<PAGE>
INVESTING
[LOGO] FOR THE
21ST
CENTURY-Registration Mark-
EATON VANCE
ASIAN
SMALL
COMPANIES
FUND
Annual Report August 31, 2000
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2000
LETTER TO SHAREHOLDERS
Eaton Vance Asian Small
Companies Fund Class A shares
had a total return of 52.65% for
the year ended August 31,
2000. That return was the result
of an increase in net asset value
per share (NAV) to $24.13 on
August 31, 2000 from $15.84
on August 31, 1999.(1)
James B. Hawkes
President
Class B shares had a total return of 37.35% for
the period from inception on October 8, 1999 to
August 31, 2000. That return was the result of an
increase in NAV to $16.07 from $11.70 on
October 8, 1999.(1)
After major gains in 1999, most Asian markets
have undergone a significant correction in 2000.
The year-long rise in U.S. interest rates appears to
have slowed the U.S. economy, a trend that could
result in lower Asian exports. The most vulnera-
ble industries are technology and electronics, sec-
tors which have led the markets lower. The
Morgan Stanley Capital International All Country
Asia Pacific Index -- a broad-based, unmanaged
index of common stocks traded in developed and
emerging markets of the Asia Pacific region -- had
a return of 4.91% during the year ended
August 31, 2000.(2)
Despite the Asian market correction,
earnings growth remains strong for
companies in the new economy...
Despite the sharp sell-off of technology companies
in the first half of 2000, small companies that are
building Asia's new economy continue to enjoy
rapid earnings growth. The need for modern tele-
com and Internet infrastructure represents a major
opportunity for equipment suppliers, software
manufacturers and producers of specialized semi-
conductors. In addition to technology, small com-
panies in health care, retailing, food and beverages
and financial services are pioneering the new
economy.
The recent market correction has
uncovered undervalued opportunities
in smallercompanies...
While severe stock market declines may be unnerv-
ing to investors, we believe that periodic correc-
tions can be a healthy part of the investment cycle,
wringing out excesses and restoring value to the
marketplace. They can also provide excellent buy-
ing opportunities in smaller companies with above-
average revenue growth. We believe that the small-
er companies will continue to provide opportunities
for patient, growth-oriented investors.
Effective September 18, 2000, Zaheer Sitabkhan
assumed sole responsibility for managing Asian
Small Companies Portfolio. Mr. Sitabkhan is a
Managing Director of Lloyd George Management
and had previously co-managed the Portfolio. In
the following pages, he reviews the past year and
looks ahead to the coming year.
Sincerely,
[SIGNATURE]
James B. Hawkes
President
October 9, 2000
Fund Information
as of August 31, 2000
Performance(3) Class A Class B
-----------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
-----------------------------------------------------------------------------
One Year 52.65% N.A.
Life of Fund+ 79.45 37.35%++
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
-----------------------------------------------------------------------------
One Year 43.84% N.A.
Life of Fund+ 72.55 37.35%++
+Inception dates: Class A: 3/1/99; Class B: 10/8/99
++ Class B returns are cumulative total returns.
Ten Largest Equity Holdings(4)
-------------------------------------
Infosys Technologies 6.4%
Giordano International Ltd. 5.7
HDFC Bank Ltd. 5.5
Li & Fung Ltd. 4.8
Denway Motors Ltd. 3.9
Quality Healthcare Asia Ltd. 3.6
Unisem (M) Berhad 3.5
Hankuk Electric Glass Co. 3.3
Unilever NV 3.0
UTV Software Solutions Communications Co. 3.0
(1)These returns do not include the 5.75% maximum sales
charge for the Fund's Class A shares or the applicable con-
tingent deferred sales charges (CDSC) for the Fund's Class B
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 average annual returns for Class A reflect a
5.75% sales charge. Class A shares redeemed within 3
months of purchase, including exchanges, are subject to a
1% early redemption fee. Class B returns 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.
(4)Based on market value. Ten largest holdings represent
42.7% 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.
--------------------------------------------------------------------------------
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 ASIAN SMALL COMPANIES FUND as of August 31, 2000
MANAGEMENT DISCUSSION
AN INTERVIEW WITH
ZAHEER SITABKHAN,
DIRECTOR, LLOYD GEORGE MANAGEMENT,
INVESTMENT ADVISER TO
ASIAN SMALL COMPANIES PORTFOLIO.
Zaheer Sitabkhan Q: Zaheer, following a fairly
Portfolio Manager robust 1999, most Asian
markets have suffered sharp
declines in 2000. How would
you evaluate the recent mar-
ket climate?
A: The region's stock markets have corrected
sharply in 2000. Many Asian economies have
showed signs of slowing somewhat, but not
enough to derail the region's overall recovery.
For example, the Korean economy, which reg-
istered double-digit growth in 1999, has eased
to a still-respectable 6.0% growth rate this
year. Meanwhile, Japan's recovery appears to
be gathering momentum. GDP growth in the
second quarter exceeded 4%, well above esti-
mates. China's growth outlook has also
improved, with most estimates calling for 8%
growth for the year. In South Asia, the Indian
market has suffered a sharp decline, as the
slow pace of privatization has frustrated many
investors. Meanwhile, the nation's trade deficit
has widened and its currency has weakened.
Nonetheless, economic growth is forecast to be
7% in the coming fiscal year.
Technology stocks, which contribute greatly to
the region's export economy, have weakened
significantly over fears of a cyclical peak.
Valuations for semiconductor, Internet, and
telecom issues became overextended in the
past year, and it came as little surprise when
the group came back to earth. Moreover, eco-
nomic growth in the region remains on track,
and following the recent declines, the markets
are much more reasonably valued.
Q: Oil prices have recently reached a 10-year
high. Do higher energy prices pose a serious
threat to the Asian economies?
A: Naturally, rising oil prices are a trend that bears
watching. However, the actual impact on Asian
economies will vary widely. Korea, as the
region's most industrialized nation, could feel a
pinch, as could India, because of its worsening
current account deficit. China, on the other
hand, has insulated itself somewhat through
the use of alternative fuels, such as coal. Hong
Kong's massive foreign currency holdings could
provide a buffer from higher energy prices.
Malaysia and Indonesia are oil exporters, so the
rise in oil prices could actually benefit those
countries.
Five Largest Industry Weightings(1)
-------------------------------------------
By total net assets
Computer Software 15.1%
Apparel 5.7%
Medical Services 5.7%
Banking & Finance 5.5%
Media 4.9%
Regional Distribution(1)
-------------------------------------------
As a percentage of common stock investments
[PIE CHART]
(1)Because the Portfolio is actively managed, Industry Weightings and
Regional Distribution are subject to change. All data are as of
8/31/00 and is based on total common stock holdings.
3
<PAGE>
Q: Even with the region's markets on the defen-
sive, the Fund turned in a strong showing
during the year. To what do you attribute the
Fund's outperformance?
A: Stock-selection has been the major determi-
nant. While the economy has slowed in many
parts of the region, many small companies con-
tinued to generate strong revenue and earnings
growth. The Portfolio's largest country weight-
ings at August 31, 2000 were Hong Kong,
India, Australia and Korea. Our largest indus-
try weightings were computer software, elec-
tronics equipment and financial services.
Technology areas represent major linchpins of
the Asian export economy. Asian companies
have been key suppliers of technology-related
goods and services in recent years, and have
benefited from technology's increasing
applications.
Q: Hong Kong was the Portfolio's largest country
weighting at August 31. What Hong Kong
companies did you find attractive?
A: The Portfolio maintained a significant invest-
ment in Li & Fung, Ltd. The company is
involved in trade-related services, providing
companies with outsourcing of raw materials,
coordinating production and helping streamline
manufacturing, marketing and logistics. With
its widespread resources and relationships
throughout Asia, Li & Fung has attracted
large U.S. customers such as Avon and
Reebok. Li & Fung has enjoyed robust earnings
and revenue growth in the past year.
Elsewhere in Hong Kong, Quality Healthcare
Asia is one of Hong Kong's leading providers of
health care, offering health services to more
than 400,000 Hong Kong residents. The com-
pany offers both western and Chinese medical
care, dental care, nursing, physiotherapy and
eldercare at more than 300 centers. In the first
half of 2000, Quality Healthcare saw earnings
rise 66% on revenue growth of more than
200%, and is well-positioned for the future.
Q: India is the Portfolio's second largest country
weighting. What companies have you empha-
sized there?
A: Infosys Technologies remained the Portfolio's
largest holding. Infosys has been a leading pro-
ducer of financial software for many years, but
has recently added to its Internet applications.
The company saw its earnings double in the
second quarter of 2000, propelled by a 105%
surge in revenues. Infosys recently announced
a global strategic alliance with Microsoft aimed
at providing solutions to e-business customers.
HDFC Bank was another Indian investment of
the Portfolio. HDFC is the leading lender in
India's growing housing market, as well as a
leader in the financing of consumer durable
purchases. As wealth levels rise among India's
burgeoning middle class, the purchases of
appliances, automobiles and consumer elec-
tronics have increased significantly.
Within the drug sector, the Portfolio main-
tained an investment in Dr. Reddy's
Laboratories. Blessed with strong research, the
company has developed a wide array of formu-
lations and has increased its market share in
India. As a result of new product launches and
acquisitions, the company has a vigorous
export business, with more than 270 product
registrations in 15 countries. Looking ahead,
Dr. Reddy's is increasing its focus on the fast-
growth areas of biotechnology and diagnostics.
Q: Where did the Portfolio invest in Australia?
A: In Australia, the Portfolio has an investment in
Keycorp Ltd., a manufacturer of equipment for
the financial services industry. Keycorp is a
leading manufacturer of banking terminals,
with major clients in Australia, Asia and
Europe. The company also is a producer of
4
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND as of August 31, 2000
MANAGEMENT DISCUSSION CONT'D
smartcards used in a widening array of applica-
tions. Finally, Keycorp is becoming increasingly
active in e-commerce through its Nobil
International Gateway. The system provides
secure environment for online transactions,
and, following a successful roll-out in Australia,
is being introduced to Europe and the U.S.
Q: And where have you focused the Portfolio's
investments in Korea?
A: The Portfolio's largest Korean investment was
Hankuk Electric Glass, the second largest pro-
ducer of glass bulbs in Korea. The Company's
products are used in the manufacturer of tele-
vision and computer monitors.
Hite Brewery was another Korean investment.
The company has enjoyed strong revenue
growth in recent years, as its Hite beer gains
popularity in the global beverage market. Hite
also has agreements to bottle beverages and
spirits for other beverage companies.
Q: Zaheer, what is your outlook for
Asian smaller companies?
A: While most Asian economies appear firmly on
the road to recovery, the stock markets have
been volatile. However, smaller companies may
be able to maintain their earnings momentum.
Because their market niches are narrowly tar-
geted, they may be less adversely affected by
broad swings in the economy. As we have seen
in recent years, demand for many technology-
based products and services is driven by efforts
to improve global productivity. Productivity
gains, have, in turn, contributed mightily to
earnings growth.
With our bottom-up approach, we look for
companies we believe will be Asia's leaders of
tomorrow. I believe, with that sound, long-
term approach, the Fund is well-positioned to
take advantage of opportunities in the year
ahead.
MSCI Index ASX ASX SC
03/31/1999 $10,000 $10,000 $10,000
04/30/1999 $10,769 $11,058 $10,420
05/31/1999 $10,309 $11,337 $10,682
06/30/1999 $11,373 $13,250 $12,485
07/31/1999 $11,970 $14,206 $13,386
08/31/1999 $12,005 $14,708 $13,858
09/30/1999 $12,264 $15,292 $14,409
10/31/1999 $12,717 $16,620 $15,661
11/30/1999 $13,358 $19,499 $18,373
12/31/1999 $14,256 $24,573 $23,154
01/31/2000 $13,882 $24,033 $22,645
02/29/2000 $13,551 $27,429 $25,845
03/31/2000 $14,366 $28,201 $26,573
04/30/2000 $13,257 $24,275 $22,873
05/31/2000 $12,549 $22,647 $21,339
06/30/2000 $13,362 $23,652 $22,286
07/31/2000 $12,127 $21,679 $20,427
08/31/2000 $12,595 $24,180 $22,790
Performance Class A Class B
-----------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
-----------------------------------------------------------------------------
One Year 52.65% N.A.
Life of Fund+ 79.45 37.35%++
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
-----------------------------------------------------------------------------
One Year 43.84% N.A.
Life of Fund+ 72.55 37.35%++
+Inception dates: Class A: 3/1/99; Class B: 10/8/99
++ Class B returns are cumulative total returns.
* Source: TowersData, Bethesda, MD. Investment operations commenced 3/1/99.
Index information is available only at month-end; therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations. Past performance is no guarantee of future
results. Investment return and principal fluctuate so that shares, when
redeemed, may be worth more or less their original cost.
The performance chart above compares the Fund's total return with that of a
broad-based securities market index. Returns are historical and are calculated
by determining the percentage change in net asset value with all distributions
reinvested. The lines on the chart represent the total returns of $10,000
hypothetical investments in the Fund and the Morgan Stanley Capital
International All Country Asia Pacific Index - a broad-based index of common
stocks traded in developed and emerging markets of the Asia Pacific region. An
investment in the Fund's Class B shares on 10/8/99 at net asset value would
have been worth $13,865 on August 31, 2000. The Index's 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
Index. It is not possible to invest directly in an Index.
5
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF AUGUST 31, 2000
<S> <C>
Assets
----------------------------------------------------
Investment in Asian Small Companies
Portfolio, at value
(identified cost, $1,788,729) $1,724,250
Receivable from the Distributor 49,385
----------------------------------------------------
TOTAL ASSETS $1,773,635
----------------------------------------------------
Liabilities
----------------------------------------------------
Payable for Fund shares redeemed $ 1,938
Accrued expenses 1,949
----------------------------------------------------
TOTAL LIABILITIES $ 3,887
----------------------------------------------------
NET ASSETS $1,769,748
----------------------------------------------------
Sources of Net Assets
----------------------------------------------------
Paid-in capital $1,814,718
Accumulated undistributed net realized
gain from Portfolio
(computed on the basis
of identified cost) 19,509
Net unrealized depreciation from
Portfolio (computed on the basis
of identified cost) (64,479)
----------------------------------------------------
TOTAL $1,769,748
----------------------------------------------------
Class A Shares
----------------------------------------------------
NET ASSETS $1,722,793
SHARES OUTSTANDING 71,393
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 24.13
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $24.13) $ 25.60
----------------------------------------------------
Class B Shares
----------------------------------------------------
NET ASSETS $ 46,955
SHARES OUTSTANDING 2,922
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 16.07
----------------------------------------------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31, 2000
<S> <C>
Investment Income
--------------------------------------------------
Dividends allocated from Portfolio
(net of foreign taxes, $371) $ 12,153
Expenses allocated from Portfolio (16,054)
--------------------------------------------------
NET INVESTMENT LOSS FROM PORTFOLIO $ (3,901)
--------------------------------------------------
Expenses
--------------------------------------------------
Management fee $ 3,616
Distribution and service fees
Class A 6,917
Class B 631
Registration fees 30,810
Printing and postage 16,570
Legal and accounting services 9,532
Custodian fee 5,248
Transfer and dividend disbursing agent
fees 90
Miscellaneous 3,085
--------------------------------------------------
TOTAL EXPENSES $ 76,499
--------------------------------------------------
Deduct --
Reduction of management fee $ 3,616
Reduction of distribution fee 3,391
Allocation of expenses to the
Distributor 49,385
--------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 56,392
--------------------------------------------------
NET EXPENSES $ 20,107
--------------------------------------------------
NET INVESTMENT LOSS $(24,008)
--------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
--------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis)
(net of foreign taxes, $26,625) $315,168
Foreign currency transactions (5,941)
--------------------------------------------------
NET REALIZED GAIN $309,227
--------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $(66,402)
Foreign currency (1,844)
--------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $(68,246)
--------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $240,981
--------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $216,973
--------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED PERIOD ENDED
IN NET ASSETS AUGUST 31, 2000 AUGUST 31, 1999(1)
<S> <C> <C>
-----------------------------------------------------------------------------
From operations --
Net investment income (loss) $ (24,008) $ 1,374
Net realized gain 309,227 9,316
Net change in unrealized
appreciation (depreciation) (68,246) 3,767
-----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 216,973 $ 14,457
-----------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (1,374) $ --
In excess of net investment income
Class A (135) --
-----------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (1,509) $ --
-----------------------------------------------------------------------------
Transactions in shares of
beneficial interest --
Proceeds from sale of shares
Class A $ 1,078,662 $ 460,000
Class B 138,662 --
Net asset value of shares issued to
shareholders in payment of
distributions declared
Class A 1,507 --
Cost of shares redeemed
Class A (39,986) --
Class B (99,028) --
-----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 1,079,817 $ 460,000
-----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 1,295,281 $ 474,457
-----------------------------------------------------------------------------
Net Assets
-----------------------------------------------------------------------------
At beginning of year $ 474,467 $ 10
-----------------------------------------------------------------------------
AT END OF YEAR $ 1,769,748 $ 474,467
-----------------------------------------------------------------------------
Accumulated undistributed
net investement income
included in net assets
-----------------------------------------------------------------------------
AT END OF YEAR $ -- $ 1,374
-----------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, March 01, 1999, to August 31,
1999.
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
----------------------
YEAR ENDED AUGUST 31,
----------------------
2000 1999(1)
<S> <C> <C>
--------------------------------------------------------
Net asset value -- Beginning
of year $15.840 $10.000
--------------------------------------------------------
Income (loss) from operations
--------------------------------------------------------
Net investment income (loss) $(0.322) $ 0.046
Net realized and unrealized
gain 8.660 5.794
--------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 8.338 $ 5.840
--------------------------------------------------------
Less distributions
--------------------------------------------------------
From net investment income $(0.044) $ --
In excess of net investment
income (0.004) --
--------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.048) $ --
--------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $24.130 $15.840
--------------------------------------------------------
TOTAL RETURN(2) 52.65% 58.40%
--------------------------------------------------------
Ratios/Supplemental Data+
--------------------------------------------------------
Net assets, end of year (000's
omitted) $ 1,723 $ 474
Ratios (As a percentage of
average daily net assets):
Net expenses(3) 2.70% 1.40%(4)
Net expenses after
custodian fee
reduction(3) 2.49% 1.40%(4)
Net investment income
(loss) (1.66)% 2.69%(4)
Portfolio Turnover of the
Portfolio 112% 105%
--------------------------------------------------------
+ The operating expenses of the Fund reflect a
reduction of the management fee and distribution fee
as well as an allocation of expenses to the
Distributor. Had such actions not been taken, the
ratios would have been as follows:
Ratios (As a percentage of
average daily net assets):
Expenses(3) 6.67% 8.23%(4)
Expenses after custodian
fee reduction(3) 6.46% 8.23%(4)
Net investment loss (5.63)% (4.13)%(4)
Net investment loss per share $(1.092) $(0.071)
--------------------------------------------------------
</TABLE>
(1) For the period from the start of business, March 1, 1999 to August 31,
1999.
(2) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of the Portfolio's allocated expenses.
(4) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-----------------------
PERIOD ENDED AUGUST 31,
-----------------------
2000(1)
<S> <C>
---------------------------------------------------------
Net asset value -- Beginning
of period $11.700
---------------------------------------------------------
Income (loss) from operations
---------------------------------------------------------
Net investment loss $(0.345)
Net realized and unrealized
gain 4.715
---------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 4.370
---------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD $16.070
---------------------------------------------------------
TOTAL RETURN(2) 37.35%
---------------------------------------------------------
Ratios/Supplemental Data+
---------------------------------------------------------
Net assets, end of period
(000's omitted) $ 47
Ratios (As a percentage of
average daily net assets):
Net expenses(3) 2.77%(4)
Net expenses after
custodian fee
reduction(3) 2.56%(4)
Net investment loss (1.59)%(4)
Portfolio Turnover of the
Portfolio 112%
---------------------------------------------------------
+ The operating expenses of the Fund reflect a reduction
of the management fee and distribution fee as well as
an allocation of expenses to the Distributor. Had such
actions not been taken, the ratios would have been as
follows:
Ratios (As a percentage of
average daily net assets):
Expenses(3) 4.81%(4)
Expenses after custodian
fee reduction(3) 4.60%(4)
Net investment loss (3.63)%(4)
Net investment loss per share $(0.788)
---------------------------------------------------------
</TABLE>
(1) For the period from the commencement of offering of Class B shares,
October 8, 1999 to August 31, 2000.
(2) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of the Portfolio's allocated expenses.
(4) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-------------------------------------------
Eaton Vance Asian Small Companies Fund (the Fund) is a diversified series of
Eaton Vance Growth Trust (the Trust). The Trust is an entity of the type
commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund offers two classes of shares. Class A shares are
generally sold subject to a sales charge imposed at time of purchase. Class B
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 Asian Small Companies 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 (2.7% at
August 31, 2000). The performance of the Fund is directly affected by the
performance of the Portfolio. The financial statements of the Portfolio,
including the portfolio of investments, are included elsewhere in this report
and should be read in conjunction with the Fund's financial statements.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuation -- Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B Income -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund determined in accordance with generally accepted
accounting principles.
C Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
to the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based
on the average daily cash 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 total expenses in the Statement of Operations.
D Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its net investment income and any
net realized capital gains. Accordingly, no provision for federal income or
excise tax is necessary.
E Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
F 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 net
investment income allocated to the Fund by the Portfolio, less the Fund's
direct expenses and at least one distribution annually of all or
substantially all of the net realized capital gains (reduced by any available
capital loss carryforwards from prior years) allocated to the Fund by the
Portfolio, 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 temporary over
distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. Permanent differences between book and tax accounting relating to
distributions are reclassified to paid-in capital.
10
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
3 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 Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------
CLASS A 2000 1999
<S> <C> <C>
----------------------------------------------------------------
Sales 42,970 29,947
Issued to shareholders electing to
receive payments of distributions in
Fund shares 65 --
Redemptions (1,590) --
----------------------------------------------------------------
NET INCREASE 41,445 29,947
----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED AUGUST 31,
-----------------------
CLASS B 2000(1) 1999
<S> <C> <C>
-----------------------------------------------------------------
Sales 9,008 --
Redemptions (6,086) --
-----------------------------------------------------------------
NET INCREASE 2,922 --
-----------------------------------------------------------------
</TABLE>
(1) For the period from the commencement of offering of Class B shares,
October 8, 1999 to August 31, 2000.
4 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, 2000, the fee was equivalent to 0.25% of the Fund's average daily
net assets for such period and amounted to $3,616. To reduce the net
operating loss of the Fund, EVM waived their fee. 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 approximately $1,576 as
its portion of the sales charge on sales of Class A shares for the year
ended August 31, 2000.
Certain officers and Trustees of the Fund and of the Portfolio are officers
of the above organization.
5 Distribution Plan
-------------------------------------------
The Fund has in effect distribution plans for Class A (Class A Plan) and
Class B (Class B Plan) pursuant to Rule 12b-1 under the Investment Company
Act of 1940 and service plans for Class A and Class B (collectively, the
Plans). The Class B Plan requires the Fund to pay EVD amounts equal to 1/365
of 0.75% of the Fund's average daily net assets attributable to Class B
shares and an amount equal to (a) 0.50% of that portion of the Fund's
Class A shares average daily net assets attributable to Class A shares of the
Fund which have remained outstanding for less than one year and (b) 0.25% of
that portion of the Fund's Class A average daily net assets which is
attributable to Class A shares of the Fund which have remained outstanding
for more than one year, for providing ongoing distribution services and
facilities to the Fund. The Fund's Class B shares will automatically
discontinue payments to EVD during any period in which there are no
outstanding Uncovered Distribution Charges, which are equivalent to the sum
of (i) 5% of the aggregate amount received by the Fund for the Class B shares
sold 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 reduced by the aggregate amount of contingent deferred sales
charges (see Note 6) and daily amounts theretofore paid to EVD. The Fund paid
or accrued approximately $6,917, and $474 for Class A and Class B shares,
respectively to or payable to EVD for the year ended August 31, 2000,
representing approximately 0.50%, and 0.75% of the average daily net assets
for Class A and Class B shares, respectively, of which $2,980 and $411 was
waived for Class A and Class B shares, respectively. In addition, to reduce
the net operating loss of the Fund, the Distributor voluntarily assumed
$49,385 of the Fund's expenses. At August 31, 2000, the amount of Uncovered
Distribution Charges EVD calculated under the Plan was approximately $11,000
for Class B shares.
The Plans authorize the Fund to make payments of service fees to EVD,
investment dealers and other persons in amounts not exceeding 0.25% of the
Fund's average daily net assets attributable to Class A and Class B shares
for each fiscal year. The Trustees initially implemented the Plans by
authorizing the Fund to make quarterly payments of service fees to EVD and
investment dealers equal to 0.25% per annum of the Fund's average daily net
assets attributable to Class A shares based on the value of Fund shares sold
by such persons and remaining outstanding for at least one year. The Class B
Plan requires the Fund to make monthly payments of service fees in amounts
equal to 0.25% of the Fund's average daily net assets attributable to Class B
shares for any fiscal year. Service fee payments
11
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
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, 2000 amounted to approximately $157 for Class B shares.
Certain officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
-------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on redemptions
of Class A shares made within three months of purchase and on redemptions of
Class B shares made within six years of purchase. Generally, the CDSC is
based upon the lower of the net asset value at date of redemption or date of
purchase. No charge is levied on shares acquired by reinvestment of dividends
or capital gains distributions. Class A shares will be subject to a 1% CDSC
if redeemed within twelve months of purchase. 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. 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
Fund's Distribution Plan (see Note 5). CDSC charges received when no
Uncovered Distribution Charges exist will be credited to the Fund. EVD did
not receive any CDSC payments by Class B shareholders for the year ended
August 31, 2000.
7 Investment Transactions
-------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio aggregated
$1,217,315 and $204,620, respectively, for the year ended August 31, 2000.
12
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES OF EATON VANCE GROWTH TRUST AND SHAREHOLDERS OF EATON VANCE
ASIAN SMALL COMPANIES FUND:
---------------------------------------------
We have audited the accompanying statement of assets and liabilities of Eaton
Vance Asian Small Companies Fund (one of the series constituting Eaton Vance
Growth Trust) as of August 31, 2000, and the related statement of operations for
the year then ended, changes in net assets and the financial highlights for each
of the years in the two-year period then ended. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Eaton Vance
Asian Small Companies Fund at August 31, 2000, and the results of its
operations, the changes in its net assets and its financial highlights for the
respective stated periods in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 13, 2000
13
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS
COMMON STOCKS -- 85.3%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
</TABLE>
AUSTRALIA -- 7.3%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Diversified Financial Services -- 1.9%
------------------------------------------------------------------
Hart Australia Ltd. 1,500,000 $ 1,201,690
------------------------------------------------------------------
$ 1,201,690
------------------------------------------------------------------
Industrial Goods -- 0.0%
------------------------------------------------------------------
Kinetic Power Ltd.(1)(2) 350,000 $ 0
------------------------------------------------------------------
$ 0
------------------------------------------------------------------
Software -- 5.4%
------------------------------------------------------------------
Keycorp Ltd.(1) 252,234 $ 1,744,501
Open Telecommunications Ltd.(1) 1,350,000 1,742,882
------------------------------------------------------------------
$ 3,487,383
------------------------------------------------------------------
Total Australia
(identified cost $2,993,720) $ 4,689,073
------------------------------------------------------------------
</TABLE>
HONG KONG -- 27.3%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Apparel -- 5.7%
------------------------------------------------------------------
Giordano International Ltd. 6,629,102 $ 3,633,631
------------------------------------------------------------------
$ 3,633,631
------------------------------------------------------------------
Automotive -- 3.8%
------------------------------------------------------------------
Denway Motors Ltd. 15,000,000 $ 2,442,558
------------------------------------------------------------------
$ 2,442,558
------------------------------------------------------------------
Electrical and Electronics -- 0.2%
------------------------------------------------------------------
United Pacific Industries 1,870,000 $ 155,849
------------------------------------------------------------------
$ 155,849
------------------------------------------------------------------
Engineering -- 2.0%
------------------------------------------------------------------
Hong Kong Aircraft Engineering Co. 700,800 $ 1,280,439
------------------------------------------------------------------
$ 1,280,439
------------------------------------------------------------------
Media -- 1.9%
------------------------------------------------------------------
CIM Co., Ltd.(2) 300,000 $ 0
Sun Television Cybernetworks Holdings
Ltd. 34,000,000 1,220,638
------------------------------------------------------------------
$ 1,220,638
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
Medical Services -- 3.5%
------------------------------------------------------------------
ehealthcareasia Ltd. 357,500 $ 25,669
Quality Healthcare Asia Ltd. 7,150,000 2,246,064
------------------------------------------------------------------
$ 2,271,733
------------------------------------------------------------------
Printing -- 2.8%
------------------------------------------------------------------
Leefung-Asco Printers Holdings Ltd. 9,349,000 $ 1,798,069
------------------------------------------------------------------
$ 1,798,069
------------------------------------------------------------------
Retail - Food and Drug -- 2.7%
------------------------------------------------------------------
Cafe de Coral Holdings Ltd. 4,495,000 $ 1,700,206
------------------------------------------------------------------
$ 1,700,206
------------------------------------------------------------------
Wholesale and International Trade -- 4.7%
------------------------------------------------------------------
Li & Fung, Ltd. 692,000 $ 3,016,720
------------------------------------------------------------------
$ 3,016,720
------------------------------------------------------------------
Total Hong Kong
(identified cost $11,449,022) $17,519,843
------------------------------------------------------------------
</TABLE>
INDIA -- 25.9%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Banking and Finance -- 5.5%
------------------------------------------------------------------
HDFC Bank Ltd. 675,000 $ 3,535,258
------------------------------------------------------------------
$ 3,535,258
------------------------------------------------------------------
Computer Software -- 9.7%
------------------------------------------------------------------
Geometric Software 44,561 $ 371,334
Infosys Technologies Ltd. 22,600 4,131,278
VisualSoft (India) Ltd. 44,300 1,759,427
------------------------------------------------------------------
$ 6,262,039
------------------------------------------------------------------
Food and Beverages -- 1.4%
------------------------------------------------------------------
United Breweries Ltd. 576,500 $ 916,258
------------------------------------------------------------------
$ 916,258
------------------------------------------------------------------
Media -- 3.0%
------------------------------------------------------------------
UTV Software Solutions Communications
Co. Ltd. 175,700 $ 1,917,913
------------------------------------------------------------------
$ 1,917,913
------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
Medical Products -- 1.6%
------------------------------------------------------------------
Dr. Reddy's Laboratories 36,500 $ 1,056,193
------------------------------------------------------------------
$ 1,056,193
------------------------------------------------------------------
Medical Services -- 2.2%
------------------------------------------------------------------
Apollo Hospitals 240,000 $ 1,419,670
------------------------------------------------------------------
$ 1,419,670
------------------------------------------------------------------
Transport - Services -- 2.5%
------------------------------------------------------------------
Blue Dart Express Ltd. 283,000 $ 1,594,636
------------------------------------------------------------------
$ 1,594,636
------------------------------------------------------------------
Total India
(identified cost $12,978,159) $16,701,967
------------------------------------------------------------------
</TABLE>
INDONESIA -- 3.5%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Food/Retail -- 0.5%
------------------------------------------------------------------
Hero Supermarkets 1,811,500 $ 332,725
------------------------------------------------------------------
$ 332,725
------------------------------------------------------------------
Soap & Cleaning Preparations -- 3.0%
------------------------------------------------------------------
Unilever NV 119,000 $ 1,928,571
------------------------------------------------------------------
$ 1,928,571
------------------------------------------------------------------
Total Indonesia
(identified cost $2,203,721) $ 2,261,296
------------------------------------------------------------------
</TABLE>
JAPAN -- 2.9%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Industrial Goods -- 2.9%
------------------------------------------------------------------
Star Micronics 131,000 $ 1,888,012
------------------------------------------------------------------
$ 1,888,012
------------------------------------------------------------------
Total Japan
(identified cost $760,037) $ 1,888,012
------------------------------------------------------------------
</TABLE>
MALAYSIA -- 4.4%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Building and Construction - Misc. -- 1.0%
------------------------------------------------------------------
Dialog Group Berhad 266,667 $ 617,545
------------------------------------------------------------------
$ 617,545
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
Electronics - Semiconductors -- 3.4%
------------------------------------------------------------------
Unisem (M) Berhad 413,000 $ 2,151,947
------------------------------------------------------------------
$ 2,151,947
------------------------------------------------------------------
Total Malaysia
(identified cost $2,446,777) $ 2,769,492
------------------------------------------------------------------
</TABLE>
REPUBLIC OF KOREA -- 6.1%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Food and Beverages -- 2.8%
------------------------------------------------------------------
Hite Brewery Co. Ltd. 42,160 $ 1,806,178
------------------------------------------------------------------
$ 1,806,178
------------------------------------------------------------------
Glass Manufacturing -- 3.3%
------------------------------------------------------------------
Hankuk Electric Glass Co. 27,470 $ 2,118,318
------------------------------------------------------------------
$ 2,118,318
------------------------------------------------------------------
Total Republic of Korea
(identified cost $3,328,255) $ 3,924,496
------------------------------------------------------------------
</TABLE>
SINGAPORE -- 5.0%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Aerospace and Defense -- 2.0%
------------------------------------------------------------------
Avimo Group Ltd. 670,000 $ 1,292,429
------------------------------------------------------------------
$ 1,292,429
------------------------------------------------------------------
Electrical Equipment -- 3.0%
------------------------------------------------------------------
Creative Technology Ltd. 10,500 $ 228,168
OMNI Industries Ltd. 800,000 1,729,127
------------------------------------------------------------------
$ 1,957,295
------------------------------------------------------------------
Total Singapore
(identified cost $1,814,696) $ 3,249,724
------------------------------------------------------------------
</TABLE>
THAILAND -- 2.9%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Foods -- 1.6%
------------------------------------------------------------------
Thai President Food Co. (Foreign) 226,050 $ 995,571
------------------------------------------------------------------
$ 995,571
------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
------------------------------------------------------------------
Investment Services -- 1.3%
------------------------------------------------------------------
Thai Reinsurance Co. Ltd. 873,100 $ 833,152
------------------------------------------------------------------
$ 833,152
------------------------------------------------------------------
Total Thailand
(identified cost $1,648,379) $ 1,828,723
------------------------------------------------------------------
Total Common Stocks -- 85.3%
(identified cost $39,622,766) $54,832,626
------------------------------------------------------------------
Other Assets, Less Liabilities -- 14.7% $ 9,462,051
------------------------------------------------------------------
Net Assets -- 100.0% $64,294,677
------------------------------------------------------------------
</TABLE>
(1) Non-income producing security.
(2) Security valued at fair value using methods determined in good faith by
or at the direction of the Trustees.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF AUGUST 31, 2000
<S> <C>
Assets
-----------------------------------------------------
Investments, at value
(identified cost, $39,622,766) $54,832,626
Cash 9,027,252
Foreign currency, at value
(identified cost, $1,793,215) 1,766,293
Receivable for investments sold 1,786,703
Dividends receivable 91,730
Tax reclaim receivable 307
-----------------------------------------------------
TOTAL ASSETS $67,504,911
-----------------------------------------------------
Liabilities
-----------------------------------------------------
Payable for investments purchased $ 3,208,885
Accrued expenses 1,349
-----------------------------------------------------
TOTAL LIABILITIES $ 3,210,234
-----------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $64,294,677
-----------------------------------------------------
Sources of Net Assets
-----------------------------------------------------
Net proceeds from capital contributions
and withdrawals $49,118,767
Net unrealized appreciation (computed on
the basis
of identified cost) 15,175,910
-----------------------------------------------------
TOTAL $64,294,677
-----------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31, 2000
<S> <C>
Investment Income
-----------------------------------------------------
Dividends (net of foreign taxes,
$14,995) $ 502,608
-----------------------------------------------------
TOTAL INVESTMENT INCOME $ 502,608
-----------------------------------------------------
Expenses
-----------------------------------------------------
Investment adviser fee $ 458,883
Administration fee 153,418
Trustees fees and expenses 2,500
Custodian fee 176,278
Legal and accounting services 26,562
Miscellaneous 6,753
-----------------------------------------------------
TOTAL EXPENSES $ 824,394
-----------------------------------------------------
DEDUCT --
Reduction of custodian fee $ 131,482
-----------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 131,482
-----------------------------------------------------
NET EXPENSES $ 692,912
-----------------------------------------------------
NET INVESTMENT LOSS $ (190,304)
-----------------------------------------------------
Realized and Unrealized Gain (Loss)
-----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis)
(net of foreign taxes, $978,242) $14,547,538
Foreign currency transactions (287,590)
-----------------------------------------------------
NET REALIZED GAIN $14,259,948
-----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 6,766,000
Foreign currency (33,950)
-----------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $ 6,732,050
-----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $20,991,998
-----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $20,801,694
-----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS AUGUST 31, 2000 AUGUST 31, 1999
<S> <C> <C>
--------------------------------------------------------------------------
From operations --
Net investment income (loss) $ (190,304) $ 262,669
Net realized gain 14,259,948 1,160,361
Net change in unrealized
appreciation (depreciation) 6,732,050 13,694,526
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 20,801,694 $ 15,117,556
--------------------------------------------------------------------------
Capital transactions --
Contributions $ 29,213,229 $ 559,753
Withdrawals (14,204,876) (2,400,000)
--------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL TRANSACTIONS $ 15,008,353 $ (1,840,247)
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 35,810,047 $ 13,277,309
--------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------
At beginning of year $ 28,484,630 $ 15,207,321
--------------------------------------------------------------------------
AT END OF YEAR $ 64,294,677 $ 28,484,630
--------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------
2000 1999 1998
<S> <C> <C> <C>
---------------------------------------------------------------------
Ratios/Supplemental Data
---------------------------------------------------------------------
Ratios (As a percentage of
average daily net assets):
Expenses 1.34% 0.85% 0.50%
Expenses after custodian
fee reduction 1.13% 0.85% 0.50%
Net investment income
(loss) (0.31)% 1.32% 1.34%
Portfolio Turnover 112% 105% 101%
---------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S
OMITTED) $64,295 $28,485 $15,207
---------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-------------------------------------------
Asian Small Companies Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company which was organized as a trust under the laws
of the State of New York on January 19, 1996. The Portfolio seeks to achieve
capital growth. The Declaration of Trust permits the Trustees to issue
interests in the Portfolio. The following is a summary of significant
accounting policies of the Portfolio. The policies are in conformity with
accounting principles generally accepted in the United States.
A Investment Valuations -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement prices. Unlisted or
listed securities for which closing sale prices are not available are valued
at the mean between the latest bid and asked prices. Short-term debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost which approximates value. Other fixed income and debt
securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined
in good faith by or at the direction of the Trustees.
B Income -- Dividend income is recorded on the ex-dividend date for dividends
received in cash and/or securities. However, if the ex-dividend date has
passed, certain dividends from foreign securities are recorded as the
Portfolio is informed of the ex-dividend date.
C Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balance the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reported as a reduction of
total expenses in the Statement of Operations.
D Income Taxes -- The Portfolio has elected to be treated as a partnership for
United States Federal tax purposes. No provision is made by the Portfolio for
federal or state taxes on any taxable income of the Portfolio because each
investor in the Portfolio is ultimately responsible for the payment of any
taxes. Since one of the Portfolio's investors is a regulated investment
company that invests all or substantially all of its assets in the Portfolio,
the Portfolio normally must satisfy the applicable source of income and
diversification requirements (under the Internal Revenue Code) in order for
its investors to satisfy them. The Portfolio will allocate at least annually
among its investors each investor's distributive share of the Portfolio's net
investment income, net realized capital gains, and any other items of income,
gain, loss, deduction or credit. Withholding taxes on foreign dividends and
capital gains have been provided for in accordance with the Portfolio's
understanding of the applicable countries' tax rules and rates.
E Financial Futures Contracts -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit (initial margin) either in
cash or securities an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by the Portfolio (margin maintenance) each day, dependent on
the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by the Portfolio.
The Portfolio's investment in financial futures contracts is designed only to
hedge against anticipated future changes in interest or currency exchange
rates. Should interest or currency exchange rates move unexpectedly, the
Portfolio may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss. If the Portfolio enters into a closing
transaction, the Portfolio will realize, for book purposes, a gain or loss
equal to the difference between the value of the financial futures contract
to sell and financial futures contract to buy.
F Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to changes in foreign currency exchange
rates are recorded for financial statement purposes as net realized gains and
losses on investments. That portion of unrealized gains and losses on
investments that results from fluctuations in foreign currency exchange rates
is not separately disclosed.
G Forward Foreign Currency Exchange Contracts -- The Portfolio may enter into
forward
20
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. Risk may arise upon
entering these contracts from the potential inability of counterparties to
meet the terms of their contracts and from movements in the value of a
foreign currency relative to the U.S. dollar. The Portfolio may enter into
forward contracts for hedging purposes as well as non-hedging purposes. The
forward foreign currency exchange contracts are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are recorded
for financial statement purposes as unrealized until such time as the
contracts have been closed or offset.
H Other -- Investment transactions are accounted for on a trade date basis.
Realized gains and losses are computed based on the specific identification
of the securities sold.
I Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
2 Investment Adviser Fee and Other Transactions with Affiliates
-------------------------------------------
The investment adviser fee is earned by Lloyd George Investment Management
(Bermuda) Limited (the Adviser), an affiliate of Eaton Vance, as compensation
for management and investment advisory services rendered to the Portfolio.
Under the advisory agreement, the Adviser receives a monthly fee of 0.0625%
(0.75% annually) of the average daily net assets of the Portfolio up to
$500,000,000, and at reduced rates as daily net assets exceed that level. For
the year ended August 31, 2000, the adviser fee was equivalent to 0.75% of
average daily net assets. In addition, an administrative fee is earned by
Eaton Vance Management (EVM) for managing and administering the business
affairs of the Portfolio. Under the administration agreement, EVM earns a
monthly fee in the amount of 1/48th of 1% (0.25% annually) of the average
daily net assets of the Portfolio up to $500,000,000, and at reduced rates as
daily net assets exceed that level. For the year ended August 31, 2000, the
administrative fee was 0.25% of average daily net assets. Except as to
Trustees of the Portfolio who are not members of the Adviser or EVM's
organization, officers and Trustees receive remuneration for their services
to the Portfolio out of such investment adviser and administrative fees.
Certain officers and Trustees of the Portfolio are officers of the above
organizations.
3 Investment Transactions
-------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $64,597,340 and $59,289,015, respectively, for the year ended
August 31, 2000.
4 Federal Income Tax Basis of Investments
-------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at August 31, 2000, as computed on a federal income tax
basis, are as follows:
<TABLE>
<S> <C>
AGGREGATE COST $39,626,268
-----------------------------------------------------
Gross unrealized appreciation $19,045,243
Gross unrealized depreciation (3,838,885)
-----------------------------------------------------
NET UNREALIZED APPRECIATION $15,206,358
-----------------------------------------------------
</TABLE>
5 Line of Credit
-------------------------------------------
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a $150 million unsecured line of credit agreement with a
group of banks. The Portfolio may temporarily borrow from the line of credit
to satisfy redemption requests or settle investment transactions. Interest is
charged to each participating portfolio or fund based on its borrowings at an
amount above the Eurodollar rate or Federal Funds rate. In addition, a fee
computed at an annual rate of 0.10% on the daily unused portion of the line
of credit is allocated among the participating portfolios and funds at the
end of each quarter. The Portfolio did not have any significant borrowings or
allocated fees during the year
ended August 31, 2000.
6 Risks Associated with Foreign Investments
-------------------------------------------
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those
not subject to the disclosure and reporting requirements of the U.S.
securities laws. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and standards of
practice comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of
21
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the Portfolio, political or financial instability or
diplomatic and other developments which could affect such investments.
Foreign stock markets, while growing in volume and sophistication, are
generally not as developed as those in the United States, and securities of
some foreign issuers (particularly those in developing countries) may be less
liquid and more volatile than securities of comparable U.S. companies. In
general, there is less overall governmental supervision and regulation of
foreign securities markets, broker-dealers, and issuers than in the United
States.
7 Financial Instruments
-------------------------------------------
The Portfolio regularly trades in financial instruments with off-balance
sheet risk in the normal course of its investing activities to assist in
managing exposure to various market risks. These financial instruments
include forward foreign currency exchange contracts and futures contracts and
may involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. The notional or contractual
amounts of these instruments represent the investment the Portfolio has in
particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the
risks associated with these instruments is meaningful only when all related
and offsetting transactions are considered. At August 31, 2000, there were no
outstanding obligations under these financial instruments.
22
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO AS OF AUGUST 31, 2000
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND INVESTORS
OF ASIAN SMALL COMPANIES PORTFOLIO:
---------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Asian Small Companies Portfolio as of
August 31, 2000, the related statement of operations for the year ended, the
statement of changes in net assets for each of the two years then ended and the
supplementary data for each of the years in the three-year period then ended.
These financial statements and supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and supplementary data based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and supplementary data are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 2000, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Asian Small Companies
Portfolio at August 31, 2000, the results of its operations, the changes in its
net assets and its supplementary data for the respective stated periods in
conformity with accounting principles generally accepted in the United States
of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 13, 2000
23
<PAGE>
EATON VANCE ASIAN SMALL COMPANIES FUND AS OF AUGUST 31, 2000
INVESTMENT MANAGEMENT
EATON VANCE ASIAN SMALL COMPANIES 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
President, Unicorn
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
ASIAN SMALL COMPANIES PORTFOLIO
Officers
Hon. Robert Lloyd George
President and Trustee
James B. Hawkes
Vice President and Trustee
Zaheer Sitabkhan
Vice President and
Portfolio Manager
William Walter Raleigh Kerr
Vice President and Assistant Treasurer
James L. O'Connor
Vice President and Treasurer
Alan R. Dynner
Secretary
Trustees
Hon. Edward K.Y. Chen
President of Lingnan College,
University of Hong Kong
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
President, Unicorn
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
24
<PAGE>
SPONSOR AND MANAGER OF
EATON VANCE ASIAN SMALL COMPANIES FUND
AND ADMINISTRATOR OF ASIAN SMALL COMPANIES PORTFOLIO
EATON VANCE MANAGEMENT
The Eaton Vance Building
255 State Street
Boston, MA 02109
ADVISER OF ASIAN SMALL COMPANIES PORTFOLIO
LLOYD GEORGE INVESTMENT MANAGEMENT (BERMUDA) LIMITED
3808 One Exchange Square
Central, Hong Kong
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
PFPC, INC.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02904-9653
(800) 262-1122
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
200 Berkeley Street
Boston, MA 02116-5022
EATON VANCE ASIAN SMALL COMPANIES FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
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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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405-10/00 ASSRC
