Internal Revenue Code),
in order for its investors to satisfy them. The Portfolio will allocate, at
least annually among its investors, each investor's distributive share of
the Portfolio's net investment income, net realized capital gains, and any
other items of income, gain, loss, deduction or credit. 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 Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
D 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 the 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 fee is reflected as a reduction of operating expense in the
Statement of Operations.
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 Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
G 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
18
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
investment transactions attributable to foreign currency 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
result from fluctuations in foreign currency exchange rates are not
separately disclosed.
H 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.
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.
J Interim Financial Information -- The interim financial statements relating
to February 28, 1997 and for the six month period then ended have not been
audited by independent certified public accountants, but in the opinion of
the Fund's management, reflect all adjustments, consisting of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
2 Investment Adviser Fee and Other Transactions
with Affiliates
----------------------------------------------------------------------------
The investment adviser fee is earned by Lloyd George Management (Bermuda)
Limited (the Adviser), an affiliate of Eaton Vance, as compensation for
management and investment advisory services rendered to the Portfolio. Under
the advisory agreement, the Adviser receives a monthly fee of 0.0625% (0.75%
annually) of the average daily net assets of the Portfolio up to
$500,000,000, and at reduced rates as daily net assets exceed that level.
For the six months ended February 28, 1997 the adviser fee was equivalent to
0.75% (annualized) of average 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% (equal to 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 period ended
February 28, 1997, the administrative fee was 0.25% (annualized) of average
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 of the officers and Trustees of the
Portfolio are officers or directors/trustees of the above organizations.
3 Investment Transactions
-------------------------------------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $75,775,971 and $130,222,008, respectively.
4 Federal Income Tax Basis of Investments
--------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the
investments owned at February 28, 1997, as computed on a federal income tax
basis, were as follows:
<TABLE>
<CAPTION>
<S> <C>
Aggregate cost $374,544,257
----------------------------------------------------------
Gross unrealized appreciation $171,037,632
Gross unrealized depreciation (22,451,944)
----------------------------------------------------------
Net unrealized appreciation $148,585,688
----------------------------------------------------------
</TABLE>
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
19
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
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 located 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
include written options 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.
A summary of obligations under these financial instruments at February 28,
1997, were as follows:
<TABLE>
<CAPTION>
Deliver Net Unrealized
Settlement Date In Exchange for (in U.S. Dollars) Appreciation
-----------------------------------------------------------------------------
<S> <C> <C> <C>
3/03/97 Maylasian Ringgit $718,241 $564
3/03/97 Maylasian Ringgit $ 95,193 $ 75
-----------------------------------------------------------------------------
Total $813,380 $639
-----------------------------------------------------------------------------
</TABLE>
7 Line of Credit
-----------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a committed $120 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 portfolio or fund based on its
borrowings at an amount above the bank's adjusted certificate of deposit
rate, eurodollar rate or federal funds rate. In addition, a fee computed at
an annual rate of 0.15% on the daily unused portion of the line of credit is
allocated among the participating portfolios and funds at the end of each
quarter. The Portfolio had borrowings of $3,083,000 during the period.
20
<PAGE>
EV Marathon Greater China Growth Fund as of February 28, 1997
INVESTMENT MANAGEMENT
EV Marathon Greater China Growth Fund
<TABLE>
<S> <C>
Officers Independent Trustees
James B. Hawkes Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
M. Dozier Gardner
Vice President Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
William D. Burt Banking, Harvard University Graduate School
Vice President of Business Administration
Barclay Tittmann Norton H. Reamer
Vice President President and Director, United Asset
Management Corporation
James L. O'Connor
Treasurer John L. Thorndike
Formerly Director,
Thomas Otis Fiduciary Company Incorporated
Secretary
Jack L. Treynor
Investment Adviser and Consultant
Greater China Growth Portfolio
Officers Independent Trustees
Hon. Robert Lloyd George Hon. Edward K.Y. Chen
President, Trustee and Professor and Director,
Co-Portfolio Manager Center for Asian Studies,
University of Hong Kong
James B. Hawkes
Vice President and Trustee Donald R. Dwight
President, Dwight Partners, Inc.
Scobie Dickinson Ward Chairman, Newspapers of New England, Inc.
Vice President, Assistant
Secretary, Assistant Treasurer, Samuel L. Hayes, III
and Co-Portfolio Manager Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School
William Walter Raleigh Kerr of Business Administration
Vice President and
Assistant Treasurer Norton H. Reamer
President and Director, United Asset
James L. O'Connor Management Corporation
Vice President and Treasurer
Thomas Otis
Vice President and Secretary
</TABLE>
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