<PAGE>
LOGO
EV Marathon
Greater India
Fund
Semi-Annual
Shareholder Report
June 30, 1995
Sponsor and Manager of
EV Marathon Greater India Fund
Administrator of South Asia Portfolio
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Adviser of South Asia Portfolio
Lloyd George Management
(Bermuda) Limited
3808 One Exchange Square
Central, Hong Kong
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
Custodian
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
Transfer Agent
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EV Marathon Greater India Fund
24 Federal Street
Boston, MA 02110 M-GISRC
<PAGE>
To Shareholders
EV Marathon Greater India Fund had a total return of -17.5 percent during the
six months ended June 30, 1995. That performance was the result of a decline in
net asset value per share from $9.84 on December 31, 1994 to $8.12 on June 30,
1995, and does not include the effect of the Fund's maximum contingent deferred
sales charge. In comparison, the Bombay Stock Exchange Index - an unmanaged
index of common stocks traded in the Indian markets - had a return of -17.9
percent for the same period. The Indian market was negatively affected by the
Mexican crisis, which rocked all emerging markets. In addition, India struggled
with political wrangling within the ruling Congress Party. However, despite the
fallout from Mexico and the political unease, the most important factor - corp-
orate earnings - continued on a record-setting pace.
After a slow start, foreign investment
in India is gathering steam...
A common factor in the success of emerging nations' economic expansion in recent
years has been a heavy measure of foreign investment. That is certainly true of
India. When India started its reform process in 1991, foreign investment began
as a trickle, totaling just $113 million in 1991. However, as the reform
movement gathered steam, the flow of investment turned into a torrent. By the
end of 1993 the figure had risen to $577 million. And in 1994, foreign
investment jumped to $3.5 billion. Those foreign investments are being funneled
into a wide range of projects, with infrastructure and energy development among
the most critical. Long closed to foreigners, those sectors have been opened to
investors from outside India in recent years. In the manufacturing sector,
electronics, chemicals, industrial machinery and transportation have become
major areas for foreigners. Finally, in the service sector, computer software
and financial services have drawn a flood of investment. For example, in the
southern Indian city of Bangalore, 30 software centers act as service bureaus
for companies around the globe.
A difficult market belies much
progress made in 1994-95...
This continuing surge of foreign investment has been accompanied by additional
accomplishments by India in the past year. The tax system has been overhauled
while import duties have been reduced from a maximum of 85 percent to 65
percent. The once strictly-controlled pharmaceuticals industry has been
liberalized, while the telecommunications sector has been opened to private
investment. Ten new privately-owned banks have been licensed, while bank lending
rates have been deregulated. These developments are all part of the economic
reform movement and are helping make India's future brighter. While the market
has experienced a negative turn in the first half of 1995, we believe the reform
movement and India's continuing economic momentum are building value that should
be recognized in the future.
Sincerely,
------------------------ /s/ James B. Hawkes
Photo of James B. Hawkes James B. Hawkes
------------------------ President
August 21, 1995
<PAGE>
Management Discussion: Robert Lloyd George
An interview with the Hon. Robert Lloyd George, President of Lloyd George
Management, and Investment Adviser to the South Asia Portfolio.
Q: Robert, why has the Indian market been under pressure in 1995?
A. Several factors have contributed to a difficult Indian market so far in 1995.
First, the Indian markets have been dominated by politics in 1995, and that
has taken the focus off what continues to be a strong earnings picture. The
ruling Congress Party, the primary sponsor of India's reforms, has suffered
setbacks in recent regional elections. While those setbacks do not pose a
serious threat to the reform process, they have nonetheless concerned
investors. Second, the Budget that was presented to Parliament in March
failed to include any tax cuts. That proved a disappointment for investors,
who had hoped for some tax relief. Finally, the Indian central bank voted to
tighten monetary policy in an effort to reduce inflation. A tighter monetary
policy resulted in higher interest rates across the rate spectrum, which
contributed to a difficult investment climate.
Photo of Hon. Robert
Lloyd George
Q: You suggested that, despite the political unease and high interest rates,
Indian corporate earnings are still strong. Could you expand on that theme?
A. Yes. Indian companies have largely ignored the political squabbling and
continued to post strong earnings growth. That has actually limited the
damage in the stock market somewhat. In fact, the markets staged a modest
rally late in the period on the strength of unusually strong corporate
earnings reports. Larger companies have led the way, but smaller and mid-cap
companies have also registered impressive profit growth. Average earnings
growth for 1994-95 was in the 45 percent range, and the initial consensus
estimates for 1995-96 are equally encouraging. Following the recent decline
in share prices, the robust earnings results suggest that the Indian market
retains a lot of value.
Q: Has the Indian central bank's tight money policy had any effect on the
inflation rate?
A. Yes, and that's very good news for investors concerned about the potentially
damaging effects of inflation on an emerging economy. Inflation fell to the
8.5 percent range at mid-year from a peak of 12 percent at the end of 1994,
according to the Finance Ministry. The government is aiming to push inflation
below 8 percent in coming months. Provided the country has a favorable
monsoon season between June and September and ample food harvests, interest
rates could very well stabilize
<PAGE>
--------------------------------------------------------------------------------
[Chart]
"STRONG DEMAND AND DEEP TALENT POOL PROVIDE A BOOST TO INDIA'S SOFTWARE
INDUSTRY..."
India Software Industry 1995 estimated revenues: $1 billion
Annual growth rate: 50%
Total Indian software export revenues: $550 million
Exports as % of total: 55%
[picture of microchip]
Source: Nasscom Software Trade Association
--------------------------------------------------------------------------------
for a while. With the improving news on inflation, prime lending rates have
remained in the 15.5 percent to 16 percent level.
Q: With that as a backdrop, where have you been investing?
A. The Portfolio maintained the largest weighting in India, at 74.8 percent of
net assets as of June 30. The second largest country weighting was Pakistan,
at 7.3 percent, followed by Sri Lanka, at 5.9 percent, and Bangladesh, at 4.3
percent. In recent months, we have sought a greater concentration in the
large capitalization stocks, which have become undervalued during this year's
market sell-off. In the event of a market upturn, the large cap stocks are
likely to be the major beneficiaries.
From an industry sector standpoint, engineering and manufacturing stocks
remained the Portfolio's largest investment. Industrial output continues to
rise in greater India and is a major engine of the region's growth.
Automobile manufacturers, a prime component of industrial production,
represented the second largest sector. The third largest segment was chemical
companies. Chemical production remains a critical element in the nation's
manufacturing processes. Banking and financial services was the fourth
largest sector. India's large financial institutions have benefited greatly
from the nation's move toward privatization and the expanding need to finance
growth.
<PAGE>
Q: Could you give some examples of the Portfolio's current Indian investments?
A. Yes. The Portfolio's largest single holding at June 30 was Tata Engineering &
Locomotive. The company's products range from heavy commercial vehicles to
pick-up trucks, where it dominates the market with a 70 percent market share,
to passenger vehicles, where it has recently collaborated with Daimler Benz
in producing Mercedes Benz vehicles in India.
Ranbaxy Laboratories was another of the Portfolio's large India-based
investments. Ranbaxy is India's second largest drug manufacturer, with a
market share of 18%. The company's products range from pharmaceuticals to
surgical dressings to diagnostic aids. The company has managed to introduce a
host of new products into the Indian market, while maintaining its price
competitiveness. Boosted by an increasing export business to other Asia
nations, Ranbaxy saw earnings surge 78 percent last year.
Mahindra & Mahindra is an automobile manufacturer with manufacturing lines
for jeeps, tractors, agricultural vehicles, and auto components. Mahindra is
the dominant maker of jeeps in India with a 90 percent market share. With a
growing middle class, the demand for vehicles continues to grow. The
company's growth has reflected that demand, having reported a 73 percent
earnings increase in the first half of the year.
Q: Pakistan remains the Portfolio's second largest country weighting. What is
the outlook there?
A. Naturally, the Pakistan market felt the aftershocks of the Mexican crisis
that roiled all emerging markets earlier in the year. The market was down
about 22 percent in the first six months of the year. The Pakistan situation
has been further complicated by political squabbling and some sectarian
violence. The government had indicated an earlier goal of 6.9 percent GDP
growth for 1995. It now appears that the growth rate may be well below that
level.
However, in my view, Pakistan continues to represent a good long-term
opportunity. The market has recently sold at a price-earnings
--------------------------------------------------------------------------------
[Pie Chart]
"THE PORTFOLIO'S COMMON STOCK INVESTMENTS"
Bangladesh 4.7%
Sri Lanka 6.4%
Pakistan 7.9%
India 81.0%
footnote: Based on market value as of June 30, 1995, excluding cash or fixed
income securities.
--------------------------------------------------------------------------------
<PAGE>
multiple of 15, well below that of other countries in the India region.
Moreover, Pakistan remains a major source of textiles for the region as well
as for exports to developed nations. Despite periods of political unrest, the
government is stepping up its efforts to modernize telecommunications,
infrastructure, and transportation facilities. For example, despite the
political rumblings, the $1.6 billion Hub River power generating project was
completed successfully at year-end. That demonstrates that large projects can
survive the unrest and that the economic momentum toward reform is still in
place. Finally, the government's privatization plans are advancing, a key
element in the effort to lure the foreign investment that is critical to the
country's future growth.
Q: Where have you invested in Pakistan?
A. Pakistan State Oil remains the Portfolio's largest Pakistan-based investment.
State Oil is Pakistan's largest distributor of petroleum with a 75 percent
market share and 2,200 retail outlets located throughout the country. More
than half of State Oil's sales are attributable to the transport sector. The
transport sector has registered more than 7 percent annual growth rate over
the past decade. The company was partially privatized in 1991, but remains 25
percent owned by the Pakistan government, which continues to finance the
company's inventories. That subsidization affords the company a major
advantage over its chief competitors.
Q: And what of Sri Lanka?
A. According to the Ministry of Finance, Sri Lanka is expected to post economic
growth of 6 percent in 1995. That represents an increase over 1994, when the
economy grew at a 5.5 percent pace. The goal is to increase the growth rate
to the 7-to-8 percent range by 1997, with the help of lower interest rates
and a much needed reform of the tax system. The government is also taking aim
on inflation, hoping to lower the rate to 5.5 percent. Finally,
--------------------------------------------------------------------------------
Recent U.S. investments* in India:
. Ford Motor Company - The auto maker has taken a 7 percent equity position in
Mahindra & Mahindra, a large Indian auto manufacturer. The pact gives Ford
access to a growing Indian market, while exposing Mahindra to Ford's marketing
capabilities.
. Nynex - The regional Bell company, which operates in New York and New England,
has formed a strategic alliance with Reliance, India's largest company. The
companies are readying a bid on contracts to modernize India's
telecommunications sector.
. Goldman Sachs - The leading U.S. investment bank established a joint
arrangement in February with Kotak Mahindra Finance to pursue investment
banking activities. Kotak Mahindra has also received approval to set up mutual
funds.
*These companies are not owned by the Portfolio.
--------------------------------------------------------------------------------
<PAGE>
the government is embarking on a privatization campaign that will focus on
large banks, food companies, and chemical concerns. The Portfolio has focused
on large cap stocks, with a strong focus in banks, including Sampath Bank and
National Development Bank.
Q: We've read a good deal about India's strength in computer software
development. Does the Portfolio have an exposure to that sector?
A. Yes. Infosys Technologies is a major software manufacturer specializing in
products for the banking and retail sectors. Roughly 90 percent of the
Bangalore-based company's revenues are attributable to exports, with the U.S.
alone accounting for 70 percent. Infosys's client list includes a strong
roster of blue chip U.S. firms, including AT&T, General Electric, Reebok, and
Levi Strauss. The company reported 52 percent profit growth in the first six
months of the fiscal year.
Interestingly, Infosys is representative of one of India's major assets: its
talent pool. With a fast-growing, well-educated middle class, India is
successfully exporting intellectual properties such as software from centers
like Bangalore. India's software talent is quickly becoming popular among
many companies outside of India that find such outsourcing a reliable and
cost-effective alternative to in-house programming.
Q: Robert, how do you view the outlook for the Greater India markets?
A. The volatility of the past six months is quite common for an emerging market
such as India, consistent with the pattern of fast growth, inflation, and
uneven political trends. Those are all risks of which investors should be
aware. And of course, there is no guarantee that the growth trends of the
past will be repeated in the future. But the encouraging thing about India
during this difficult market has been that the pace of reforms continues,
together with foreign investment and a further opening of industry to
privatization. In addition, India continues to develop new businesses and
enterprises. Naturally, there will be more hurdles ahead. But India's
progress is similar to the early development of the world's other great
economies. I believe the future may provide rewards for patient investors in
India.
--------------------------------------------------------------------------------
[Chart]
"INDUSTRIAL OUTPUT IS LEADING THE INDIAN ECONOMY"
This chart compares the rise in India's GDP growth since 1990 with the
nation's increase in industrial output. GDP is represented in columnar form
while the industrial output is represented by a line chart. These figures set
against a background map of India. The following represents the plot points
of this chart:
Label GDP Industrial Output
1990 5.8 8.3
1991 5.7 8.0
1992 1.0 0.0
1993 3.7 1.0
1994 4.3 3.0
1995 5.9 8.0
--------------------------------------------------------------------------------
<PAGE>
EV Marathon Greater India Fund
Financial Statements
Statement of Assets and Liabilities
June 30, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Assets:
Investment in South Asia Portfolio, at value (Note 1A)
(identified cost, $38,004,436) $30,836,505
Receivable for Fund shares sold 49,032
Deferred organization expenses (Note 1D) 54,243
-----------
Total assets $30,939,780
Liabilities:
Payable for Fund shares redeemed $60,885
Payable to affiliate -
Custodian fees 128
Trustees fees 41
Accrued expenses 20,139
-------
Total liabilities 81,193
-----------
Net Assets for 3,800,669 shares of beneficial interest outstanding $30,858,587
===========
Sources of Net Assets:
Paid-in capital $40,235,805
Accumulated undistributed net realized loss from Portfolio (1,527,282)
Accumulated net investment loss (682,005)
Unrealized depreciation of investments from Portfolio (7,167,931)
-----------
Total $30,858,587
===========
Net Asset Value, Offering Price, and Redemption Price (Note 6) Per Share
($30,858,587 / 3,800,669 shares of beneficial interest outstanding) $ 8.12
===========
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements (continued)
Statement of Operations
For the six months ended June 30, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment Income (Note 1B):
Dividend income allocated from Portfolio (net of foreign tax, $7,796) $ 47,052
Interest income allocated from Portfolio 12,578
Expenses allocated from Portfolio (224,832)
-----------
Net investment income from Portfolio $ (165,202)
Expenses -
Management fee (Note 2) $ 40,531
Compensation of Trustees not members
of the Administrator's organization 79
Custodian fee (Note 2) 1,807
Distribution fees (Note 5) 124,854
Printing and postage 34,087
Transfer and dividend disbursing agent fees 30,820
Registration fees 11,143
Legal and accounting services 8,797
Amortization of organization expenses (Note 1D) 7,641
-----------
Total expenses 259,759
-----------
Net investment loss $ (424,961)
===========
Realized and Unrealized Gain (Loss) from Portfolio:
Net realized loss from investment transactions (identified cost basis) $(1,607,435)
Net realized loss on foreign currency transactions (9,123)
-----------
Net realized loss $(1,616,558)
Change in unrealized depreciation (4,631,543)
-----------
Net realized and unrealized loss $(6,248,101)
-----------
Net decrease in net assets from operations $(6,673,062)
===========
</TABLE>
See notes to financial statements
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six months
ended Year ended
June 30, 1995 December 31
(unaudited) 1994*
------------- -----------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From operations -
Net investment loss $ (424,961) $ (257,044)
Net realized gain (loss) from Portfolio (1,616,558) 89,276
Change in unrealized depreciation from Portfolio (4,631,543) (2,536,388)
----------- -----------
Net decrease in net assets from operations $(6,673,062) $(2,704,156)
----------- -----------
Transactions in shares of beneficial interest (Note 3) -
Proceeds from sale of shares $ 4,977,604 $45,817,041
Cost of shares redeemed (6,370,550) (4,188,290)
----------- -----------
Increase (decrease) in net assets from Fund share transactions $(1,392,946) $41,628,751
----------- -----------
Net increase (decrease) in net assets $(8,066,008) $38,924,595
Net Assets:
At beginning of period 38,924,595 --
----------- -----------
At end of period (including net investment loss of $682,005 $30,858,587 $38,924,595
and $257,044, respectively) =========== ==========
</TABLE>
*For the period from the start of business, May 2, 1994, to December 31, 1994.
See notes to financial statements
<PAGE>
Financial Statements (continued)
Financial Highlights
<TABLE>
<CAPTION>
Six months
ended Year ended
June 30, 1995 December 31
(unaudited) 1994*
------------ -----------
<S> <C> <C>
Net Asset Value, beginning of period $ 9.84 $ 10.00
------- -------
Income (Loss) From Investment Operations:
Net investment loss $ (0.11) $ (0.07)
Net realized and unrealized loss on investments (1.61) (0.09)
------- -------
Total loss from investment operations (1.72) $ (0.16)
------- -------
Net Asset Value, end of period $ 8.12 $ 9.84
======= =======
Total Return /(2)/ (17.48)% (1.60)%
Ratios/Supplemental Data:
Net assets, end of period (000 omitted) $30,858 $38,925
Ratio of net expenses to average daily net assets /(1)/ 2.99%/+/ 2.54%/+/
Ratio of net investment loss to average daily net assets (2.62)%/+/ (1.42)%/+/
</TABLE>
*For the period from the start of business, May 2, 1994, to December 31, 1994.
/(1)/ Includes the Fund's share of South Asia Portfolio's allocated expenses.
/(2)/ Total return is calculated assuming a purchase at net asset value on the
first day and a sale at the net asset value on the last day of the period.
Dividends and distributions, if any, are assumed to be reinvested at the
net asset value on the payable date. Total return is not computed on an
annualized basis.
/+/ Annualized
See notes to financial statements
<PAGE>
Notes to Financial Statements
(unaudited)
(1) Significant Accounting Policies
EV Marathon Greater India Fund (the Fund) is a diversified series of Eaton Vance
Special Investment Trust (the Trust). The Trust is an entity of the type
commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund invests all of its investable assets in interests in South
Asia 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
(65.0% at June 30, 1995). The performance of the Fund is directly affected by
the performance of the Portfolio. The financial statements of the Portfolio,
including the portfolio of investments, are included elsewhere in this report
and should be read in conjunction with the Fund's financial statements. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
A. Investment Valuations - Valuation of securities by the Portfolio is discussed
in Note 1 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. At December 31, 1994, the Fund, for federal income
tax purposes had a capital loss carryover of $6,809 which will reduce the
taxable income arising from future net realized gains on investments, if any,
to the extent permitted by the Internal Revenue Code, and thus will reduce the
amount of the distributions to shareholders which would otherwise be necessary
to relieve the Fund of any liability for federal income or excise tax. Such
capital loss carryover will expire on December 31, 2002.
D. Deferred Organization Expenses - Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on the
straight-line basis over five years.
E. Distributions to Shareholders - It is the present policy of the Fund to make
(a) at least one distribution annually (normally in December) of all or
substantially all of the investment income allocated to the Fund by the
Portfolio, if any, less the Fund's direct and allocated expenses and (b) at
least one distribution annually of all or substantially all of the net realized
capital gains allocated by the Portfolio to the Fund, if any (reduced by any
available capital loss carryforwards from prior years). Shareholders may
reinvest all distributions in shares of the Fund without a sales charge at the
per share net asset value as of the close of business on the record date.
F. Distribution Costs - For book purposes, commissions paid on the sale of Fund
shares and other distribution costs are charged to operations. For tax purposes,
commissions paid were charged to paid-in capital prior to November 16, 1994 and
subsequently charged to operations. The change in the tax accounting practice
was prompted by a recent Internal Revenue Service ruling and has no effect on
either the Fund's current yield or total return (Note 5).
G. Interim Financial Information - The interim financial statements relating to
June 30, 1995 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.
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
(2) 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 June
30, 1995 the fee was equivalent to 0.25% (annualized) of the Fund's average net
assets for such period and amounted to $40,531. Except as to Trustees of the
Fund who are not members of EVM's organization, officers and Trustees receive
remuneration for their services to the Fund out of such management fee.
Investors Bank & Trust Company (IBT), an affiliate of EVM, serves as custodian
of the Fund. Pursuant to the custodian agreement, IBT receives a fee reduced by
credits which are determined based on the daily average cash balances the Fund
maintains with IBT. Certain officers and Trustees of the Fund and the Portfolio
are officers and directors/trustees of the above organizations. In addition,
investment adviser, administrative fees, and custody fees are paid by the
Portfolio to EVM and its affiliates. See Note 2 of the Portfolio's Notes to
Financial Statements which are included elsewhere in this report.
--------------------------------------------------------------------------------
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Six months
ended Year ended
June 30, 1995 December 31
(unaudited) 1994*
------------- -----------
<S> <C> <C>
Sales 585,824 4,356,983
Redemptions (741,150) (400,988)
-------- ---------
Net increase (decrease) (155,326) 3,955,995
======== =========
</TABLE>
*For the period from the start of business, May 2, 1994, to December 31, 1994.
--------------------------------------------------------------------------------
(4) Investment Transactions
Increases and decreases in the Fund's investment in the Portfolio aggregated
$5,161,927 and $6,697,490, respectively.
<PAGE>
(5) Distribution Plan
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
Principal Underwriter, Eaton Vance Distributors, Inc. (EVD) amounts equal to
1/365 of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 5% of the
aggregate amount received by the Fund for shares sold plus, (ii) distribution
fees calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges of EVD reduced by the
aggregate amount of contingent deferred sales charges (see Note 6), daily
amounts theretofore paid to EVD and amounts theretofore paid or payable to EVD
by Lloyd George Investment Management (Bermuda) Limited, investment adviser for
the Portfolio (the Adviser), in consideration of EVD's distribution effort. The
amount payable to EVD by the Fund with respect to each day is accrued on such
day as a liability of the Fund and, accordingly, reduces the Fund's net assets.
The Fund accrued $121, 592 as payable to EVD for the six months ended June 30,
1995, representing 0.75% of average daily net assets. The amounts paid or
payable by the Adviser to EVD are equivalent to 0.15% of the Fund's annual
average net assets and are made from the Adviser's own resources, not the Fund's
net assets. At June 30, 1995, the amount of Uncovered Distribution Charges of
EVD calculated under the Plan was approximately $1,738,000.
In addition, the Plan authorizes the Fund to make payments of service fees
to the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have initially implemented the Plan by authorizing the Fund to make
quarterly payments of service fees to the Principal Underwriter and Authorized
Firms in amounts not expected to exceed 0.25% per annum of the Fund's average
daily net assets based on the value of Fund shares sold by such persons and
remaining outstanding for at least one year. For the six months ended June 30,
1995 service fees amounted to $3,262. 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 where there are no outstanding Uncovered Distribution Charges of
EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
--------------------------------------------------------------------------------
(6) Contingent Deferred Sales Charge
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon the
lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by reinvestment of dividends or capital gain
distributions. The CDSC is imposed at declining rates that begin at 5% in the
case of redemptions in the first and second year after purchase (6% and 5%,
respectively, for shares purchased prior to August 1, 1994) declining one
percentage point each subsequent year. No CDSC is levied on shares which have
been sold to EVM or its affiliates or to their respective employees or clients.
CDSC charges are paid to EVD to reduce the amount of Uncovered Distribution
Charges calculated under the Fund's Distribution Plan. CDSC charges received
when no Uncovered Distribution Charges exist will be credited to the Fund. EVD
received approximately $105,000 of CDSC paid by shareholders for the six months
ended June 30, 1995.
<PAGE>
South Asia Portfolio
Portfolio of Investments
June 30, 1995
(unaudited)
Common Stocks - 92.3%
<TABLE>
Shares Value
------- -----------
<S> <C> <C>
Bangladesh, 4.3%
Apex Spinning & Knitting 40,000 $ 360,060
Apex Tannery Ltd. 20,000 491,072
Eastern Housing Ltd. 90,300 331,879
Monno Fabrics Ltd. /(2)/ 133,000 497,499
Square Pharmaceuticals Ltd. 16,000 362,960
-----------
$ 2,043,470
-----------
INDIA, 74.8%
Alacrity Housing Ltd. 321,000 $ 291,339
Bajaj Auto Ltd. /(2)/ 43,500 1,011,305
Bellary Steels & Alloys /(2)/ 310,000 256,680
Bharat Heavy Electricals 125,000 481,687
Bharat Petroleum Corp. Ltd. 10,000 93,312
Bombay Dyeing & Manufacturing GDR 105,000 1,246,875
BPL Engineering Ltd. 150,000 212,580
Century Textiles & Industrial GDR 5,316 810,690
DCL Polysters /(2)/ 10,000 8,041
Emkay Texofdod Industries /(2)/ 185,000 128,149
Essar Gujarat /(2)/ 42,000 79,293
Flex Industries 4,400 24,942
Flex Industries (rts) /(1)/ 2,200 26,642
Flex Industries (wts) /(1)/ 4,274 22,867
Gujarat Ambuja Cement 18,000 136,432
Hinachal Futuristic Community /(2)/ 220,900 710,546
Hinachal Telematics Ltd. /(2)/ 125,000 210,987
Hindustan Petroleum Corp. /(2)/ 65,000 749,365
Hoechst India Ltd. /(2)/ 120,000 1,031,844
Hoest Schering Agrevo Ltd. /(2)/ 20,000 200,636
Hotel Leela Venture Ltd. /(2)/ 250,000 1,043,000
Hotel Leela Venture (rts) /(1) (2)/ 21,180 82,629
Hotel Leela Venture (wts) /(1)/ 42,360 114,668
IFB Industries Ltd. /(2)/ 107,800 635,125
Indian Aluminum Co. GDR 60,000 622,500
Indo Gulf Fertilizers /(2)/ 3,200 6,063
Infosys Technologies Ltd. /(2)/ 85,500 1,290,665
Innovation Medi Equipment Ltd. /(2)/ 150,000 95,535
JCT Limited GDR 75,000 1,387,500
Karur Vysya Bank /(2)/ 97,000 841,795
KEC International Ltd. /(2)/ 165,200 699,737
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Value
------- ---------
<S> <C> <C>
INDIA (continued)
Kotak Mahindra Finance Ltd. /(2)/ 224,000 1,291,203
Larsen & Toubro /(2)/ 102,500 856,889
Madras Refinery Ltd. 253,550 541,024
Mahindra & Mahindra /(2)/ 130,000 1,345,539
Motor Industries /(2)/ 3,750 705,812
Murudeshnar Ceramics Ltd. /(2)/ 187,200 637,902
Najarjuna Construction /(2)/ 20,000 92,994
Nicholas Piramel /(2)/ 27,950 244,786
Orchid Chemicals /(2)/ 250,000 613,050
Paper Products Ltd. 50,000 191,085
Punjab Wireless Systems 100,000 770,700
Ranbaxy Laboratories Ltd. GDR 60,000 1,530,000
Rubber Products /(2)/ 132,000 88,281
S & S Industries & Enterprise /(2)/ 356,000 331,614
Saktmi Sugars /(2)/ 150,000 253,185
Shaan Interwell (India) /(2)/ 112,700 195,613
State Bank of India-New /(2)/ 205,000 1,227,396
Tata Chemicals /(2)/ 128,850 1,411,603
Tata Engineering & Locomotive (units) 85,714 2,228,564
Taurus Mutual Fund /(2)/ 320,000 76,448
Thiru Arodran Sugars /(2)/ 100,000 318,470
Triveni Engineering /(2)/ 190,850 662,497
TTG Industries Ltd. /(2)/ 135,300 400,731
Tube Investments of India GDR 76,000 456,000
T.V.S. Suzuki /(2)/ 228,550 1,783,261
Usha Beltron Ltd. GDR 188,450 1,201,368
VST Tillers /(2)/ 10,000 24,522
VST Tillers (rts) /(1)/ /(2)/ 84,200 268,151
W.S. Industries Ltd. 102,500 124,045
Zuari Agroochemicals /(2)/ 90,000 1,066,239
-----------
$35,492,401
-----------
PAKISTAN, 7.3%
Adamjee Insurance Co. /(2)/ 100,000 $ 364,760
D.G. Xhan Cement Company Ltd. 191,250 270,083
Maple Leaf Cement Factory 91,520 97,487
Mishat Chuhian (wts) /(1)/ 306,000 93,850
Pakistan State Oil Co. Ltd. 124,930 1,512,277
</TABLE>
<PAGE>
Portfolio of Investments (continued)
<TABLE>
<CAPTION>
Shares Value
------- -----------
<S> <C> <C>
PAKISTAN (continued)
Pakistan Telecommunications /(2)/ 212,000 225,822
Pakistan Telecommunications GDR 6,000 609,000
Searle Pakistan 137,460 270,672
-----------
$ 3,443,951
-----------
SRI LANKA, 5.9%
Dev Fin Corp Of Ceylon 35,731 $ 266,163
Hayleys 135,840 512,660
John Keells Holdings 76,000 286,824
John Keells Holdings Ltd.GDR 104,000 819,000
Kelaki Tyres 144,100 47,942
National Development Bank 53,900 256,946
Royal Ceramics 359,000 299,477
Sampath Bank 186,000 168,106
Vanik Corporation 228,750 162,435
Vanik Corporation (wts) /(1)/ 45,750 5,460
-----------
$ 2,825,013
-----------
Total Common Stocks (Identified cost, $54,211,956) $43,804,835
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount
Bonds - 2.4% (000 Omitted) Value
------------ ---------------- -----------
<S> <C> <C>
Ballarpur Industries Ltd. Conv., 4s, 4/1/99 U.S. $500 $ 452,500
Gujarat Ambuja, 3s, 6/30/99 U.S. $500 665,000
-----------
Total Bonds (Identified cost, $1,255,000) $ 1,117,500
-----------
Total Investments (Identified cost, $55,466,955)-94.7% $44,922,335
Other Assets, less Liabilities-5.3% 2,519,996
-----------
Net Assets-100% $47,442,324
===========
</TABLE>
GDR -- Global depository receipt
/(1)/ Non-income producing security.
/(2)/ The above securities held by the Portfolio on June 30, 1995 are
unrestricted securities valued at market prices. Because of the length of
the registration process, the Portfolio would temporarily be unable to
sell these securities. At June 30, 1995, the aggregate value of these
securities amounted to $6,748,469, representing 14.2% of the Portfolio's
net assets (Note 5).
See notes to financial statements
<PAGE>
Financial Statements
Statement of Assets and Liabilities
June 30, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Assets:
Investments, at value (Note 1A) (identified cost, $55,466,955) $44,922,335
Cash 2,171,189
Foreign currency, at value (identified cost, $372,040) 371,283
Receivable for investments sold 92,963
Dividends and interest receivable 70,380
Deferred organization expenses (Note 1C) 66,727
-----------
Total assets $47,694,877
Liabilities:
Payable for investments purchased $184,974
Payable to affiliates:
Custodian fee 29,242
Accrued expenses 38,337
--------
Total liabilities 252,553
-----------
Net Assets applicable to investors' interest in Portfolio $47,442,324
===========
Sources of Net Assets:
Net proceeds from capital contributions and withdrawals $57,987,701
Net unrealized depreciation of investments and foreign currency
(computed on the basis of indentified cost) (10,545,377)
-----------
Total $47,442,324
===========
</TABLE>
See notes to financial statements
<PAGE>
Financial Statements (continued)
Statement of Operations
For the six months ended June 30, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment Income:
Income -
Dividends (net of foreign taxes, $11,971) $ 71,891
Interest 18,750
-----------
Total income $ 90,641
Expenses -
Investment adviser fee (Note 2) $ 180,751
Administration fee (Note 2) 60,243
Compensation of Trustees not members of
Investment Adviser's or Administrator's organization 6,250
Custodian fee (Note 2) 39,345
Legal and accounting services 34,053
Amortization of organization expenses (Note 1C) 9,322
Printing and postage 3,117
Registration costs 125
Miscellaneous 2,010
----------
Total expenses 335,216
-----------
Net investment loss $ (244,575)
-----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) -
Net realized loss on investments (identified cost basis) $(2,379,111)
Net realized loss on foreign currency transactions (13,694)
-----------
Net realized loss $(2,392,805)
Net unrealized appreciation (depreciation) -
Net unrealized depreciation of investments (identified cost basis) $(6,816,632)
Net unrealized depreciation of foreign currency (982)
-----------
Net unrealized depreciation (6,817,614)
-----------
Net realized and unrealized loss on investments $(9,210,419)
-----------
Net decrease in net assets from operations $(9,454,994)
===========
</TABLE>
See notes to financial statements
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six months
ended Year ended
June 30, 1995 December 31,
(unaudited) 1994*
------------- ------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From operations -
Net investment income (loss) $ (244,575) $ 1,649
Net realized gain (loss) on investments and foreign currency transactions (2,392,805) 137,750
Change in unrealized depreciation of investments (6,817,614) (3,727,763)
----------- -----------
Decrease in net assets from operations $(9,454,994) $(3,588,364)
----------- -----------
Capital transactions:
Contributions $ 9,865,546 $67,765,119
Withdrawals (9,821,818) (7,423,185)
----------- -----------
Increase in net assets resulting from capital transactions $ 43,728 $60,341,934
----------- -----------
Net increase (decrease) in net assets $(9,411,266) $56,753,570
Net Assets:
At beginning of period 56,853,590 100,020
----------- -----------
At end of period $47,442,324 $56,853,590
=========== ===========
</TABLE>
* For the period from the start of business, May 2, 1994, to December 31, 1994.
--------------------------------------------------------------------------------
Supplementary Data
<TABLE>
<CAPTION>
Six months Year
ended ended
June 30, 1995 December 31,
(unaudited) 1994*
------------- ------------
<S> <C> <C>
Ratios (as a percentage of average net assets):
Expenses 1.39%/+/ 1.16%/+/
Net investment income (loss) (1.02)%/+/ 0.01%/+/
Portfolio Turnover 7% 1%
</TABLE>
/+/ Annualized
* For the period from the start of business, May 2, 1994, to December 31, 1994.
See notes to financial statements
<PAGE>
Notes to Financial Statements
(unaudited)
(1) Significant Accounting Policies
South Asia 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
January 18, 1994. The Declaration of Trust permits the Trustees to issue
interests in the Portfolio. The following is a summary of the significant
accounting policies of the Portfolio. The policies are in conformity with
generally accepted accounting principles.
A. Investment Valuations - Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National Market
System are valued at closing sale prices or, if there were no sales, at the mean
between the closing bid and asked prices on the exchange where such securities
are principally traded. Futures positions on securities or currencies are
generally valued at closing settlement prices. Unlisted or listed securities for
which closing sale prices are not available are valued at the mean between the
latest bid and asked prices. Short term debt securities with a remaining
maturity of 60 days or less are valued at amortized cost. Other fixed income and
debt securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined in
good faith by or at the direction of the Trustees.
B. Federal Taxes - The Portfolio is treated as a partnership for U.S. Federal
tax purposes. No provision is made by the Portfolio for federal or state taxes
on any taxable income of the Portfolio because each investor in the Portfolio is
individually responsible for the payment of any taxes on its share of such
income. Since some of the Portfolio's investors are regulated investment
companies that invest all or substantially all of their assets in the Portfolio,
the Portfolio normally must satisfy the applicable source of income and
diversification requirements, (under the U.S. 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.
C. Deferred Organization Expenses - Costs incurred by the Portfolio in
connection with its organization, including registration costs, are being
amortized on the straight-line basis over five years.
D. 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 daily
fluctuations in the value of the underlying security, and are recorded for book
purposes as unrealized gains or losses by the Portfolio. 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.
<PAGE>
E. 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.
F. Forward Foreign Currency Exchange Contracts - The Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counterparties to
meet the terms of their contracts and from movements in the value of a foreign
currency relative to the U.S. dollar. The Portfolio will enter into forward
contracts for hedging purposes as well as non-hedging purposes. The forward
foreign currency exchange contracts are adjusted by the daily exchange rate of
the underlying currency and any gains or losses are recorded for financial
statement purposes as unrealized until such time as the contracts have been
closed or offset.
G. Other - Investment transactions are accounted for on the date the securities
are purchased or sold. Dividend income is recorded on the ex-dividend date.
However, if the ex-dividend date has passed, certain dividends from foreign
securities are recorded as the Portfolio is informed of the ex-dividend date.
Interest income is recorded on the accrual basis.
H. Interim Financial Information - The interim financial statements relating to
June 30, 1995 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 Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Lloyd George Investment Management
(Bermuda) Limited (the Adviser) as compensation for management and investment
advisory services rendered to the Portfolio. Under the advisory agreement, the
Adviser receives a monthly fee of 0.0625% (0.75% annually) of the average daily
net assets of the Portfolio up to $500,000,000, and at reduced rates as daily
net assets exceed that level. For the six months ended June 30, 1995 the
annualized adviser fee was 0.75% of average net assets and amounted to $180,751.
In addition, an administrative fee is earned by Eaton Vance Management (EVM) for
managing and administering the business affairs of the Portfolio. Under the
administration agreement, EVM earns a monthly fee in the amount of 1/48th of 1%
(equal to 0.25% annually) of the average daily net assets of the Portfolio up to
$500,000,000, and at reduced rates as daily net assets exceed that level. For
the six months ended June 30, 1995, the administration fee was 0.25%
(annualized) of average net assets and amounted to $60,243. 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. Investors
Bank & Trust Company (IBT), an affiliate of EVM, 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. Certain of the officers and Trustees of the
Portfolio are officers or trustees of the above organizations.
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
(3) Investment Transactions
Purchases and sales of investments, other than short-term obligations,
aggregated $6,668,259 and $3,149,258 respectively.
--------------------------------------------------------------------------------
(4) Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) in value of the investments
owned at June 30, 1995, as computed on a federal income tax basis, are as
follows:
<TABLE>
<S> <C>
Aggregate cost $55,466,955
===========
Gross unrealized appreciation $ 2,710,110
Gross unrealized depreciation 13,254,730
-----------
Net unrealized depreciation $10,544,620
===========
</TABLE>
--------------------------------------------------------------------------------
(5) Risks Associated with Foreign Investments
Investing in securities issued by companies whose principal business activities
are outside the United States may involve significant risks not present in
domestic investments. For example, there is generally less publicly available
information about foreign companies, particularly those not subject to the
disclosure and reporting requirements of the U.S. securities laws. Foreign
issuers are generally not bound by uniform accounting, auditing, and financial
reporting requirements and standards of practice comparable to those applicable
to domestic issuers. Investments in foreign securities also involve the risk of
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the Portfolio, political or financial instability or diplomatic
and other developments which could affect such investments. Foreign stock
markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In general, there is less
overall governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the United States.
Settlement of securities transactions in the Indian subcontinent may be
delayed and is generally less frequent than in the United States, which could
affect the liquidity of the Portfolio's assets. The Portfolio may be unable to
sell securities where the registration process is incomplete and may experience
delays in receipt of dividends.
--------------------------------------------------------------------------------
(6) Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a $120 million unsecured line of credit agreement with a bank.
The line of credit consists of a $20 million committed facility and a $100
million discretionary facility. Borrowings will be made by the Portfolio 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 either the bank's adjusted certificate of deposit
rate, a variable adjusted certificate of deposit rate, or a federal funds
effective rate. In addition, a fee computed at an annual rate of 1/4 of 1% on
the $20 million committed facility and on the daily unused portion of the $100
million discretionary 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 period.
<PAGE>
EV Marathon
Greater India
Fund
Officers
---------------------------------------------------------
James B. Hawkes
President and Trustee
Clifford H. Krauss
Vice President
James L. O'Connor
Treasurer
Thomas Otis
Secretary
Trustees
---------------------------------------------------------
Landon T. Clay
Chairman, Eaton Vance Corp.
Donald R. Dwight
President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking, Harvard
University Graduate School of Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
South Asia
Portfolio
Officers
---------------------------------------------------------
Hon. Robert Lloyd George
President
James B. Hawkes
Vice President and Trustee
Scobie Dickinson Ward
Vice President, Assistant Secretary and
Assistant Treasurer
William Walter Raleigh Kerr
Vice President, Secretary and
Assistant Treasurer
James L. O'Connor
Vice President and Treasurer
Thomas Otis
Vice President and Assistant Secretary
Trustees
---------------------------------------------------------
Hon. Robert Lloyd George
Chairman and Chief Executive, Lloyd George Management
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Harvard University Graduate School of Business Administration
Stuart Hamilton Leckie
Managing Director and Actuary, Wyatt Company,
Hong Kong
Hon. Edward K.Y. Chen
Professor and Director, Center for Asian Studies,
University of Hong Kong
