<PAGE>
[LOGO]
[PHOTO]
Annual Report August 31, 1999
EATON VANCE
WORLDWIDE
HEALTH
SCIENCES FUND
Global Management-Global Distribution
[PHOTO]
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
- ---------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
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[PHOTO]
James B. Hawkes
President
Eaton Vance Worldwide Health Sciences Fund Class A shares had a total return of
53.28% during the year ended August 31, 1999. That return was the result of an
increase in net asset value per share (NAV) from $12.55 on August 31, 1998 to
$18.49 on August 31, 1999, and the reinvestment of $0.672 per share in capital
gains distributions.(1)
Class B shares had a total return of 52.29% for the same period, the result of
an increase in NAV from $9.76 to $14.12, and the reinvestment of $0.672 per
share in capital gains distributions.(1)
Class C shares had a total return of 52.16% for the same period, the result of
an increase in NAV from $8.46 to $12.13, and the reinvestment of $0.672 per
share in capital gains distributions.(1)
By comparison, the S&P 500 had a return of 39.82% while the Morgan Stanley
Capital International Europe, Australasia and Far East Index had a return of
26.03%.(2)
Global markets recover as economic outlook improves ...
1999 has been a year of rising global stock markets as the outlook has
significantly improved for the world economy. Many Asian markets, mired last
year in a mix of recession and currency crisis, have rebounded strongly in the
wake of corporate restructurings and banking reforms. The U.S. market moved
generally higher, although rising interest rates stalled market momentum during
the summer.
Against that backdrop, drug and biotech stocks have been relatively strong
performers. U.S. pharmaceuticals performed exceptionally well through the first
six months of the fiscal year. Since March, however, the sector has undergone a
major correction, with drug stock prices reverting to more reasonable
valuations.
Meanwhile, Japanese drug and biotech stocks have been stellar performers. With
Japan finally emerging from its prolonged recession, the market has mounted a
strong recovery in 1999, and drug stocks have been among the leaders.
As the pace of drug discovery gathers steam, the future brightens for drug
stocks ...
At a recent Joint Congressional Summit on Biotechnology, representatives from
the drug sector and the political arena echoed a similar theme: the 21st
century will be the century of the life sciences. A quickened pace of drug
discovery and new advances in gene-mapping suggest a new determination to
focus resources on the fight against disease. That is sure to have major
implications for investors, with exciting challenges and promising
opportunities. We believe that Worldwide Health Sciences Portfolio will
participate in that bright future.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
October 12, 1999
<TABLE>
<CAPTION>
Performance(3) Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 53.28% 52.29% 52.16%
Five Years 22.37 N.A. N.A.
Ten Years 18.72 N.A. N.A.
Life of Fund+ 16.83 14.43 16.54
<CAPTION>
SEC Average Annual Total Returns (Including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 44.42% 47.29% 51.16%
Five Years 20.93 N.A. N.A.
Ten Years 18.02 N.A. N.A.
Life of Fund+ 16.34 13.38 16.54
</TABLE>
+Inception Dates - Class A: 7/26/85; Class B: 9/23/96; Class C:1/05/98
<TABLE>
<CAPTION>
Ten Largest Equity Holdings(4)
- -------------------------------------------
<S> <C>
Sanofi-Synthelabo 5.6%
Lilly (Eli) & Co. 5.5
Abgenix, Inc. 5.0
Monsanto Co. 5.0
Warner-Lambert Co. 4.6
Roche Holding AG 4.5
Eisai Co., Ltd. 4.5
Altana 4.3
Banyu Pharmaceutical Co. 4.2
Fujisawa Pharmaceutical 4.2
</TABLE>
(1) These returns do not include the 5.75% maximum sales charge for the Fund's
Class A shares or the applicable contingent deferred sales charges (CDSC) for
Class B and Class C shares.
(2) It is not possible to invest directly in an Index.
(3) Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 5.75% sales charge. SEC returns for Class B reflect
applicable CDSC based on the following schedule: 5% - 1st and 2nd years; 4% -
3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC 1-Year return for
Class C reflects 1% CDSC.
(4) Ten largest equity holdings accounted for 47.4% of the Portfolio's total
net assets. Holdings are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
- --------------------------------------------------------------------------------
MUTUAL FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
- --------------------------------------------------------------------------------
2
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
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MANAGEMENT DISCUSSION
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AN INTERVIEW WITH SAMUEL D. ISALY, DIRECTOR, ORBIMED ADVISORS, INC., INVESTMENT
ADVISER TO WORLDWIDE HEALTH SCIENCES PORTFOLIO
[PHOTO]
Samuel D. Isaly
Portfolio Manager
Q: Sam, the Fund posted strong returns this year. What accounted for this
performance?
A: Two segments of the Portfolio led the way in the overall performance. One was
U.S. biotechnology stocks, and the other was Japanese major pharmaceutical
companies such as Fujisawa and Eisai. With regard to the U.S. biotechs, an
increasing number of these companies are starting to become profitable. There
are about 20 profitable biotech companies in the U.S. this year; we expect that
number to grow to 40 in the year 2000. That kind of momentum continued to fuel
the stock prices in the sector, and we do not foresee any diminution of that in
the immediate future.
Q: Why are U.S. biotech companies doing as well as they are?
A: On an individual basis, factors like favorable product news, legislation, and
FDA approval have boosted stock prices. In a broader sense, the success of this
group is largely due to fruitfulness of technologies developed and incorporated
in the early 1990s. Now, at the end of the decade, biotech companies are
becoming commercially viable. It has taken quite a while to get these new drugs
to market, but it may be payoff time finally for those who have been patient
investors.
Q: You mentioned that the Japanese pharmaceutical companies were strong
performers as well. What can you tell us about the Portfolio's holdings in this
area?
A: Eisai Co. Ltd. is a global pharmaceutical company based in Japan. The company
was the first in Japan to synthesize and mass-produce Vitamin E, and vitamins
and consumer products are still a vital part of Eisai's strength. More recently,
however, the company has been spending about 15% of its revenues on further
research and development in areas such as immunology and endocrinology. Eisai's
strength in research and development has produced an impressive pipeline of new
drugs, including two products of world-
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Sector Distribution+
- --------------------------------------------------------------------------------
As a percentage of total investments
<S> <C>
Specialty/Biotech Companies 38.8%
Major Pharmaceutial Companies 61.2%
<CAPTION>
Regional Distribution+
- --------------------------------------------------------------------------------
As a percentage of total investments
<S> <C>
North America/Specialty 32.1%
North America/Majors 25.8%
Europe/Majors 17.9%
Far East/Majors 16.8%
Far East/Speciality 3.6%
Europe/Speciality 2.6%
</TABLE>
+ Sector and Regional Distrubutions subject to change due to active management.
3
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
wide merit. Aricept is a treatment for Alzheimer's disease. While not a cure,
Aricept is the only drug being used to effectively treat the disease. Marketed
with Pfizer, Inc., the drug has been on the market for two years. We believe
Aricept has the potential to be a $1 billion seller in coming years. Another
promising drug for Eisai is Pariet, an anti-ulcer treatment. The drug is just
now being introduced and is being marketed with Johnson & Johnson, Inc.
Another Japanese pharmaceutical concern that has performed well for the
Portfolio is Fujisawa Pharmaceuticals. Fujisawa also has a global presence in
drug development. Among Fujisawa's success stories is Prograf, an
immunosuppressant used to prevent organ rejection in kidney and liver
transplants.
Recently, Fujisawa has received approval in Japan for Protopic, a cream-based,
topical formulation of Prograf for use in fighting dermatitis, a common skin
infection. Approval for use in the U.S. is expected this year. Prograf and
Protopic have excellent prospects and have been fueling Fujisawa's rapid
earnings growth.
Q:How did the Portfolio's regional diversification affect performance?
A: A general economic recovery in the Asian and Japanese markets certainly
worked to our advantage in the past year. In addition, as the Japanese majors
were improving their performance, we were able to increase our exposure in those
markets. However, while diversification often provides a buffer against
turbulence in any one market, we don't invest based on regional criteria.
Rather, we choose stocks based on their individual merits, analyzing a company's
fundamentals, such as earnings growth potential.
Q: Was there a segment of the Portfolio that didn't fare as well?
A: Major U.S. pharmaceutical companies didn't fare as well. While the group
posted very strong performance in the first half of the period, by April
valuations had gotten ahead of themselves and the stocks were unable to sustain
the momentum. Furthermore, the U.S. drug stocks were negatively impacted by
fears of legislative changes in the U.S.
At the moment, Medicare does not cover out-of-hospital prescription drugs, but
legislation under consideration would provide coverage of such drugs for
Medicare patients. Medicaid, which does cover out-of-hospital drugs, requires
rather substantial discounts. These are some of the factors and external events
that can influence the U.S. drug stocks.
Q:What has been happening with the Portfolio's top holding, Sanofi-Synthelabo?
A: Since the last annual report, our top holding, Sanofi SA, announced and
finalized a merger with Synthelabo. The merger puts the combined company among
the world's top pharmaceutical giants. Sanofi was already a major player in the
European drug market, especially in France, where Sanofi sells about 30% of its
products. Now, Sanofi is well-positioned to succeed in North American markets
and to expand its considerable presence in Japan as well. The company recently
announced its financial results for the first half of 1999, and they were
encouraging:sales were up about 7%, net earnings increased around 18%, and
pharmaceuticals, which account for 90% of the new group's business, showed
nearly 8% growth.
Q: You mentioned that some drug companies have impressive pipelines for new
products. Why is that significant?
A: Companies with an active pipeline of new products have a major advantage over
companies that rely on aging products. In this case, the numbers are very
instructive. Of the 20 top-selling drugs worldwide, 14 are scheduled to lose
patent protection in the next four years. Typically, when a drug comes off
patent, it becomes vulnerable to price competition as generic imitations come to
market. That can mean a drop in revenues for the drug as much as 50 to 80%.
Obviously, that can have major implications for the
4
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
companies involved. Companies with a strong lineup of new products under
development are less vulnerable to the loss of patent protection.
Merck & Co. is a good example. By 2001, the company will lose patents on two
major cardiovascular drugs, Mevacor and Vasotec. However, because of its rich
pipeline, Merck is able to offset the loss of those revenues with the
introductions of new drugs, including Zocor, Fosamax, and Crixivan. With the
growing contribution of these new products, Merck could continue to post
double-digit revenue growth.
Q: Sam, what is your outlook for the drug stocks in the coming year?
A: Naturally, Medicare reimbursement rates are likely to be a continuing,
nettlesome issue for the drug sector. But I believe that the drug industry is
likely to benefit from several major trends, including the aging of the general
population, the increasing pace of breakthroughs in clinical trials and the use
of drug treatments as an alternative to extended hospital stays.
It's no surprise that the population is aging as the baby boomers approach
retirement age. On the research front, newer drug technologies are starting to
produce results and, with the continuing advance of the human gene-mapping
process, there is likely to be an explosion of discovery in coming years.
Finally, with the high cost of health care a prime focus in the political
sector, there is a push to reduce hospital costs through the use of drugs for
outpatient treatment.
Given the aging U.S. economic expansion, drug stocks, with their reliable
earnings and defensive characteristics, may become increasingly attractive in
the coming year. Meanwhile, as I indicated earlier, more biotech companies are
likely to reach profitability. These are positive trends for the drug and
biotech sectors and I'm enthusiastic about their prospects.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
8/31/89 8/31/91 8/31/93 8/31/95 8/31/97 8/31/99
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index $10,000 $12,054 $14,987 $19,192 $32,045 $48,426
EAFE $10,000 $8,789 $11,223 $12,572 $14,875 $18,771
Eaton Vance Worldwide Health
Sciences Fund Class A $10,000 $14,514 $19,737 $27,994 $43,168 $55,620
Fund including maximum sales charge $9,425 $13,679 $18,601 $26,383 $40,684 $52,419
</TABLE>
<TABLE>
<CAPTION>
Performance** Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 53.28% 52.29% 52.16%
Five Years 22.37 N.A. N.A.
Ten Years 18.72 N.A. N.A.
Life of Fund+ 16.83 14.43 16.54
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 44.42% 47.29% 51.16%
Five Years 20.93 N.A. N.A.
Ten Years 18.02 N.A. N.A.
Life of Fund+ 16.34 13.38 16.54
</TABLE>
+Inception Dates - Class A: 7/26/85; Class B: 9/23/96; Class C:1/05/98
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced
7/26/85.
The performance chart above compares the Fund's total return with that of a
broad-based securities market index. Returns are calculated by determining
the percentage change in net asset value (NAV) with all distributions
reinvested. The lines on the chart represent the total returns of $10,000
hypothetical investments in the Fund, the S&P 500 Index - a broad-based,
widely recognized index of 500 common stocks traded in the U.S. - and the
Morgan Stanley Capital International Europe, Australasia, and Far East
Index (EAFE) - a broad-based index of common stocks traded in foreign
markets. An investment in the Fund's Class B shares on 9/30/96 at net asset
value would have been worth $14,516 on August 31, 1999; $14,116 including
applicable CDSC. An investment in the Fund's Class C shares on 1/31/98 at
net asset value would have been worth $12,498 on August 31, 1999. The
Indices' total returns do not reflect any commissions or expenses that
would have been incurred if an investor individually purchased or sold the
securities represented in the Indices. It is not possible to invest
directly in an index.
** Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns
for Class A reflect the maximum 5.75% sales charge. SEC returns for Class B
reflect applicable CDSC based on the following schedule: 5% - 1st and 2nd
years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC
1-Year return for Class C reflects 1% CDSC.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
5
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF AUGUST 31, 1999
<S> <C>
Assets
- ------------------------------------------------------
Investment in Worldwide Health Sciences
Portfolio, at value (identified cost,
$162,193,259) $204,400,794
Receivable for Fund shares sold 566,664
Tax reclaim receivable 142,982
Deferred organization expenses 18,190
- ------------------------------------------------------
TOTAL ASSETS $205,128,630
- ------------------------------------------------------
Liabilities
- ------------------------------------------------------
Payable for Fund shares redeemed $ 196,873
Accrued expenses 17,806
- ------------------------------------------------------
TOTAL LIABILITIES $ 214,679
- ------------------------------------------------------
NET ASSETS $204,913,951
- ------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------
Paid-in capital $147,920,537
Accumulated undistributed net realized
gain from Portfolio (computed on the
basis of identified cost) 14,788,758
Net unrealized appreciation from
Portfolio (computed on the basis of
identified cost) 42,204,656
- ------------------------------------------------------
TOTAL $204,913,951
- ------------------------------------------------------
Class A Shares
- ------------------------------------------------------
NET ASSETS $ 89,213,651
SHARES OUTSTANDING 4,823,709
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(Net assets DIVIDED BY shares of
beneficial interest outstanding) $ 18.49
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $18.49) $ 19.62
- ------------------------------------------------------
Class B Shares
- ------------------------------------------------------
NET ASSETS $107,922,789
SHARES OUTSTANDING 7,640,743
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 6)
(Net assets DIVIDED BY shares of
beneficial interest outstanding) $ 14.12
- ------------------------------------------------------
Class C Shares
- ------------------------------------------------------
NET ASSETS $ 7,777,511
SHARES OUTSTANDING 641,262
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 6)
(Net assets DIVIDED BY shares of
beneficial interest outstanding) $ 12.13
- ------------------------------------------------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31, 1999
<S> <C>
Investment Income
- -----------------------------------------------------
Dividends allocated from Portfolio (net
of foreign taxes, $77,026) $ 958,077
Interest income allocated from Portfolio 26,183
Expenses allocated from Portfolio (1,679,959)
- -----------------------------------------------------
NET INVESTMENT LOSS FROM PORTFOLIO $ (695,699)
- -----------------------------------------------------
Expenses
- -----------------------------------------------------
Management fee $ 462,162
Trustees fees and expenses 2,310
Distribution and service fees
Class A 209,081
Class B 820,661
Class C 46,379
Transfer and dividend disbursing agent
fees 270,998
Registration fees 53,833
Printing and postage 32,800
Legal and accounting services 23,065
Custodian fee 23,064
Amortization of organization expenses 7,891
Miscellaneous 39,637
- -----------------------------------------------------
TOTAL EXPENSES $ 1,991,881
- -----------------------------------------------------
Deduct --
Reduction of custodian fee $ 20,886
- -----------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 20,886
- -----------------------------------------------------
NET EXPENSES $ 1,970,995
- -----------------------------------------------------
NET INVESTMENT LOSS $(2,666,694)
- -----------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- -----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $19,289,586
Foreign currency transactions (65,459)
- -----------------------------------------------------
NET REALIZED GAIN $19,224,127
- -----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments $57,465,799
Foreign currency (2,919)
- -----------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $57,462,880
- -----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $76,687,007
- -----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $74,020,313
- -----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------
From operations --
Net investment loss $ (2,666,694) $ (2,700,746)
Net realized gain 19,224,127 9,768,017
Net change in unrealized appreciation
(depreciation) 57,462,880 (37,261,834)
- --------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 74,020,313 $ (30,194,563)
- --------------------------------------------------------------------------
Distributions to shareholders --
From net realized gain
Class A $ (3,621,408) $ --
Class B (5,013,898) --
Class C (197,322) --
- --------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (8,832,628) $ --
- --------------------------------------------------------------------------
Transactions in shares of beneficial
interest --
Proceeds from sale of shares
Class A $ 29,816,201 $ 30,859,412
Class B 15,461,673 45,190,521
Class C 5,035,458 2,603,075
Issued in reorganization of EV
Marathon Worldwide Health Sciences
Fund
Class B -- 64,663,847
Net asset value of shares issued to
shareholders in payment of
distributions declared
Class A 3,420,168 --
Class B 4,719,635 --
Class C 193,239 --
Cost of shares redeemed
Class A (41,587,153) (39,199,899)
Class B (20,458,515) (18,157,011)
Class C (721,473) (267,568)
- --------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS $ (4,120,767) $ 85,692,377
- --------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 61,066,918 $ 55,497,814
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NET ASSETS AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------
At beginning of year $ 143,847,033 $ 88,349,219
- --------------------------------------------------------------------------
AT END OF YEAR $ 204,913,951 $ 143,847,033
- --------------------------------------------------------------------------
Accumulated
net investment loss
included in net assets
- --------------------------------------------------------------------------
AT END OF YEAR $ -- $ --
- --------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------------------------------------------------------
1999(1) 1998 1997 1996 1995
------------------------------ -------------------------------- -------- -------- --------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C(2) CLASS A CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning
of year $12.550 $ 9.760 $ 8.460 $14.930 $11.680 $ 10.000 $13.540 $11.710 $ 9.150
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss $(0.182) $(0.214) $(0.199) $(0.209) $(0.204) $ (0.076) $(0.133) $(0.230) $ (0.170)
Net realized and unrealized
gain (loss) 6.794 5.246 4.541 (2.171) (1.716) (1.464) 1.818 3.460 3.410
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 6.612 $ 5.032 $ 4.342 $(2.380) $(1.920) $ (1.540) $ 1.685 $ 3.230 $ 3.240
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions
- --------------------------------------------------------------------------------------------------------------------------------
From net realized gain $(0.672) $(0.672) $(0.672) $ -- $ -- $ -- $(0.295) $(1.400) $ (0.680)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.672) $(0.672) $(0.672) $ -- $ -- $ -- $(0.295) $(1.400) $ (0.680)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
YEAR $18.490 $14.120 $12.130 $12.550 $ 9.760 $ 8.460 $14.930 $13.540 $ 11.710
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) 53.28% 52.29% 52.16% (15.94)% (16.44)% (15.40)% 17.67% 31.04% 38.13%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(000's omitted) $89,214 $107,923 $ 7,778 $66,831 $75,111 $ 1,905 $88,349 $55,016 $ 17,690
Ratios (As a percentage of
average daily net
assets):
Net operating
expenses(4)(5) 1.69% 2.29% 2.44% 1.83% 2.43% 2.67%(6) 2.07% 2.21% 2.44%
Interest expense(4) 0.01% 0.01% 0.01% -- -- -- -- -- --
Net expenses after
custodian fee
reduction(4) 1.63% 2.23% 2.38% 1.69% 2.29% 2.53%(6) 2.00% -- --
Net investment loss (1.11)% (1.70)% (1.82)% (1.21)% (1.80)% (1.84)%(6) (1.60)% (1.81)% (1.80)%
Portfolio Turnover of the
Fund(7) -- -- -- -- -- -- -- 66% 45%
Portfolio Turnover of the
Portfolio(7) 41% 41% 41% 34% 34% 34% 14% -- --
- --------------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio may reflect a reduction of the investment adviser fee, an allocation of
expenses to the Manager/Administrator, or both. Had such actions not been taken, the ratios and net investment loss per share
would have been as follows:
Ratios (As a percentage of
average daily net
assets):
Expenses(4)(5) 2.29% -- --
Expenses after custodian
fee reduction(4) 2.22% -- --
Net investment loss (1.82)% -- --
Net investment loss per
share $(0.151) -- --
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net investment loss per share was computed using average shares
outstanding.
(2) For the period from the commencement of offering of Class C shares,
January 5, 1998, to August 31, 1998.
(3) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
(4) Includes the Fund's share of the Portfolio's allocated expenses for the
period the Fund was investing in the Portfolio.
(5) The expense ratios for the year ended August 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the 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 ratio
for the year ended August 31, 1995 has not been adjusted to reflect this
change.
(6) Annualized.
(7) Portfolio Turnover of the Fund represents the rate of portfolio activity
for the period while the Fund was making investments directly in
securities. The Fund began investing in the Portfolio on September 1, 1996.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Eaton Vance Worldwide Health Sciences Fund (the Fund) is a diversified,
open-end management investment company. The Fund offers three classes of
shares. Class A shares are generally sold subject to a sales charge imposed
at time of purchase. Class B and Class C shares are sold at net asset value
and are subject to a contingent deferred sales charge (see Note 6). Each
class represents a pro rata interest in the Fund, but votes separately on
class-specific matters and (as noted below) is subject to different expenses.
Realized and unrealized gains and losses and net investment income, other
than class specific expenses, are allocated daily to each class of shares
based on the relative net assets of each class to the total net assets of the
Fund. Each class of shares differs in its distribution plan and certain other
class specific expenses. The Fund invests all of its investable assets in
interests in Worldwide Health Sciences Portfolio (the Portfolio), a New York
Trust, having the same investment objective as the Fund. The value of the
Fund's investment in the Portfolio reflects the Fund's proportionate interest
in the net assets of the Portfolio (99.7% at August 31, 1999). 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 the 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 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.
D Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over
five years.
E Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
to the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based
on the average daily cash balances the Fund or the Portfolio maintains with
IBT. All significant credit balances used to reduce the Fund's custodian fees
are reported as a reduction of expenses on the Statement of Operations.
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.
2 Distributions to Shareholders
- -------------------------------------------
It is the present policy of the Fund to make at least one distribution
annually (normally in December) of all or substantially all of the investment
income allocated to the Fund by the Portfolio, less the Fund's direct and
allocated expenses and at least one distribution annually of all or
substantially all of the net realized capital gain (reduced by any available
capital loss carry forwards from prior years) allocated by the Portfolio to
the Fund, if any. Shareholders may reinvest all distributions in shares of
the Fund at the per share net asset value as of the close of business on the
ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis. 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 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.
9
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS 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 year ended
August 31, 1999, the fee was equivalent to 0.25% of the Fund's average daily
net assets and amounted to $462,162. EVM had agreed that through August 31,
1999, if the annual aggregate expenses of the Class A shares (excluding
extraordinary expenses) exceed 2.00% of average daily net assets, then EVM
would reduce its fees and take other actions to the extent required to reduce
the expenses. Except for Trustees of the Fund who are not members of EVM's
organization, officers and Trustees receive remuneration for their services
to the Fund out of such management fee. The Fund was informed that Eaton
Vance Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's principal
underwriter, received $36,283 from the Fund as its portion of the sales
charge on sales of Class A shares for the year ended August 31, 1999.
Certain officers and Trustees of the Fund and of the Portfolio are officers
of the above organizations. In addition, administrative fees are paid by the
Portfolio to EVM. See Note 2 of the Portfolio's Notes to Financial Statements
which are included elsewhere in the report.
4 Shares of Beneficial Interest
- -------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Such shares may be issued in a number of different series (such as
the Fund) and classes. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
CLASS A AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
--------------------------------------------------------------------------
Sales 1,828,443 1,974,814
Issued to shareholders electing to
receive payment of distributions in
Fund shares 205,562 --
Redemptions (2,533,601) (2,569,073)
--------------------------------------------------------------------------
NET DECREASE (499,596) (594,259)
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
CLASS B AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
--------------------------------------------------------------------------
Sales 1,205,173 3,723,160
Issued to shareholders electing to
receive payment of distributions in
Fund shares 369,828 --
Redemptions (1,632,152) (1,561,658)
Issued to EV Marathon Worldwide Health
Sciences Fund shareholders -- 5,536,392
--------------------------------------------------------------------------
NET INCREASE (DECREASE) (57,151) 7,697,894
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
CLASS C AUGUST 31, 1999 AUGUST 31, 1998(1)
<S> <C> <C>
-----------------------------------------------------------------------------
Sales 464,942 251,792
Issued to shareholders electing to
receive payment of distributions in
Fund shares 17,615 --
Redemptions (66,467) (26,620)
-----------------------------------------------------------------------------
NET INCREASE 416,090 225,172
-----------------------------------------------------------------------------
</TABLE>
(1) For the period from the commencement of offering of Class C shares,
January 5, 1998, to August 31, 1998.
5 Distribution Plans
- -------------------------------------------
Each Class of the Fund has adopted a distribution plan (the Plans) pursuant
to Rule 12b-1 under the Investment Company Act of 1940. The Plans require
that the Class A shares will pay a monthly distribution fee to EVD in an
amount equal to 0.25% on an annual basis of the average daily net assets
attributable to Class A shares. EVD may pay up to the entire amount of the
Class A distribution fee to investment dealers for providing personal
services to shareholders. For the year ended August 31, 1999, the Class A
shares paid or accrued $209,081 payable to EVD. The Plans require the
Class B and Class C shares to pay EVD amounts equal to 1/365 of 0.75% of the
average daily net assets attributable to Class B and Class C shares for
providing ongoing distribution services and facilities to each class. Each
class will automatically discontinue payments to EVD during any period in
which there are no outstanding Uncovered Distribution Charges, which are
equivalent to the sum of (i) 5% and 6.25% of the aggregate amount received by
the Fund for the Class B and Class C shares sold, respectively, plus (ii)
interest calculated by applying the rate of 1% over the prevailing prime rate
to the outstanding balance of Uncovered Distribution Charges of EVD of each
respective class reduced by the aggregate amount of contingent deferred sales
charges (see Note 6) and daily amounts theretofore paid to EVD by each
respective class. The Fund paid or accrued $724,113
10
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
and $34,784 for Class B and Class C shares, respectively, payable to EVD for
the year ended August 31, 1999, representing 0.75% of the average daily net
assets for Class B and Class C shares, respectively. At August 31, 1999, the
amount of Uncovered Distribution Charges of EVD calculated under the Plans
was approximately $3,554,000 and $433,000 for Class B and Class C shares,
respectively.
In addition, the Plans authorize the Class B and Class C shares to make
payments of service fees to EVD, investment dealers and other persons in
amounts not exceeding 0.25% of the average daily net assets attributable to
Class B and Class C shares for each fiscal year. The Trustees have initially
implemented the Plans by authorizing Class B shares to make quarterly
payments of service fees to EVD and investment dealers in amounts not
expected to exceed 0.25% per annum of the average daily net assets
attributable to Class B shares based on the value of Fund shares sold by such
persons and remaining outstanding for at least one year. The Class C Plan
permits the Fund to make monthly payments of service fees in amounts not
expected to exceed 0.25% of the Fund's average daily net assets attributable
to Class C shares for any fiscal 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 year ended August 31, 1999 amounted to
$96,548 and $11,595 for Class B and Class C shares, respectively.
6 Contingent Deferred Sales Charge
- -------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on redemptions
of Class B shares made within six years of purchase and on redemptions of
Class C shares made within one year of purchase. Generally, the CDSC is based
upon the lower of the net asset value at date of redemption or date of
purchase. No charge is levied on shares acquired by reinvestment of dividends
or capital gains distributions. Class B CDSC is imposed at declining rates
that begin at 5% in the case of redemptions in the first and second year
after purchase, declining one percentage point each subsequent year. Class C
shares will be subject to a 1% CDSC if redeemed within one year of purchase.
No CDSC is levied on shares which have been sold to EVM or its affiliates or
to their respective employees or clients and may be waived under certain
other limited conditions. CDSC charges are paid to EVD to reduce the amount
of Uncovered Distribution Charges calculated under each Class' Distribution
Plan (see Note 5). CDSC charges received when no Uncovered Distribution
Charges exist will be credited to the Fund. For the year ended August 31,
1999, the Fund was informed that EVD received approximately $522,000 and
$4,000 of CDSC paid by shareholders for Class B and Class C shares,
respectively.
7 Investment Transactions
- -------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the
year ended August 31, 1999 aggregated $58,406,556 and $74,323,401,
respectively.
8 Transfer of Net Assets
- -------------------------------------------
On September 1, 1997, EV Traditional Worldwide Health Sciences Fund, Inc.,
currently the Eaton Vance Worldwide Health Sciences Fund, acquired the net
assets of EV Marathon Worldwide Health Sciences Fund pursuant to an Agreement
and Plan of Reorganization dated June 23, 1997. In accordance with the
agreement, the Fund at the closing, issued 5,536,392 Class B shares with an
aggregate value of $64,663,847 (including unrealized appreciation of
$3,351,226) and a net asset value per share of $11.68. The transaction was
structured for tax purposes to qualify as a tax-free reorganization under the
Internal Revenue Code. Directly after the merger, the combined net assets of
the Fund were $153,013,066, with net asset values of $14.93 and $11.68 for
Class A shares and Class B shares respectively.
11
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
INDEPENDENT ACCOUNTANTS' REPORT
To the Trustees and Shareholders
of Eaton Vance Worldwide Health Sciences Fund:
- --------------------------------------------------------
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Eaton Vance Worldwide Health Sciences Fund, (the "Fund") at August 31, 1999, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and financial highlights for
each of the three years in the period then ended, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above. The financial
highlights for each of the two years in the period ended August 31, 1996 were
audited by other independent accountants whose report dated September 26, 1996
expressed an unqualified opinion on those financial highlights.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 1, 1999
12
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF AUGUST 31, 1999
INVESTMENT MANAGEMENT
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
Officers
James B. Hawkes
President and Trustee
Thomas E. Faust, Jr.
Vice-President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
WORLDWIDE HEALTH SCIENCES PORTFOLIO
Officers
James B. Hawkes
President and Trustee
Samuel D. Isaly
Vice President and
Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking
Emeritus, Harvard University Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
22
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 1999
PORTFOLIO OF INVESTMENTS
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS -- 89.85%
<CAPTION>
PERCENTAGE OF
SECURITY SHARES VALUE NET ASSETS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Major Capitalization - Europe -- 17.88%
- -----------------------------------------------------------------------------------
Altana 135,000 $ 8,904,516 4.34%
Ares-Serono 4,700 7,098,200 3.46%
Roche Holding AG 800 9,243,553 4.51%
Sanofi-Synthelabo(1) 274,800 11,426,400 5.57%
- -----------------------------------------------------------------------------------
$ 36,672,669 17.88%
- -----------------------------------------------------------------------------------
Major Capitalization - Far East -- 16.78%
- -----------------------------------------------------------------------------------
Banyu Pharmaceutical Co. 450,000 $ 8,610,086 4.20%
Eisai Co., Ltd. 400,000 9,220,537 4.49%
Fujisawa Pharmaceutical 500,000 8,569,086 4.18%
Takeda Chemical Industries, Ltd. 160,000 8,017,858 3.91%
- -----------------------------------------------------------------------------------
$ 34,417,567 16.78%
- -----------------------------------------------------------------------------------
Major Capitalization - North America -- 25.82%
- -----------------------------------------------------------------------------------
Genzyme Corp., Class A(1) 150,000 $ 8,465,625 4.13%
Lilly (Eli) & Co. 150,000 11,193,750 5.46%
Merck & Co., Inc. 110,000 7,390,625 3.60%
Monsanto Co. 250,000 10,265,625 5.01%
Pharmacia & Upjohn, Inc. 120,000 6,270,000 3.06%
Warner-Lambert Co. 141,269 9,359,071 4.56%
- -----------------------------------------------------------------------------------
$ 52,944,696 25.82%
- -----------------------------------------------------------------------------------
Specialty Capitalization - Europe -- 2.61%
- -----------------------------------------------------------------------------------
Cambridge Antibody Technology, Ltd.(1) 396,040 $ 1,432,962 0.70%
Cambridge Antibody Technology, Ltd.
Warrants(1)(2)(3) 15,500 2,124 0.00%
Swiss Serum Institute 328 3,926,136 1.91%
- -----------------------------------------------------------------------------------
$ 5,361,222 2.61%
- -----------------------------------------------------------------------------------
Specialty Capitalization - Far East -- 3.63%
- -----------------------------------------------------------------------------------
Rohto Pharmaceutical 500,000 $ 3,858,594 1.88%
Teikoku Hormone Manufacturing 390,000 3,588,903 1.75%
- -----------------------------------------------------------------------------------
$ 7,447,497 3.63%
- -----------------------------------------------------------------------------------
Specialty Capitalization - North America -- 23.13%
- -----------------------------------------------------------------------------------
Abgenix, Inc.(1) 43,000 $ 1,381,375 0.67%
Alexion Pharmaceuticals, Inc.(1) 270,000 3,611,250 1.76%
<CAPTION>
PERCENTAGE OF
SECURITY SHARES VALUE NET ASSETS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Specialty Capitalization - North America (continued)
- -----------------------------------------------------------------------------------
Aviron(1) 250,000 $ 7,015,625 3.42%
Bio-Technology General Corp.(1) 400,000 4,075,000 1.99%
Gilead Sciences, Inc.(1) 100,000 7,793,750 3.80%
Incyte Pharmaceuticals, Inc.(1) 110,000 3,121,250 1.52%
Orchid Biocomputer Warrants(2)(3) 50,000 0 0.00%
Pharmacopeia, Inc.(1) 302,500 3,705,625 1.81%
Premier Research Worldwide(1) 235,000 1,439,375 0.70%
SangStat Medical Corp.(1) 260,000 5,362,500 2.62%
Triangle Pharmaceuticals, Inc.(1) 200,000 3,675,000 1.79%
Vertex Pharmaceuticals, Inc.(1) 225,000 6,243,750 3.05%
- -----------------------------------------------------------------------------------
$ 47,424,500 23.13%
- -----------------------------------------------------------------------------------
Total Common Stocks and Warrants
(identified cost $149,398,960) $184,268,151
- -----------------------------------------------------------------------------------
PREFERRED STOCKS -- 8.52%
<CAPTION>
PERCENTAGE OF
SECURITY SHARES VALUE NET ASSETS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Specialty Capitalization - North America -- 8.52%
- -----------------------------------------------------------------------------------
Abgenix, Inc.(1)(2)(4) 276,923 $ 8,896,151 4.34%
Arena Pharmaceuticals(1)(2)(3) 354,994 1,238,929 0.60%
Intrabiotics Pharm, Inc.(1)(2)(3) 333,334 1,000,002 0.49%
Net Genics, Inc. Convertible, Series D,
Preferred R(1)(2)(3) 250,000 500,000 0.24%
Ontogeny, Inc.(1)(2)(3) 600,000 1,830,000 0.89%
Orchid Biocomputer, Inc.(1)(2)(3) 180,180 1,999,998 0.98%
Tularik, Inc.(1)(2)(3) 200,000 2,000,000 0.98%
- -----------------------------------------------------------------------------------
$ 17,465,080 8.52%
- -----------------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $10,038,929) $ 17,465,080
- -----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<S> <C> <C> <C>
BONDS -- 0.49%
<CAPTION>
PRINCIPAL
AMOUNT
(000'S PERCENTAGE OF
SECURITY OMITTED) VALUE NET ASSETS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Specialty Capitalization - North America -- 0.49%
- -----------------------------------------------------------------------------------
Orchid Biocomputer,
9.75%, 5/24/00(2)(3) $ 1,000 $ 1,000,000 0.49%
- -----------------------------------------------------------------------------------
$ 1,000,000 0.49%
- -----------------------------------------------------------------------------------
Total Bonds
(identified cost $1,000,000) $ 1,000,000
- -----------------------------------------------------------------------------------
Total Investments
(identified cost $160,437,889) $202,733,231 98.86%
- -----------------------------------------------------------------------------------
Other Assets, Less Liabilities $ 2,347,410 1.14%
- -----------------------------------------------------------------------------------
Net Assets $205,080,641 100.00%
- -----------------------------------------------------------------------------------
</TABLE>
(1) Non-income producing security.
(2) Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
(3) Restricted security.
(4) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF AUGUST 31, 1999
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C>
Assets
- -------------------------------------------------------
Investments, at value (identified cost,
$160,437,889) $202,733,231
Cash 2,154,390
Receivable for investments sold 94,320
Dividends and interest receivable 108,025
Deferred organization expenses 5,822
- -------------------------------------------------------
TOTAL ASSETS $205,095,788
- -------------------------------------------------------
Liabilities
- -------------------------------------------------------
Accrued expenses $ 15,147
- -------------------------------------------------------
TOTAL LIABILITIES $ 15,147
- -------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $205,080,641
- -------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $162,784,098
Net unrealized appreciation computed on
the basis of identified cost) 42,296,543
- -------------------------------------------------------
TOTAL $205,080,641
- -------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31, 1999
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C>
Investment Income
- ------------------------------------------------------
Dividends (net of foreign taxes,
$164,263) $ 873,403
Interest 26,271
- ------------------------------------------------------
TOTAL INVESTMENT INCOME $ 899,674
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Investment adviser fee $ 1,141,637
Administration fee 466,036
Trustees fees and expenses 6,318
Custodian fee 119,320
Legal and accounting services 29,890
Interest 23,470
Amortization of organization expenses 2,402
Miscellaneous 10,168
- ------------------------------------------------------
TOTAL EXPENSES $ 1,799,241
- ------------------------------------------------------
Deduct --
Reduction of custodian fee $ 115,253
- ------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 115,253
- ------------------------------------------------------
NET EXPENSES $ 1,683,988
- ------------------------------------------------------
NET INVESTMENT LOSS $ (784,314)
- ------------------------------------------------------
Realized and Unrealized
Gain (Loss)
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $19,325,069
Foreign currency transactions (66,203)
- ------------------------------------------------------
NET REALIZED GAIN $19,258,866
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $57,605,005
Foreign currency 1,201
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $57,606,206
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $76,865,072
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $76,080,758
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS (EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
Increase (Decrease) YEAR ENDED YEAR ENDED
in Net Assets AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- -----------------------------------------------------------------------------
From operations --
Net investment loss $ (784,314) $ (887,400)
Net realized gain 19,258,866 9,778,649
Net change in unrealized appreciation
(depreciation) 57,606,206 (37,330,872)
- -----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 76,080,758 $(28,439,623)
- -----------------------------------------------------------------------------
Capital transactions --
Contributions $ 58,763,929 $ 79,343,537
Withdrawals (74,426,211) (58,958,737)
- -----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL TRANSACTIONS $(15,662,282) $ 20,384,800
- -----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ 60,418,476 $ (8,054,823)
- -----------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------
At beginning of year $144,662,165 $152,716,988
- -----------------------------------------------------------------------------
AT END OF YEAR $205,080,641 $144,662,165
- -----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA (EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------
1999 1998 1997
<S> <C> <C> <C>
- -----------------------------------------------------------------
Ratios to average daily net assets
- -----------------------------------------------------------------
Operating expenses 0.95% 1.06% 1.25%
Interest expense 0.01% -- --
Expenses after custodian fee
reduction 0.90% 0.92% 1.18%
Net investment loss (0.42)% (0.49)% (0.81)%
Portfolio Turnover 41% 34% 14%
- -----------------------------------------------------------------
NET ASSETS, END OF YEAR
(000'S OMITTED) $205,081 $144,662 $152,717
- -----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN UNITED STATES DOLLARS)
1 Significant Accounting Policies
- -------------------------------------------
Worldwide Health Sciences Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company which was organized as a trust under the laws of the State
of New York on March 26, 1996. The Portfolio seeks long-term capital growth
by investing in a global and diversified portfolio of securities of health
sciences companies. The Declaration of Trust permits the Trustees to issue
interests in the Portfolio. Investment operations began on September 1, 1996,
with the acquisition of securities with a value of $51,528,696, including
unrealized appreciation of $9,053,201, in exchange for interest in the
Portfolio by one of the Portfolio's investors. The following is a summary of
the significant accounting policies of the Portfolio. The policies are in
conformity with accounting principles generally accepted in the United States
of America.
A Investment Valuations -- Securities listed on a recognized stock exchange,
whether U.S. or foreign, are valued at the last reported sale price on that
exchange prior to the time when assets are valued or prior to the close of
trading on the New York Stock Exchange. In the event that there are no sales,
the last available sale price will be used. If a security is traded on more
than one exchange, the security is valued at the last sale price on the
exchange where the stock is primarily traded. Securities for which market
quotations are not readily available and other assets are valued on a
consistent basis at fair value as determined in good faith by or under the
supervision of the Portfolio's officers in a manner specifically authorized
by the Board of Trustees.
B Income -- Dividend income is recorded on the ex-dividend date, except that
certain dividends from foreign securities are recorded on the ex-dividend
date or as soon thereafter as the Portfolio is informed of the dividend.
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premium or discount when required for Federal income tax
purposes.
C Federal Taxes -- The Portfolio has elected to be treated as a partnership for
United States Federal tax purposes. No provision is made by the Portfolio for
federal or state taxes on any taxable income of the Portfolio because each
investor in the Portfolio is ultimately responsible for the payment of any
taxes. Since one of the Portfolio's investors is a regulated investment
company that invests all or substantially all of its assets in the Portfolio,
the Portfolio 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.
D Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balances the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reflected as a reduction of
operating expense on the Statement of Operations.
E Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
F Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
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
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
results from fluctuations in foreign currency exchange rates is 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
18
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
gains and losses are recorded for financial statement purposes as unrealized
until such time as the contracts have been closed.
I Other -- Investment transactions are accounted for on a trade date basis.
Realized gains and losses are computed based on the specific identification
of the securities sold.
2 Investment Advisory Fees, Administrator's Fees and Other Transactions with
Affiliates
- -------------------------------------------
Pursuant to the Advisory Agreement, OrbiMed Advisors, Inc. ("OrbiMed") serves
as the Investment Adviser of the Portfolio. Under this agreement, OrbiMed
receives a monthly fee at the annual rate of 1% of the Portfolio's first $30
million in average net assets, 0.90% of the next $20 million in average net
assets, and 0.75% of average net assets in excess of $50 million. The fee
rate declines for net assets of $500 million and greater. In addition,
effective September 1, 1997, OrbiMed's fee is subject to an upward or
downward performance fee adjustment of up to 0.25% of the average daily net
assets of the Portfolio based upon the investment performance of the
Portfolio compared to the Standard & Poor's Index of 500 Common Stocks over
specified periods. For the year ended August 31, 1999, the fee was equivalent
to 0.61% of the Portfolio's average daily net assets and amounted to
$1,141,637.
Under an Administration Agreement between the Portfolio and its
Administrator, Eaton Vance Management (EVM) , EVM manages and administers the
affairs of the Portfolio. 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 million, and at reduced rates as daily net assets exceed that
level. For the year ended August 31, 1999, the administration fee was 0.25%
of average net assets and amounted to $466,036.
Except for Trustees of the Portfolio who are not members of the Adviser or
EVM's organization, officers and Trustees receive remuneration for their
services to the Portfolio out of such investment adviser and administrative
fees. Certain officers and Trustees of the Portfolio are officers of the
above organizations. Trustees of the Portfolio that are not affiliated with
the Investment Adviser may elect to defer receipt of all or a portion of
their annual fees in accordance with the terms of the Trustee Deferred
Compensation Plan. For the year ended August 31, 1999, no significant amounts
have been deferred.
3 Investments
- -------------------------------------------
Purchases and sales of investments other than U.S. Government securities and
short-term obligations aggregated $75,978,691 and $94,634,009, respectively,
for the year ended August 31, 1999.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation/(depreciation) in value of the
investments owned at August 31, 1999, as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $ 160,589,151
- -------------------------------------------------------
Gross unrealized appreciation $ 47,879,996
Gross unrealized depreciation (5,735,916)
- -------------------------------------------------------
NET UNREALIZED APPRECIATION $ 42,144,080
- -------------------------------------------------------
</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 other
developments which could affect such investments. Foreign stock markets,
while growing in volume and sophistication, are generally not as developed as
those in the United States, and securities of some foreign issuers
(particularly those in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In general, there is
less overall governmental supervision and regulation of foreign securities
markets, broker-dealers, and issuers than in the United States.
6 Line of Credit
- -------------------------------------------
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a committed $130 million unsecured line of credit agreement
with a group of banks. Borrowings will be made by the portfolios and funds
solely to facilitate the handling of unusual and/ or unanticipated short-term
cash requirements. Interest is
19
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
charged to each portfolio or fund based on its borrowings at an amount above
the Eurodollar rate or federal funds effective rate. In addition, a fee
computed at an annual rate of 0.10% on the daily unused portion of the
facility is allocated among the participating portfolios and funds at the end
of each quarter. The Portfolio did not have any significant borrowings or
allocated fees during the year ended August 31, 1999.
7 Restricted Securities
- -------------------------------------------
At August 31, 1999, the Portfolio owned the following securities
(representing 4.67% of net assets) which were restricted as to public resale
and not registered under the Securities Act of 1933. The Fund has various
registration rights (exercisable under a variety of circumstances) with
respect to these securities. The fair value of these securities is determined
based on valuations provided by brokers when available, or if not available,
they are valued at fair value using methods determined in good faith by or at
the direction of the Trustees. This valuation may differ from the value that
would be realized if the securities were sold and the difference could be
material to the financial statements.
<TABLE>
<CAPTION>
Shares/
Principal
Amount
Date of (000's
Description Acquisition Omitted) Cost Fair Value
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Preferred Stocks
- -------------------------------------------------------------------------------------------
Arena Pharmaceuticals 1/28/99 354,994 $ 1,238,929 $ 1,238,929
Intrabiotics Pharm, Inc. 11/24/98 333,334 1,000,002 1,000,002
Net Genics, Inc. Convertible,
Series D, Preferred R 3/20/98 250,000 500,000 500,000
Ontogeny, Inc. 3/13/97 600,000 1,500,000 1,830,000
Orchid Biocomputer, Inc. 12/19/97 180,180 1,999,998 1,999,998
Tularik, Inc. 10/14/96 200,000 2,000,000 2,000,000
- -------------------------------------------------------------------------------------------
$ 8,238,929 $ 8,568,929
- -------------------------------------------------------------------------------------------
Warrants
- -------------------------------------------------------------------------------------------
Cambridge Antibody
Technology, Ltd. 08/28/96 15,500 $ 31,000 $ 2,124
Orchid Biocomputer Warrants 05/24/99 50,000 0 0
- -------------------------------------------------------------------------------------------
$ 31,000 $ 2,124
- -------------------------------------------------------------------------------------------
Bonds
- -------------------------------------------------------------------------------------------
Orchid Biocomputers,
9.75% 5/24/00 05/24/99 1,000 $ 1,000,000 $ 1,000,000
- -------------------------------------------------------------------------------------------
$ 1,000,000 $ 1,000,000
- -------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF AUGUST 31, 1999
INDEPENDENT ACCOUNTANTS' REPORT
TO THE TRUSTEES AND INVESTORS
OF WORLDWIDE HEALTH SCIENCES PORTFOLIO:
- ---------------------------------------------
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the supplementary data present fairly, in all material
respects, the financial position of Worldwide Health Sciences Portfolio (the
"Portfolio") at August 31, 1999, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and supplementary data for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and supplementary data (hereafter referred to as "financial
statements") are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 1999 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 1, 1999
21
<PAGE>
SPONSOR AND MANAGER OF EATON VANCE
WORLDWIDE HEALTH SCIENCES FUND & ADMINISTRATOR OF
WORLDWIDE HEALTH SCIENCES PORTFOLIO
EATON VANCE MANAGEMENT
The Eaton Vance Building
255 State Street
Boston, MA 02109
ADVISER OF WORLDWIDE HEALTH SCIENCES PORTFOLIO
ORBIMED ADVISORS, INC.
767 3rd Avenue
New York, NY 10017
PRINCIPAL UNDERWRITER
EATON VANCE DISTRIBUTORS, INC.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
FIRST DATA INVESTOR SERVICES GROUP
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
- -------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
4-2669-10/99 HSSRC-10/99
