<PAGE>
[LOGO OF EATON VANCE MUTUAL FUNDS APPEARS HERE] [PHOTO OF CITY APPEARS HERE]
Semiannual Report February 28, 1997
[PHOTO OF DRAGON APPEARS HERE]
EV
TRADITIONAL
GREATER CHINA
GROWTH FUND
Eaton Vance
Global Management--Global Distribution
[PHOTO OF GREAT WALL APPEARS HERE] TRADITIONAL
<PAGE>
EV Traditional 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 15.9% during the six months ended February 28,
1997./1/ That return was the result of a rise in net asset value per share
from $14.98 on August 31, 1996 to $16.92 on February 28, 1997, and the
reinvestment of $0.29 per share in capital gains distributions and $0.11 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.*
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
/1/This return does not include the maximum 4.75% initial sales charge.
/2/Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. SEC average annual returns reflect a
maximum 4.75% sales charge. 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 weightings 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. 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 the Index.
- --------------------------------------------------------------------------------
Fund Information
as of February 28, 1997
Performance -- periods ended 2/28/97 /2/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One year 11.8%
Life of Fund (10/28/92) 13.8
SEC Average Annual Total Returns (With maximum 4.75% sales charge)
- --------------------------------------------------------------------------------
One year 6.5%
Life of Fund (10/28/92) 12.5
Diversification by Country/3/
- --------------------------------------------------------------------------------
By total net assets
[BAR CHART APPEARS HERE] 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 Kai Properties Ltd 2.22
Wharf Holdings 2.20
2
<PAGE>
EV Traditional 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 Portfolio, at value (Note 1A)
(identified cost, $143,667,260) $209,021,844
Receivable for Fund shares sold 37,629
Deferred organization expenses (Note 1E) 18,407
- --------------------------------------------------------------------------
Total assets $209,077,880
- --------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------
Payable for Fund shares redeemed $ 441,569
Payable to affiliate for Trustees' fees (Note 3) 527
Accrued expenses 150,930
- --------------------------------------------------------------------------
Total liabilities $ 593,026
- --------------------------------------------------------------------------
Net Assets for 12,324,297 shares of
beneficial interest outstanding $208,484,854
- --------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------
Paid-in capital $144,240,670
Accumulated net realized gain on investments and
foreign currency transactions (computed on basis
of identified cost) 4,188,523
Accumulated distributions in excess of net
investment income (5,298,923)
Net unrealized appreciation of investments and
foreign currency transactions (computed on basis
of identified cost) 65,354,584
- --------------------------------------------------------------------------
Total $208,484,854
- --------------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share
- --------------------------------------------------------------------------
($208,484,854 / 12,324,297 shares of
beneficial interest outstanding) $ 16.92
- --------------------------------------------------------------------------
Computation of Offering Price
- --------------------------------------------------------------------------
Offering price per share (100 / 95.25 of $16.92) $ 17.76
- --------------------------------------------------------------------------
On sales of $50,000 or more, the offering price is reduced.
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
February 28, 1997
Investment Income (Note 1B)
- --------------------------------------------------------------------------
<S> <C>
Dividend income allocated from Portfolio
(net of foreign taxes, $107,779) $ 1,405,782
Interest income allocated from Portfolio 5,332
Expenses allocated from Portfolio (1,193,716)
- --------------------------------------------------------------------------
Total investment income $ 217,398
- --------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------
Management fee (Note 3) $ 257,088
Compensation of Trustees not members of the
Administrator's organization (Note 3) 1,606
Custodian fee 9,849
Distribution fees (Note 5) 513,204
Transfer and dividend disbursing agent fees 115,900
Printing and postage 69,332
Legal and accounting services 11,866
Registration fees 6,207
Amortization of organization expenses (Note 1E) 13,084
Miscellaneous 11,768
- --------------------------------------------------------------------------
Total expenses $ 1,009,904
- --------------------------------------------------------------------------
Net investment loss $ (792,506)
- --------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- --------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 1,229,715
Foreign currency transactions (73,927)
- --------------------------------------------------------------------------
Net realized gain on investment transactions $ 1,155,788
- --------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ 30,353,616
Foreign currency transactions 5,998
- --------------------------------------------------------------------------
Net change in unrealized appreciation of investments $ 30,359,614
- --------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 31,515,402
- --------------------------------------------------------------------------
Net increase in net assets from operations $ 30,722,896
- --------------------------------------------------------------------------
</TABLE>
See notes to financial statements
3
<PAGE>
EV Traditional 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 $ (792,506) $ (53,230)
Net realized gain on investments 1,155,788 10,430,806
Change in unrealized
appeciation (depreciation) 30,359,614 2,011,547
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations $ 30,722,896 $ 12,389,123
- --------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
In excess of net investment income $ (1,397,595) $ --
In excess of net realized gain
on investments (3,684,542) --
- --------------------------------------------------------------------------------
Total distributions to shareholders $ (5,082,13) $ --
- --------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 4) --
Proceeds from sale of shares $ 68,794,211 $ 25,157,784
Net asset value of shares issued
to shareholders in payment of
distributions declared 4,468,410 --
Cost of shares redeemed (95,894,779) (74,971,187)
- --------------------------------------------------------------------------------
Net decrease in net assets from
Fund share transactions $ (22,632,158) $ (49,813,403)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 3,008,601 $ (37,424,280)
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 205,476,253 $ 242,900,533
- --------------------------------------------------------------------------------
At end of period $ 208,484,854 $ 205,476,253
- --------------------------------------------------------------------------------
Accumulated
distributions in excess
of net investment income
included in net assets
- --------------------------------------------------------------------------------
At end of period $ (5,289,923) $ (3,108,822)
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
4
<PAGE>
EV Traditional 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 $ 14.980 $ 14.230 $ 15.710 $ 12.450 $ 10.000
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (0.093) $ (0.040) $ 0.051 $ (0.026) $ (0.029)
Net realized and unrealized gain (loss) on investments 2.433 0.790 (1.441) 3.336 2.479
- ---------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 2.340 $ 0.750 $ (1.390) $ 3.310 $ 2.450
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $ -- $ -- $ (0.051) $ -- $ --
In excess of net investment income (0.110) -- (0.004) -- --
From net realized gain on investments (0.290) -- -- (0.050) --
In excess of net realized gain on investments -- -- (0.035) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.400) $ -- $ (0.090) $ (0.050) $ --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of period $ 16.920 $ 14.980 $ 14.230 $ 15.710 $ 12.450
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 15.86% 5.27% (8.82)% 26.56% 24.50%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 208,485 $205,476 $242,901 $ 316,229 $ 154,317
Ratio of net expenses to average net assets/(2)(3)/ 2.17%+ 2.15% 2.08% 2.12% 2.47%+
Ratio of net expenses to average net assets after
custodian fee reduction/(2)/ 2.14%+ 2.09% -- -- --
Ratio of net investment loss to average net assets (0.77)%+ (0.02)% (0.38)% (0.28)% (0.69)%+
</TABLE>
* For the period from the start of business, October 28, 1992, to August 31,
1993.
+ Annualized.
(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 Traditional Greater China Growth Fund as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
- --------------------------------------------------------------------------------
EV Traditional 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 (40.2% 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 -- The Fund has entered into an arrangement with its
custodian agent whereby interest earned on uninvested cash balances are used
to offset custodian fees. All significant reductions are reported as a
reduction of 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, if
any, and any net realized capital gains. Accordingly, no provision for
federal income or excise tax is necessary.
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 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 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.
<PAGE>
EV Traditional Greater China Growth Fund as of February 28, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
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 $257,088. 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. Eaton Vance Distributors, Inc., (EVD), a
subsidiary of EVM and the Fund's principal underwriter, received
approximately $13,359 as its portion of the sales charge on sales of Fund
shares for the six months ended February 28, 1997.
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 4,270,729 1,678,332
Issued to shareholders electing
to receive payments of distributions
in Fund shares 287,097 --
Redemptions (5,953,183) (5,022,518)
- --------------------------------------------------------------------------------
Net increase (decrease) (1,395,357) (3,344,186)
- --------------------------------------------------------------------------------
</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) a monthly
distribution fee equal, on an annual basis, to the aggregate of (a) 0.50% of
that portion of the Fund's average daily net assets for any fiscal year
which is attributable to shares of the Fund which have remained outstanding
for less than one year and (b) 0.25% of that portion of the Fund's average
daily net assets for any fiscal year which is attributable to shares of the
Fund which have remained outstanding for more than one year. During the six
months ended February 28, 1997 the Fund paid distribution fees to EVD
aggregating approximately $282,800 representing 0.28% (annualized) of
average daily net assets. The Plan also provides that the Fund will pay a
quarterly service fee to EVD in an amount equal, on an annual basis, to
0.25% of that portion of the Fund's average daily net assets for any fiscal
year which is attributable to shares of the Fund which have remained
outstanding for more than one year. Such payments are made for personal
services and/or the maintenance of shareholder accounts. The Fund paid or
accrued an aggregate of approximately $230,400 for the six months ended
February 28, 1997 as service fees under the Plan. EVD may pay up to the
entire amount of the service fees to authorized firms through which the
Fund's shares are distributed.
6 Investment Transactions
- --------------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the
six months ended February 28, 1997 aggregated $69,259,395 and $97,881,610,
respectively.
7
<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.
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
8
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
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 Sampoerna (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
9
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
Diversified Trading -- 9.38%
- --------------------------------------------------------------------------------
<S> <C> <C>
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, Johor
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
10
<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 Insurance 4,510 $ 1,755,107
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
11
<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
12
<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
13
<PAGE>
Greater China Growth Portfolio as of February 28, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of February 28, 1997
Assets
- --------------------------------------------------------------------------------
<S> <C>
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
- --------------------------------------------------------------------------------
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
February 28, 1997
Investment Income
- --------------------------------------------------------------------------------
<S> <C>
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
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
14
<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 on investments 2,838,237 13,787,497
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
15
<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
16
<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
17
<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
18
<PAGE>
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 $ 95,139 $ 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.
19
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EV Traditional Greater China Growth Fund as of February 28, 1997
<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT
EV Traditional Greater China Growth Fund
<S> <C> <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 Banking,
William D. Burt Harvard University Graduate School of
Vice President 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, Fiduciary Company Incorporated
Thomas Otis
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, Center for Asian Studies,
Co-Portfolio Manager University of Hong Kong
James B. Hawkes Donald R. Dwight
Vice President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
Scobie Dickinson Ward
Vice President, Assistant Samuel L. Hayes, III
Secretary, Assistant Treasurer, Jacob H. Schiff Professor of Investment Banking,
and Co-Portfolio Manager Harvard University Graduate School of
Business Administration
William Walter Raleigh Kerr
Vice President and Norton H. Reamer
Assistant Treasurer President and Director, United Asset
Management Corporation
James L. O'Connor
Vice President and Treasurer
Thomas Otis
Vice President and Secretary
</TABLE>
