<PAGE>
[LOGO] INVESTING
FOR THE
EATON VANCE 21ST
- ------------
MUTUAL FUNDS CENTURY-Registered Trademark-
SEMIANNUAL REPORT FEBRUARY 28, 1999
[PHOTO] - Doctors
EATON VANCE
WORLDWIDE
HEALTH
SCIENCES FUND
GLOBAL MANAGEMENT-GLOBAL DISTRIBUTION
[PHOTO] - Medical Research
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF FEBRUARY 28, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
Investment Environment
- --------------------------------------------------------------------------------
[PHOTO]
Samuel D. Isaly
Portfolio Manager
- - During the six months ended February 28, 1999, health sciences stocks had a
strong showing overall. Small-capitalization biotech stocks in particular
had a good second half, thanks to positive earnings news and a number of
merger announcements. Larger-cap stocks, such as the pharmaceutical group,
were boosted by the general momentum of the stock market in the same
six-month period.
- - The pharmaceutical industry benefited from an improved regulatory
environment: FDA approvals for new products have been quicker, and the
number of approved drugs has grown. Furthermore, recent merger and
acquisition deals have been positive developments for drug companies.
- - Breakthroughs in biomedical science have given rise to some promising new
drugs. Major recent accomplishments include a series of AIDS therapeutics
and the first anti-arthritis treatments in over a decade.
The Fund
- --------------------------------------------------------------------------------
The Past Six Months
- - During the six months ended February 28, 1999, the Fund's Class A shares
had a total return of 39.4%. This return was the result of an increase in
net asset value (NAV) to $16.81 on February 28, 1999 from $12.55 on August
31, 1998, and the reinvestment of $0.672 per share in capital gains
distributions.(1)
- - The Fund's Class B shares had a total return of 38.9% during the period,
the result of an increase in NAV to $12.88 from $9.76, and the reinvestment
of $0.672 per share in capital gains distributions.(1)
- - The Fund's Class C shares had a total return of 38.9% during the period,
the result of an increase in NAV to $11.07 from $8.46, and the reinvestment
of $0.672 per share in capital gains distributions.(1)
Management Discussion
- - To seek its objective of long-term capital growth, Worldwide Health
Sciences Portfolio invests in domestic and foreign health science
companies, including those in the pharmaceutical and biotechnology sectors.
- - The Portfolio's overall returns for calendar year 1998 were characterized
by tremendous volatility: a first-half bust followed by a second-half boom.
The strong rally in both the small-cap biotech and larger pharmaceutical
sectors in the last four months of 1998, into January 1999, ensured the
Portfolio's outstanding performance.
- - Sanofi SA, the Portfolio's largest holding, is a French company that
manufactures pharmaceutical and beauty products for a worldwide market.
Currently, the company has about 30 drug compounds in development for the
treatment of cardiovascular and central nervous system disorders,
osteoporosis, and cancer. Sanofi SA recently announced a merger with
Synthelabo, a subsidiary of L'Oreal.
- - Another key stock in the Portfolio, Roche Holding AG, is a Swiss
pharmaceutical maker known for such products as Valium and Aleve. The
company's latest product, Xenical, is a weight-reduction medicine that
works by blocking the absorption of fat in the gastrointestinal system.
Management is enthusiastic about the blockbuster potential of this new
drug.
- - One of the few profitable U.S. biotechnology companies, Centocor, Inc.,
remained a core holding of the Portfolio. Earnings per share more than
tripled in the fourth quarter on sales of ReoPro, a cardiac drug supported
by the marketing strength of Eli Lilly & Co.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND INFORMATION
AS OF FEBRUARY 28, 1999
<TABLE>
<CAPTION>
PERFORMANCE(2) Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 11.1% 10.4% 10.4%
Five Years 18.7 N.A. N.A.
Ten Years 20.1 N.A. N.A.
Life of Fund+ 16.7 13.4 15.0
SEC Average Annual Total Returns (including sales
charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 4.7% 5.4% 9.4%
Five Years 17.3 N.A. N.A.
Ten Years 19.4 N.A. N.A.
Life of Fund+ 16.2 12.0 15.0
</TABLE>
+Inception Dates - Class A: 7/26/85; Class B: 9/23/96; Class C: 1/5/98
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS(3) By total net assets
- -----------------------------------------------------------
<S> <C>
Sanofi SA 6.3%
Roche Holding AG 5.3
Centocor, Inc. 4.8
Monsanto Co. 4.7
Altana 4.5
Merck & Co, Inc. 4.2
Pharmacia & Upjohn, Inc. 4.2
Genzyme Corp. 4.1
Ares-Sorono 4.0
Warner-Lambert Co. 3.9
</TABLE>
(1) These returns do not include the 5.75% maximum sales charge for Class A
shares or the applicable contingent deferred sales charges (CDSC) for Class
B and Class C shares. (2) 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. (3) As
of 2/28/99. Ten largest equity holdings accounted for 46.0% of the
Portfolio's 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.
2
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF FEBRUARY 28, 1999
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF FEBRUARY 28, 1999
<S> <C>
Assets
- -------------------------------------------------------
Investment in Worldwide Health Sciences
Portfolio, at value
(identified cost, $163,755,168) $ 192,668,627
Receivable for Fund shares sold 214,958
Other receivables 66,068
Deferred organization expenses 22,150
- -------------------------------------------------------
TOTAL ASSETS $ 192,971,803
- -------------------------------------------------------
Liabilities
- -------------------------------------------------------
Payable for Fund shares redeemed $ 561,965
Payable to affiliate for Trustees' fees 24
Other accrued expenses 65,270
- -------------------------------------------------------
TOTAL LIABILITIES $ 627,259
- -------------------------------------------------------
NET ASSETS $ 192,344,544
- -------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------
Paid-in capital $ 153,519,980
Accumulated undistributed net realized
gain from Portfolio (computed on the
basis of identified cost) 11,360,421
Accumulated net investment loss (1,449,316)
Net unrealized appreciation from
Portfolio (computed on the basis of
identified cost) 28,913,459
- -------------------------------------------------------
TOTAL $ 192,344,544
- -------------------------------------------------------
Class A Shares
- -------------------------------------------------------
NET ASSETS $ 86,499,469
SHARES OUTSTANDING 5,146,977
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 16.81
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $16.81) $ 17.84
- -------------------------------------------------------
Class B Shares
- -------------------------------------------------------
NET ASSETS $ 101,283,360
SHARES OUTSTANDING 7,866,665
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 12.88
- -------------------------------------------------------
Class C Shares
- -------------------------------------------------------
NET ASSETS $ 4,561,715
SHARES OUTSTANDING 412,258
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 11.07
- -------------------------------------------------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
FEBRUARY 28, 1999
<S> <C>
Investment Income
- ------------------------------------------------------
Dividends allocated from Portfolio
(net of foreign taxes, $17,746) $ 289,326
Expenses allocated from Portfolio (814,526)
- ------------------------------------------------------
NET INVESTMENT LOSS FROM PORTFOLIO $ (525,200)
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Management fee $ 225,432
Distribution and service fees
Class A 106,143
Class B 396,040
Class C 16,242
Transfer and dividend disbursing agent
fees 104,407
Registration fees 38,889
Printing and postage 15,165
Custodian fee 11,545
Legal and accounting services 8,582
Amortization of organization expenses 3,931
Miscellaneous 9,285
- ------------------------------------------------------
TOTAL EXPENSES $ 935,661
- ------------------------------------------------------
Deduct --
Reduction of custodian fee $ 11,545
- ------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 11,545
- ------------------------------------------------------
NET EXPENSES $ 924,116
- ------------------------------------------------------
NET INVESTMENT LOSS $ (1,449,316)
- ------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 13,134,915
Foreign currency transactions (8,332)
- ------------------------------------------------------
NET REALIZED GAIN $ 13,126,583
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments $ 44,189,971
Foreign currency (18,288)
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 44,171,683
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 57,298,266
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 55,848,950
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF FEBRUARY 28, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
Increase (Decrease) FEBRUARY 28, 1999 YEAR ENDED
in Net Assets (UNAUDITED) AUGUST 31, 1998
<S> <C> <C>
- -------------------------------------------------------------------------------
From operations --
Net investment loss $ (1,449,316) $ (2,700,746)
Net realized gain 13,126,583 9,768,017
Net change in unrealized appreciation
(depreciation) 44,171,683 (37,261,834)
- -------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 55,848,950 $ (30,194,563)
- -------------------------------------------------------------------------------
Distributions to shareholders --
From net realized gain
Class A $ (3,621,392) $ --
Class B (5,012,375) --
Class C (197,322) --
- -------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (8,831,089) $ --
- -------------------------------------------------------------------------------
Transactions in shares of beneficial
interest --
Proceeds from sale of shares
Class A $ 13,356,023 $ 30,859,412
Class B 7,140,350 45,190,521
Class C 2,055,331 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 3,420,152 --
Class B 4,719,360 --
Class C 193,239 --
Cost of shares redeemed
Class A (19,836,195) (39,199,899)
Class B (9,381,464) (18,157,011)
Class C (187,146) (267,568)
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 1,479,650 $ 85,692,377
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 48,497,511 $ 55,497,814
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1999 YEAR ENDED
Net Assets (UNAUDITED) AUGUST 31, 1998
<S> <C> <C>
- -------------------------------------------------------------------------------
At beginning of period $ 143,847,033 $ 88,349,219
- -------------------------------------------------------------------------------
AT END OF PERIOD $ 192,344,544 $ 143,847,033
- -------------------------------------------------------------------------------
Accumulated
net investment loss
included in net assets
- -------------------------------------------------------------------------------
AT END OF PERIOD $ (1,449,316) $ --
- -------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF FEBRUARY 28, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1999
(UNAUDITED)(1)
--------------------------------------
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
- --------------------------------------------------------------------
Net asset value -- Beginning
of period $12.550 $ 9.760 $ 8.460
- --------------------------------------------------------------------
Income (loss) from operations
- --------------------------------------------------------------------
Net investment loss $(0.101) $(0.114) $(0.107)
Net realized and unrealized
gain (loss) 5.033 3.906 3.389
- --------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 4.932 $ 3.792 $ 3.282
- --------------------------------------------------------------------
Less distributions
- --------------------------------------------------------------------
From net realized gain $(0.672) $(0.672) $(0.672)
- --------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.672) $(0.672) $(0.672)
- --------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD $16.810 $12.880 $11.070
- --------------------------------------------------------------------
TOTAL RETURN(3) 39.35% 38.91% 38.87%
- --------------------------------------------------------------------
Ratios/Supplemental Data+
- --------------------------------------------------------------------
Net assets, end of period
(000's omitted) $86,499 $101,283 $ 4,562
Ratios (As a percentage of
average daily net assets):
Net expenses(4) 1.67%(5) 2.25%(5) 2.38%(5)
Net expenses after
custodian fee
reduction(4)(6) 1.59%(5) 2.17%(5) 2.30%(5)
Net investment loss (1.27)%(5) (1.85)%(5) (2.00)%(5)
Portfolio Turnover(7) -- -- --
- --------------------------------------------------------------------
+ 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)
Expenses after custodian
fee reduction(4)(6)
Net investment loss
Net investment loss per share
- --------------------------------------------------------------------
<CAPTION>
YEAR ENDED AUGUST 31,
1998 1997 1996 1995 1994
---------------------------------- --------- --------- --------- -----------
CLASS A CLASS B CLASS C(2) CLASS A CLASS A CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------
Net asset value -- Beginning
of period $14.930 $11.680 $10.000 $13.540 $11.710 $ 9.150 $ 9.640
- ------------------------------
Income (loss) from operations
- ------------------------------
Net investment loss $(0.209) $(0.204) $(0.076) $(0.133) $(0.230) $(0.170) $ (0.160)
Net realized and unrealized
gain (loss) (2.171) (1.716) (1.464) 1.818 3.460 3.410 0.430
- ------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $(2.380) $(1.920) $(1.540) $ 1.685 $ 3.230 $ 3.240 $ 0.270
- ------------------------------
Less distributions
- ------------------------------
From net realized gain $ -- $ -- $ -- $(0.295) $(1.400) $(0.680) $ (0.760)
- ------------------------------
TOTAL DISTRIBUTIONS $ -- $ -- $ -- $(0.295) $(1.400) $(0.680) $ (0.760)
- ------------------------------
NET ASSET VALUE -- END OF
PERIOD $12.550 $ 9.760 $ 8.460 $14.930 $13.540 $11.710 $ 9.150
- ------------------------------
TOTAL RETURN(3) (15.94)% (16.44)% (15.40)% 17.67% 31.04% 38.13% 2.69%
- ------------------------------
Ratios/Supplemental Data+
- ------------------------------
Net assets, end of period
(000's omitted) $66,831 $75,111 $ 1,905 $88,349 $55,016 $17,690 $ 13,231
Ratios (As a percentage of
average daily net assets):
Net expenses(4) 1.83% 2.43% 2.67%(5) 2.07% 2.21% 2.44% 2.50%
Net expenses after
custodian fee
reduction(4)(6) 1.69% 2.29% 2.53%(5) 2.00% -- -- --
Net investment loss (1.21)% (1.80)% (1.84)%(5) (1.60)% (1.81)% (1.80)% (1.65)%
Portfolio Turnover(7) -- -- -- -- 66% 45% 49%
- ------------------------------
+ The operating expenses of th
reduction of the investment
expenses to the Manager/Adm
not been taken, the ratios
would have been as follows:
Ratios (As a percentage of
average daily net assets):
Expenses(4) 2.29% -- -- 2.67%
Expenses after custodian
fee reduction(4)(6) 2.22% -- -- --
Net investment loss (1.82)% -- -- (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) Annualized.
(6) 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 provider. The expense ratios
for each of the prior periods have not been adjusted to reflect this
change.
(7) Portfolio Turnover represents the rate of portfolio activity for the period
while the Fund was making investments directly in securities. The portfolio
turnover rate for the period since the Fund transferred all of its
investable assets to the Portfolio is shown in the Portfolio's financial
statements which are included elsewhere in this report.
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF FEBRUARY 28, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 sold subject to a sales charge imposed at the 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). All classes of
shares have equal rights to assets and voting privileges. 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 (99.8% at February 28, 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.
H Interim Financial Statements -- The interim financial statements relating to
February 28, 1999 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
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.
6
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF FEBRUARY 28, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
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.
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, 1999, the fee was equivalent to 0.25% (annualized) of the
Fund's average daily net assets and amounted to $225,432. EVM has 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 will 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. Eaton Vance
Distributors, Inc. (EVD), a subsidiary of EVM and the Fund's principal
underwriter, received $17,873 from the Fund as its portion of the sales
charge on sales of Class A shares for the six months ended February 28, 1999.
Certain officers and Trustees of the Fund and the Portfolio are officers and
Trustees 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 classes.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1999 YEAR ENDED
CLASS A (UNAUDITED) AUGUST 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------
Sales 841,521 1,974,814
Issued to shareholders electing to
receive payment of distributions in
Fund shares 205,562 --
Redemptions (1,223,411) (2,569,073)
- --------------------------------------------------------------------------------
NET DECREASE (176,328) (594,259)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1999 YEAR ENDED
CLASS B (UNAUDITED) AUGUST 31, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------
Sales 566,144 3,723,160
Issued to shareholders electing to
receive payment of distributions in
Fund shares 369,807 --
Redemptions (767,180) (1,561,658)
Issued to EV Marathon Worldwide Health
Sciences Fund shareholders -- 5,536,392
- --------------------------------------------------------------------------------
NET INCREASE 168,771 7,697,894
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1999 PERIOD ENDED
CLASS C (UNAUDITED) AUGUST 31, 1998(1)
<S> <C> <C>
- --------------------------------------------------------------------------------
Sales 188,243 251,792
Issued to shareholders electing to
receive payment of distributions in
Fund shares 17,615 --
Redemptions (18,772) (26,620)
- --------------------------------------------------------------------------------
NET INCREASE 187,086 225,172
- --------------------------------------------------------------------------------
</TABLE>
(1) For the period from the commencement of offering of Class C shares, January
5, 1998, to August 31, 1998.
7
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF FEBRUARY 28, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
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 the Principal
Underwriter, Eaton Vance Distributors, Inc. (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 Authorized Firms for providing personal services to
shareholders. For the six months ended February 28, 1999, the Class A shares
paid or accrued $106,143 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 $353,040 and $12,202 for Class B
and Class C shares, respectively, payable to EVD for the six months ended
February 28, 1999, representing 0.75% (annualized) of the average daily net
assets for Class B and Class C shares, respectively. At February 28, 1999,
the amount of Uncovered Distribution Charges of EVD calculated under the
Plans was approximately $3,782,000 and $269,000 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, Authorized Firms 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 Authorized Firms 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 six months ended February 28, 1999
amounted to $43,000 and $4,040 for Class B and Class C shares, respectively.
6 Contingent Deferred Sales Charge
- -------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of
Class B shares made within six years of purchase. A CDSC is imposed on
certain Class C shares redeemed 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. 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
six months ended February 28, 1999, EVD received approximately $230,000 and
$2,500 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 six
months ended February 28, 1999 aggregated $30,990,253 and $39,504,280,
respectively.
8 Transfer of Net Assets
- -------------------------------------------
On September 1, 1997, EV Traditional Worldwide Health Sciences Fund, Inc.
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.
8
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF FEBRUARY 28, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED)
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<S> <C> <C> <C>
COMMON STOCKS AND WARRANTS -- 94.20%
<CAPTION>
PERCENTAGE OF
SECURITY SHARES VALUE NET ASSETS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
Major Capitalization - Europe -- 20.00%
- ----------------------------------------------------------------------------------
Altana 135,000 $ 8,633,272 4.47%
Ares-Serono 4,700 7,751,708 4.01%
Roche Holding AG 800 10,130,425 5.25%
Sanofi SA 68,700 12,100,655 6.27%
- ----------------------------------------------------------------------------------
$ 38,616,060 20.00%
- ----------------------------------------------------------------------------------
Major Capitalization - Far East -- 10.51%
- ----------------------------------------------------------------------------------
Banyu Pharmaceutical Co. 400,000 $ 6,401,482 3.32%
Eisai Co., Ltd. 400,000 7,475,691 3.87%
Fujisawa Pharmaceutical 500,000 6,414,951 3.32%
- ----------------------------------------------------------------------------------
$ 20,292,124 10.51%
- ----------------------------------------------------------------------------------
Major Capitalization - North America -- 35.75%
- ----------------------------------------------------------------------------------
Biochem Pharma, Inc.(1) 211,000 $ 5,182,688 2.69%
Centocor, Inc.(1) 225,000 9,351,563 4.84%
Genentech, Inc.(1) 75,000 5,985,938 3.10%
Genzyme Corp.(1) 175,000 7,875,000 4.08%
Lilly (Eli) & Co. 80,000 7,575,000 3.92%
Merck & Co., Inc. 100,000 8,175,000 4.23%
Monsanto Co. 200,000 9,112,500 4.72%
Pharmacia & Upjohn, Inc. 150,000 8,175,000 4.23%
Warner-Lambert Co. 110,000 7,596,875 3.94%
- ----------------------------------------------------------------------------------
$ 69,029,564 35.75%
- ----------------------------------------------------------------------------------
Specialty Capitalization - Europe -- 3.22%
- ----------------------------------------------------------------------------------
Cambridge Antibody Technology, Ltd.(1) 521,040 $ 2,002,669 1.04%
Cambridge Antibody Technology, Ltd.
Warrants(1)(2)(3) 15,500 2,831 0.00%
Swiss Serum Institute 328 4,215,720 2.18%
- ----------------------------------------------------------------------------------
$ 6,221,220 3.22%
- ----------------------------------------------------------------------------------
Specialty Capitalization - Far East -- 4.18%
- ----------------------------------------------------------------------------------
Rohto Pharmaceutical 500,000 $ 3,619,986 1.88%
Teikoku Hormone Manufacturing 550,000 4,449,636 2.30%
- ----------------------------------------------------------------------------------
$ 8,069,622 4.18%
- ----------------------------------------------------------------------------------
Specialty Capitalization - North America -- 20.54%
- ----------------------------------------------------------------------------------
Abgenix, Inc.(1) 43,000 $ 688,000 0.35%
Agouron Pharmaceuticals, Inc.(1) 35,000 1,997,188 1.03%
Alexion Pharmaceuticals, Inc.(1) 270,000 $ 3,138,750 1.62%
<CAPTION>
PERCENTAGE OF
SECURITY SHARES VALUE NET ASSETS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
Specialty Capitalization - North America (continued)
- ----------------------------------------------------------------------------------
Aviron(1) 125,000 2,679,688 1.39%
Bio-Technology General Corp.(1) 400,000 2,487,520 1.29%
Gilead Sciences, Inc.(1) 153,500 6,331,875 3.28%
Incyte Pharmaceuticals, Inc.(1) 200,000 5,612,500 2.91%
Pharmacopeia, Inc.(1) 270,000 2,565,000 1.33%
Premier Research Worldwide(1) 235,000 1,233,750 0.64%
SangStat Medical Corp.(1) 225,000 5,034,375 2.61%
Triangle Pharmaceuticals, Inc.(1) 200,000 2,600,000 1.35%
Vertex Pharmaceuticals, Inc.(1) 225,000 5,287,500 2.74%
- ----------------------------------------------------------------------------------
$ 39,656,146 20.54%
- ----------------------------------------------------------------------------------
Total Common Stocks and Warrants
(identified cost $155,890,303) $ 181,884,736
- ----------------------------------------------------------------------------------
PREFERRED STOCKS -- 6.73%
<CAPTION>
PERCENTAGE OF
SECURITY SHARES VALUE NET ASSETS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
Specialty Capitalization - North America -- 6.73%
- ----------------------------------------------------------------------------------
Abgenix, Inc.(1)(2) 276,923 $ 4,430,768 2.29%
Arena Pharmaceuticals(1)(2)(3) 354,994 1,238,929 0.64%
Intrabiotics Pharm, Inc.(1)(2)(3) 333,334 1,000,002 0.52%
Net Genics, Inc. Convertible, Series D,
Preferred R(1)(2)(3) 250,000 500,000 0.26%
Ontogeny, Inc.(1)(2)(3) 600,000 1,830,000 0.95%
Orchid Biocomputer, Inc.(1)(2)(3) 180,180 1,999,998 1.03%
Tularik, Inc.(1)(2)(3) 200,000 2,000,000 1.04%
- ----------------------------------------------------------------------------------
$ 12,999,697 6.73%
- ----------------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $10,038,929) $ 12,999,697
- ----------------------------------------------------------------------------------
Total Investments
(identified cost $165,929,232) $ 194,884,433 100.93%
- ----------------------------------------------------------------------------------
Other Assets, Less Liabilities $ (1,803,662) (0.93)%
- ----------------------------------------------------------------------------------
Net Assets $ 193,080,771 100.00%
- ----------------------------------------------------------------------------------
</TABLE>
(1) Non-income producing security.
(2) Restricted security.
(3) Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF FEBRUARY 28, 1999
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF FEBRUARY 28, 1999
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C>
Assets
- -------------------------------------------------------
Investments, at value (identified cost,
$165,929,232) $ 194,884,433
Cash 1,726,197
Foreign currency, at value (identified
cost, $1,684,056) 1,678,088
Receivable for investments sold 1,248,951
Dividends receivable 46,400
Deferred organization expenses 7,033
- -------------------------------------------------------
TOTAL ASSETS $ 199,591,102
- -------------------------------------------------------
Liabilities
- -------------------------------------------------------
Payable for investments purchased $ 6,507,412
Payable to affiliate for Trustees' fees 56
Other accrued expenses 2,863
- -------------------------------------------------------
TOTAL LIABILITIES $ 6,510,331
- -------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $ 193,080,771
- -------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $ 164,140,982
Net unrealized appreciation (computed on
the basis of identified cost) 28,939,789
- -------------------------------------------------------
TOTAL $ 193,080,771
- -------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
FEBRUARY 28, 1999
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C>
Investment Income
- ------------------------------------------------------
Dividends (net of foreign taxes,
$17,777) $ 289,860
- ------------------------------------------------------
TOTAL INVESTMENT INCOME $ 289,860
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Investment adviser fee $ 563,283
Administration fee 228,725
Custodian fee 62,157
Legal and accounting services 8,918
Amortization of organization expenses 1,191
Miscellaneous 12,662
- ------------------------------------------------------
TOTAL EXPENSES $ 876,936
- ------------------------------------------------------
Deduct --
Reduction of custodian fee $ 60,892
- ------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 60,892
- ------------------------------------------------------
NET EXPENSES $ 816,044
- ------------------------------------------------------
NET INVESTMENT LOSS $ (526,184)
- ------------------------------------------------------
Realized and Unrealized
Gain (Loss)
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 13,160,446
Foreign currency transactions (8,930)
- ------------------------------------------------------
NET REALIZED GAIN $ 13,151,516
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 44,264,864
Foreign currency (15,412)
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 44,249,452
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 57,400,968
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 56,874,784
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF FEBRUARY 28, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
Increase (Decrease) FEBRUARY 28, 1999 YEAR ENDED
in Net Assets (UNAUDITED) AUGUST 31, 1998
<S> <C> <C>
- -------------------------------------------------------------------------------
From operations --
Net investment loss $ (526,184) $ (887,400)
Net realized gain 13,151,516 9,778,649
Net change in unrealized appreciation
(depreciation) 44,249,452 (37,330,872)
- -------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 56,874,784 $ (28,439,623)
- -------------------------------------------------------------------------------
Capital transactions --
Contributions $ 31,097,579 $ 79,343,537
Withdrawals (39,553,757) (58,958,737)
- -------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL TRANSACTIONS $ (8,456,178) $ 20,384,800
- -------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ 48,418,606 $ (8,054,823)
- -------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------
At beginning of period $ 144,662,165 $ 152,716,988
- -------------------------------------------------------------------------------
AT END OF PERIOD $ 193,080,771 $ 144,662,165
- -------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF FEBRUARY 28, 1999
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA (EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1999 ---------------------
(UNAUDITED) 1998 1997
<C> <C> <C>
------------------------------------------------
Ratios to average daily
net assets
------------------------------------------------
Expenses 0.96%(1) 1.06% 1.25%
Expenses
after
custodian
fee
reduction 0.89%(1) 0.92% 1.18%
Net
investment
loss (0.57)%(1) (0.49)% (0.81)%
Portfolio
Turnover 28% 34% 14%
------------------------------------------------
NET
ASSETS,
END
OF
PERIOD
(000'S
OMITTED) $193,081 $144,662 $152,717
------------------------------------------------
</TABLE>
(1) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF FEBRUARY 28, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(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 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.
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 some of the Portfolio's investors are regulated investment
companies that invest all or substantially all of their 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
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 nonhedging purposes. The
forward
13
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF FEBRUARY 28, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
foreign currency exchange contracts are adjusted by the daily exchange rate
of the underlying currency and any gains and losses are recorded for
financial statement purposes as unrealized until such time as the contracts
have been closed.
I Other -- Investment transactions are accounted for on a trade date basis.
J Interim Financial Statements -- The interim financial statements relating to
February 28, 1999 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the
Portfolio's management, reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
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,
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 six months ended
February 28, 1999, the fee was equivalent to 0.61% (annualized) of the
Portfolio's average daily net assets and amounted to $563,283.
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 $500,000,000, and at reduced rates as daily net assets exceed that
level. For the six months ended February 28, 1999, the administration fee was
0.25% (annualized) of average net assets and amounted to $228,725.
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 also officers or
directors/trustees 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 six months ended February 28,
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 $49,465,128 and $56,464,480, respectively,
for the six months ended February 28, 1999.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation/(depreciation) in value of the
investments owned at February 28, 1999, as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $ 165,929,232
- -------------------------------------------------------
Gross unrealized appreciation $ 38,480,632
Gross unrealized depreciation (9,525,431)
- -------------------------------------------------------
NET UNREALIZED APPRECIATION $ 28,955,201
- -------------------------------------------------------
</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
14
<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO AS OF FEBRUARY 28, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
(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 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 six months ended
February 28, 1999.
7 Restricted Securities
- -------------------------------------------
At February 28, 1999, the Portfolio owned the following securities
(representing 6.74% 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.
<TABLE>
<CAPTION>
DATE OF
DESCRIPTION ACQUISITION SHARES COST FAIR VALUE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
PREFERRED STOCKS
- ---------------------------------------------------------------------------------------------
Abgenix, Inc. 12/18/97 276,923 $ 1,800,000 $ 4,430,768
Arena Pharmaceuticals 1/28/99 354,994 1,238,929 1,238,929
Intrabiotics Pharm, Inc. 11/24/98 333,339 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
- ---------------------------------------------------------------------------------------------
$ 10,038,929 $ 13,001,697
- ---------------------------------------------------------------------------------------------
WARRANTS
- ---------------------------------------------------------------------------------------------
Cambridge Antibody Technology, Ltd. 08/28/96 15,500 $ 31,000 $ 2,831
- ---------------------------------------------------------------------------------------------
$ 31,000 $ 2,831
- ---------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND AS OF FEBRUARY 28, 1999
INVESTMENT MANAGEMENT
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
Officers
James B. Hawkes
President and Trustee
Thomas E. Faust
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Jessica M. Bibliowicz
President and Chief Operating Officer,
John A. Levin & Co.
Director, Baker, Fentress & Company
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
John L. Thorndike
Former Director, Fiduciary Company Incorporated
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
Independent Trustees
Jessica M. Bibliowicz
President and Chief Operating Officer,
John A. Levin & Co.
Director, Baker, Fentress & Company
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
John L. Thorndike
Former Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
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SPONSOR AND MANAGER OF EATON VANCE WORLDWIDE
HEALTH SCIENCES FUND & ADMINISTRATOR OF
WORLDWIDE HEALTH SCIENCES PORTFOLIO
Eaton Vance Management
24 Federal Street
Boston, MA 02110
ADVISOR OF WORLDWIDE HEALTH SCIENCES PORTFOLIO
Orbimed Advisors, Inc.
767 3rd Avenue
New York, NY 10017
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
First Data Invesor Services Group
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
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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.
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2-2147-4/99 HSSRC-4/99
