<PAGE>
[LOGO OF EATON VANCE APPEARS HERE] [PHOTOGRAPH OF EARTH APPEARS HERE]
Investing for the 21st Century
Semiannual Report June 30, 1997
[INDIAN SCULPTURE ARTWORK APPEARS HERE]
EV
MARATHON
GREATER INDIA
FUND
Eaton Vance
Global Management-Global Distribution
[PHOTOGRAPH OF SAFARI APPEARS HERE]
Marathon
<PAGE>
EV Marathon Greater India Fund as of June 30, 1997
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
Investment Environment
- --------------------------------------------------------------------------------
India's Economy
. Despite a turbulent political scene, the India economy continued to register
strong 6% GDP growth in early 1997. The stock market reflected a growing
optimism over continued economic reforms. While earnings among pivotal
large-cap companies were uneven, the Bombay Stock Exchange/1/ posted a solid
advance, rising 32.6% during the six-month period.
. Indian Finance Minister Chidambaram released his "market-friendly" 1998 budget
in February, which reduced individual and corporate income tax rates and
lowered tariffs on imports. Foreign institutional investment soared 30% in the
months following the budget release.
. Following the fall of the United Front (UF) government of Prime Minister Deve
Gowda in March, another UF-Congress coalition was formed by former foreign
minister Inder Kumar Gujral. Mr. Gujral's appointment and endorsement of
continued reforms brought a renewed interest from India's domestic investors.
. The India market was given a boost by the Reserve Bank of India, which eased
credit policy and reduced prime lending rates to 13% from 17% a year ago. The
move has increased liquidity and improved the outlook for corporate earnings
in the 1997-98 fiscal year.
The Fund
- --------------------------------------------------------------------------------
Performance for the Past Six Months
. The Fund had a total return of 23.9% during the six months ended June 30,
1997/2/. That return was the result of a rise in net asset value per share
from $5.91 on December 31, 1996 to $7.32 on June 30, 1997.
. The Fund's six-month results far outpaced the 6.0% average return of 86
Pacific-based funds - ex Japan,/3/ according to Lipper Analytical Services,
Inc., a mutual fund ranking service.
Management Discussion
. The Portfolio remained predominantly geared toward large-cap companies that
are market leaders in their sectors, including conglomerates, engineering, and
finance. Automobile companies, at 10.5% of investments, were also among the
largest sector weightings of the Fund. Mahindra & Mahindra, a large Portfolio
holding, dominates India's growing utility vehicle segment and has entered the
passenger vehicle market through a venture with Ford Motor Co.
. Telecom stocks (5.8%) remained a focus of the Portfolio as India spends
billions to upgrade its antiquated phone infrastructure. Mahanagar Telephone
Nigam Ltd. is the monopoly provider of fixed-wire telephone services in Mumbai
(Bombay) and Delhi.
. As some cyclical companies reported disappointing earnings during the first
half, the Fund benefited from its exposure to non-cyclical, consumer-oriented
stocks. The Portfolio's largest holding, Hindustan Lever, Ltd., dominates the
soap, toiletry and toothpaste segments of the Indian consumer products market.
Meanwhile, another major investment, Hoechst Marion Roussel, Ltd., is a leader
in the Indian pharmaceutical industry.
. With the depth of the market improving in recent months, the Portfolio
increased its exposure to mid-cap stocks. Lower interest rates have improved
the earnings outlook for companies like Cipla Paper Products, Orchid
Chemicals, and Infosys Technologies.
- --------------------------------------------------------------------------------
/1/ It is not possible to invest directly in the Index.
/2/ This return does not include contingent deferred sales charge (CDSC)
incurred by certain redeeming shareholders.
/3/ It is not possible to invest directly in the Lipper category of Pacific-
based Funds - ex Japan.
/4/ Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. SEC average annual returns reflect
applicable CDSC on the following schedule: 5% - 1st year; 5% - 2nd year;
4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year.
/5/ Because the Fund is actively managed, regional and industry weightings are
subject to change. Five largest industry weightings represent 53.0% of the
Portfolio's investments.
Past performance is no guarantee of future results. The value of an
investment in the Fund 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fund Information
as of June 30, 1997
Performance/4/
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
- --------------------------------------------------------------------------------
<S> <C>
One year -4.1%
Life of Fund (12/8/94) -9.4
<CAPTION>
SEC Average Annual Total Returns
- --------------------------------------------------------------------------------
<S> <C>
One year -8.9%
Life of Fund (12/8/94) -10.3
</TABLE>
Five Largest Industry Weightings/5/
- --------------------------------------------------------------------------------
By total net assets
<TABLE>
[BAR GRAPH APPEARS HERE]
<S> <C>
Conglomerates 12.4%
Household Products 11.0%
Automobiles/Auto Parts 10.5%
Banking/Money Services 9.9%
Medical Products 9.2%
</TABLE>
Regional Equity Weightings/5/
- --------------------------------------------------------------------------------
By total net assets
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Sri Lanka 4.2%
Bangladesh .8%
India 84.8%
</TABLE>
2
<PAGE>
EV Marathon Greater India Fund as of June 30, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of June 30, 1997
Assets
- --------------------------------------------------------------------------------
<S> <C>
Investment in South Asia Portfolio, at value (Note 1A)
(identified cost, $78,734,271) $ 90,762,855
Receivable for Fund shares sold 82,177
Deferred organization expenses (Note 1D) 25,924
- --------------------------------------------------------------------------------
Total assets $ 90,870,956
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 86,720
Payable to affiliate for Trustees' fees 356
Accrued expenses 20,188
- --------------------------------------------------------------------------------
Total liabilities $ 107,264
- --------------------------------------------------------------------------------
Net Assets for 12,397,878 shares of beneficial interest
outstanding $ 90,763,692
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $ 93,430,516
Accumulated net realized loss on investments
(computed on the basis of identified cost) (13,792,627)
Accumulated net investment loss (902,781)
Net unrealized appreciation of investments (computed
on the basis of identified cost) 12,028,584
- --------------------------------------------------------------------------------
Total $ 90,763,692
- --------------------------------------------------------------------------------
Net Asset Value, Offering Price and Redemption
Price Per Share (Note 7)
- --------------------------------------------------------------------------------
($90,763,692 / 12,397,878 shares of
beneficial interest outstanding) $ 7.32
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Six Months Ended
June 30, 1997
Investment Income (Note 1B)
- --------------------------------------------------------------------------------
<S> <C>
Dividend income allocated from Portfolio
(net of foreign taxes, $76,800) $ 355,104
Interest income allocated from Portfolio 9,220
Expenses allocated from Portfolio (669,907)
- --------------------------------------------------------------------------------
Total investment loss from Portfolio $ (305,583)
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Management fee (Note 2) $ 102,718
Compensation of Trustees not members of the
Administrator's organization 754
Distribution fee (Note 6) 323,257
Transfer agent fees 49,027
Printing and postage 24,713
Legal and accounting services 12,393
Registration fees 12,150
Amortization of organization expenses (Note 1D) 7,012
Custodian fee 4,832
Miscellaneous 15,486
- --------------------------------------------------------------------------------
Total expenses $ 552,342
- --------------------------------------------------------------------------------
Net investment loss $ (857,925)
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (4,447,839)
Foreign currency transactions (26,199)
- --------------------------------------------------------------------------------
Net realized loss on investment transactions $ (4,474,038)
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ 23,062,857
Foreign currency transactions 6,137
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 23,068,994
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 18,594,956
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 17,737,031
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
3
<PAGE>
EV Marathon Greater India Fund as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) June 30, 1997 Year Ended
in Net Assets (Unaudited) December 31, 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment loss $ (857,925) $ (1,120,474)
Net realized loss on
investments (4,474,038) (5,564,374)
Net change in unrealized
appreciation (depreciation)
of investments 23,068,994 (1,647,270)
- ---------------------------------------------------------------------------
Net increase (decrease) in net
assets from operations $ 17,737,031 $ (8,332,118)
- ---------------------------------------------------------------------------
Transactions in shares of
beneficial
interest (Note 3) --
Proceeds from sale of shares $ 8,541,598 $ 83,092,249
Cost of shares redeemed (10,176,022) (21,140,440)
- ---------------------------------------------------------------------------
Net increase (decrease) in net
assets from Fund
share transactions $ (1,634,424) $ 61,951,809
- ---------------------------------------------------------------------------
Net increase in net assets $ 16,102,607 $ 53,619,691
- ---------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------
At beginning of period $ 74,661,085 $ 21,041,394
- ---------------------------------------------------------------------------
At end of period $ 90,763,692 $ 74,661,085
- ---------------------------------------------------------------------------
Accumulated net investment loss
included in net assets
- ---------------------------------------------------------------------------
At end of period $ (902,781) $ (44,856)
- ---------------------------------------------------------------------------
<CAPTION>
Statement of Cash Flows
Six Months Ended
June 30, 1997
Increase (Decrease) in Cash (Unaudited)
- ---------------------------------------------------------------------------
<S> <C>
Cash Flows From (Used For) Operating Activities --
Purchase of interests in South Asia Portfolio $ (8,739,057)
Withdrawal of interests in South Asia Portfolio 10,887,065
Operating expenses paid (566,783)
- ---------------------------------------------------------------------------
Net cash from operating activities $ 1,581,225
- ---------------------------------------------------------------------------
Cash Flows From (Used For) Financing Activities --
Proceeds from shares sold $ 8,739,057
Payments for shares redeemed (10,320,282)
- ---------------------------------------------------------------------------
Net cash used for financing activities $ (1,581,225)
- ---------------------------------------------------------------------------
Net increase in cash $ --
- ---------------------------------------------------------------------------
Cash at Beginning of Period $ --
- ---------------------------------------------------------------------------
Cash at End of Period $ --
- ---------------------------------------------------------------------------
Reconciliation of Net Increase in Net Assets
From Operations to Net Cash From
Operating Activities
- ---------------------------------------------------------------------------
Net increase in net assets from operations $ 17,737,031
Decrease in deferred organization expenses 7,012
Decrease in payable to affiliate (61)
Decrease in accrued expenses (21,393)
Net increase in investments (16,141,364)
- ---------------------------------------------------------------------------
Net cash from operating activities $ 1,581,225
- ---------------------------------------------------------------------------
</TABLE>
See notes to financial statements
4
<PAGE>
EV Marathon Greater India Fund as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 --------------------------------------------------
(Unaudited) 1996 1995 1994*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 5.910 $ 6.550 $ 9.840 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss $(0.069)++ $ (0.099)++ $(0.176) $ (0.065)
Net realized and unrealized gain (loss) on investments 1.479 (0.541) (3.114) (0.095)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 1.410 $ (0.640) $(3.290) $ (0.160)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 7.320 $ 5.910 $ 6.550 $ 9.840
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 23.86% (9.77)% (33.43)% (1.60)%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $90,764 $ 74,661 $21,041 $ 38,925
Ratio of net expenses to average daily net assets/(2)(3)/ 3.01%+ 2.88% 3.31% 2.54%+
Ratio of net expenses to average daily net assets after
custodian fee reduction/(2)/ 2.97%+ 2.65% 2.90% --
Ratio of net investment loss to average daily net assets (2.09)%+ (1.46)% (1.74)% (1.42)%+
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
++ Computed using average shares outstanding.
* For the period from the start of business, May 2, 1994, to December 31,
1994.
/(1)/Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is not
computed on an annualized basis.
/(2)/Includes the Fund's share of the Portfolio's allocated expense.
/(3)/The expense ratios for the six month period ended June 30, 1997 and the
years ended December 31, 1996 and 1995 have been adjusted to reflect a
change in reporting requirements. The new reporting guidelines require the
Fund to increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for the period
ended December 31, 1994 have not been adjusted to reflect this change.
See notes to financial statements
5
<PAGE>
EV Marathon Greater India Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
------------------------------------------------------------------------------
EV Marathon Greater India Fund (the Fund) is a mutual fund seeking long-term
capital appreciation through the purchase of an interest in a separate
investment company which invests primarily in equity securities of companies
in India and surrounding countries of the Indian sub-continent. 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 the South Asia Portfolio (the Portfolio), a
New York Trust, having the same investment objective as the Trust. The value
of the Fund's investment in the Portfolio reflects the Fund's proportionate
interest in the net assets of the Portfolio (73.8% at June 30, 1997). The
performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the portfolio
of investments, are included elsewhere in this report and should be read in
conjunction with the Trust's financial statements. The following is a summary
of significant accounting policies consistently followed by the Trust 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 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 taxable income, including any
net realized gain on investments. Accordingly, no provision for federal income
or excise tax is necessary. At December 31, 1996, the Fund, for federal income
tax purposes had capital loss carryover of $8,885,760 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 December 31, 2002 ($7,604), December 31,
2003 ($4,416,592) and December 31, 2004 ($4,461,564). Additionally, at
December 31, 1996, net capital losses of $220,102 and net currency losses of
$44,856 attributable to security transactions incurred after October 31, 1996,
are treated as arising on the first day of the Fund's next taxable year.
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 Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
F Interim Financial Information -- The interim financial statements relating
to June 30, 1997 and the period 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.
G Other -- Investment transactions are accounted for on a trade date basis.
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, 1997, the fee was equivalent to 0.25% (annualized) of the Fund's
average net assets for such period and amounted to $102,718. 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. Certain officers and Trustees of the Fund and the Portfolio
are officers and directors of EVM. In addition, investment
6
<PAGE>
EV Marathon Greater India Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
adviser administrative fees are paid by the Portfolio to EVM and its
affiliates. See Note 2 of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.
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
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
------------------------------------------------------------------------------
<S> <C> <C>
Sales 1,346,552 12,608,893
Redemptions (1,572,568) (3,198,395)
------------------------------------------------------------------------------
Net increase (decrease) (226,016) 9,410,498
------------------------------------------------------------------------------
</TABLE>
4 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.
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 statement 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 losses. Permanent differences between book and tax
accounting are reclassified to paid-in capital.
5 Investment Transactions
------------------------------------------------------------------------------
For the six month period ended June 30, 1997, increases and decreases in the
Fund's investment in the Portfolio aggregated $8,739,057 and $10,887,065,
respectively.
6 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 the 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 aggregate amount of contingent deferred sales
charges (see Note 7), daily amounts theretofore paid to EVD and amounts
theretofore paid to EVD by Lloyd George Investment Management (Bermuda)
Limited, investment adviser for the Portfolio (the Advisor), 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 paid or accrued $308,152
as payable to EVD for the six months ended June 30, 1997, representing 0.75%
(annualized) of average daily net assets. The amounts paid by the Adviser to
EVD are equivalent to 0.15% of the Fund's annual daily average net assets and
are made from the Adviser's own resources, not the Fund's net assets. At June
30, 1997, the amount of Uncovered Distribution Charges EVD calculated under
the Plan was approximately $4,289,000.
In addition, the Plan authorizes the Fund to make monthly 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 any
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
7
<PAGE>
EV Marathon Greater India Fund as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
the value of Fund shares sold by such persons and remaining outstanding for at
least one year. Service fee payments will be made for personal services and/or
the maintenance of shareholder accounts. Service fees are separate and
distinct from the sales commissions and distribution fees payable by the Fund
to EVD, and, as such are not subject to automatic discontinuance where there
are no outstanding Uncovered Distribution Charges of EVD. Service fee payments
for the six month period ended June 30, 1997 amounted to $15,105.
Certain officers and Trustees of the Fund are officers or directors of EVD.
7 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
gains 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,
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. For the six month period ended June 30, 1997, EVD
received approximately $241,000 of CDSC paid by shareholders.
8
<PAGE>
South Asia Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited)
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Common Stocks -- 95.9%
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Bangladesh -- 0.8%
Housing -- 0.1%
- --------------------------------------------------------------------------------
Eastern Housing Ltd. 50,180 $ 177,809
Housing/construction company in
Bangladesh.
- --------------------------------------------------------------------------------
$ 177,809
- --------------------------------------------------------------------------------
Textiles -- 0.7%
- --------------------------------------------------------------------------------
Apex Spinning & Knitting 48,000 $ 199,038
Cotton spinning mill.
Apex Tannery Ltd. 23,000 347,434
Leather tanning and processing.
Monno Fabrics 95,000 279,145
Integrated textile mill.
- --------------------------------------------------------------------------------
$ 825,617
- --------------------------------------------------------------------------------
Total Bangladesh
(identified cost $1,172,048) $ 1,003,426
- --------------------------------------------------------------------------------
India -- 81.7%
Auto and Parts -- 10.5%
- --------------------------------------------------------------------------------
Bajaj Auto Ltd./(1)/ 112,400 $ 2,891,631
World's second largest
motorcycle, moped & scooter
manufacturer.
IFB Industries Ltd./(1)/ 50 31
Automotive components and
consumer durables.
Mahindra & Mahindra 140,666 1,701,351
Mahindra & Mahindra GDR 131,668 1,942,103
Major manufacturer of utility
vehicles & tractors.
Motor Industries 6,150 1,205,177
Subsidiary of Robert Bosch
(Germany). Major manufacturer
of auto components.
T.V.S. Suzuki/(1)/ 141,750 1,841,166
India's second largest
motorcycle, moped & scooter
manufacturer.
Tata Engineering & Locomotion GDR 95,862 1,471,482
Tata Engineering & Locomotive GDR 120,000 1,842,000
India's largest auto producer
and distributor
- --------------------------------------------------------------------------------
$ 12,894,941
- --------------------------------------------------------------------------------
Banks and Money Services -- 8.8%
- --------------------------------------------------------------------------------
Industrial Credit and Investment 2,250 $ 4,918
Corp.
India's major development financial
institution.
Karur Vysya Bank/(1)/ 189,500 950,147
Private sector retail bank.
Kotak Mahindra Finance Ltd/(1)/ 403,600 462,223
Leading non-bank financial
institution for corporate and
consumer markets.
Oriental Bank of Commerce/(1)/ 1,201,200 2,373,880
Public sector retail bank.
State Bank of India/(1)/ 602,800 5,729,126
State Bank of India GDR 50,000 1,325,000
Largest commercial bank in
India with over 8,000 branches.
- --------------------------------------------------------------------------------
$ 10,845,294
- --------------------------------------------------------------------------------
Beverages -- 0.3%
- --------------------------------------------------------------------------------
Tata Tea Ltd. 30,200 $ 327,307
Integrated tea producer.
- --------------------------------------------------------------------------------
$ 327,307
- --------------------------------------------------------------------------------
Building Materials -- 0.3%
- --------------------------------------------------------------------------------
Asian Paints (India) Ltd./(1)/ 6,650 $ 68,358
Leading producer of decorative paints.
Associated Cement Cos. Ltd./(1)/ 1,086 44,062
Manufacturer of cement.
Murudeshwar Ceramics Ltd./(1)/ 298,240 249,922
Manufacturer of glazed ceramic
wall and floor tiles.
- --------------------------------------------------------------------------------
$ 362,342
- --------------------------------------------------------------------------------
Chemicals -- 1.4%
- --------------------------------------------------------------------------------
Hoechst Schering Agrevo Ltd. 85,700 $ 1,615,852
Agrochemical & pesticide
manufacturer.
Indian Petrochemicals Corp./(1)/ 9,780 39,612
Major producer of polymers &
chemical intermediates.
Tata Chemicals 1,449 7,336
Diversified company
manufacturing soda ash, caustic
soda & fertilizers.
Zuari Agrochemicals/(1)/ 2,500 9,637
Zuari Agrochemicals (rts) 2,500 8,939
Producer of fertilizers & cement
- --------------------------------------------------------------------------------
$ 1,681,376
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
9
<PAGE>
South Asia Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Shares Value
- ---------------------------------------------------------------------------
<S> <C> <C>
Computer Software -- 4.3%
- ---------------------------------------------------------------------------
Infosys Technologies Ltd. 103,100 $ 5,356,592
Producer of specialized software for
banking and retail sectors.
- ---------------------------------------------------------------------------
$ 5,356,592
- ---------------------------------------------------------------------------
Conglomerates -- 9.2%
- ---------------------------------------------------------------------------
Indian Rayon & Industries Ltd./(1)/ 5,900 $ 60,936
Diversified company with interests
in cement, textiles, rayon and
carbon black.
Larsen & Toubro Ltd./(1) 239,650 1,633,369
Larsen & Toubro Ltd. GDR 133,700 2,306,325
Diversified company with
interests in engineering,
construction, cement, and
switchgears.
Ramco Industries Ltd./(1)/ 69,050 2,488,116
Diversified company with
interests in building
materials, textiles and
computer software.
S & S Industries & Enterprise/(1)/ 4,260 773
Diversified company with
interests in environmental
engineering, edible oils
and aquaculture.
Thermax Ltd./(1)/ 497,200 4,860,894
Conglomerate with interests in
energy, environment &
chemicals, manufacturing
of industrial boilers, heat and
pollution control equipment.
Triveni Engineering/(1)/ 1,633 2,144
Manufacturer of sugar, sugar
machinery and turbines.
- ---------------------------------------------------------------------------
$ 11,352,557
- ---------------------------------------------------------------------------
Construction -- 0.1%
- ---------------------------------------------------------------------------
Nagarjuna Construction 112,500 $ 103,701
Construction activities in the
infrastructure and housing sectors.
- ---------------------------------------------------------------------------
$ 103,701
- ---------------------------------------------------------------------------
Consumer Products -- 3.0%
- ---------------------------------------------------------------------------
ITC Ltd. 129,000 $ 2,027,786
Tobacco/consumer products
manufacturer in India
Marico Industries Ltd. 190,000 1,730,168
Personal care/consumer products
manufacturer in India
- ---------------------------------------------------------------------------
$ 3,757,954
- ---------------------------------------------------------------------------
Electric-Utilities -- 1.9%
- ---------------------------------------------------------------------------
BSES Ltd. 351,600 $ 2,339,908
Electricity generator,
transmitter and distributor to
suburban Bombay.
- ---------------------------------------------------------------------------
$ 2,339,908
- ---------------------------------------------------------------------------
Electrical Equipment -- 1.4%
- ---------------------------------------------------------------------------
Asea Brown Boveri (India) Ltd./(1)/ 90,000 $ 1,688,757
Indian subsidiary of Swedish-Swiss
electrical power equipment
manufacturer.
- ---------------------------------------------------------------------------
$ 1,688,757
- ---------------------------------------------------------------------------
Household Products -- 9.2%
- ---------------------------------------------------------------------------
Enkay Texofood Industries Ltd./(1)/ 786 $ 329
Manufacturer of synthetic yarn
and processed foods.
Hindustan Lever Ltd./(1)/ 280,350 11,272,733
Subsidiary of Unilever,
manufacturer of soap,
detergents, personal care
products and processed foods.
- ---------------------------------------------------------------------------
$ 11,273,062
- ---------------------------------------------------------------------------
Industrial Equipment -- 1.5%
- ---------------------------------------------------------------------------
Punjab Tractors 91,400 $ 1,716,941
Dominant supplier of tractors in India.
VST Tillers/(1)/ 94,200 81,570
Manufacturer of power tillers,
harvesters and small tractors.
- ---------------------------------------------------------------------------
$ 1,798,511
- ---------------------------------------------------------------------------
Lodging and Gaming -- 1.9%
- ---------------------------------------------------------------------------
Hotel Leela Venture (wts)*/(2)/ 154 $ 172
Hotel Leela Venture Ltd./(1)/ 750 1,582
Operates hotels & beach resort
in Bombay & Goa.
Indian Hotels Co. Ltd./(1)/ 82,400 1,500,693
Indian Hotels Co. Ltd. GDR 35,850 851,438
India's largest hotel company.
- ---------------------------------------------------------------------------
$ 2,353,885
- ---------------------------------------------------------------------------
Machinery -- 0.3%
- ---------------------------------------------------------------------------
Otis Elevator (India) Ltd. 41,100 $ 384,308
Manufactures, installs and
services various types of
elevators, escalators and
travolators.
</TABLE>
See notes to financial statements
10
<PAGE>
South Asia Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Machinery (continued)
- --------------------------------------------------------------------------------
TTG Industries Ltd. 37,600 $ 16,804
Engineers pollution control and
wind energy equipment.
- --------------------------------------------------------------------------------
$ 401,112
- --------------------------------------------------------------------------------
Medical Products -- 9.0%
- --------------------------------------------------------------------------------
Cipla Ltd. 72,500 $ 1,504,172
Second largest pharmaceutical
company in India.
Crosland Research Laboratory 251,000 1,682,682
Pharmaceutical company
specializing in dermatology.
Glaxo (India) Ltd./(1)/ 161,750 1,673,977
Largest pharmaceutical
manufacturer in India.
Hoechst Marion Roussel Ltd./(1)/ 542,050 5,761,174
Fourth largest pharmaceutical
manufacturer in India.
Orchid Chemicals & 169,600 506,905
Pharmaceuticals/(1)/
Manufacturer and exporter of
"cephalosporin" range of antibiotics.
- --------------------------------------------------------------------------------
$ 11,128,910
- --------------------------------------------------------------------------------
Metals - Industrial -- 5.1%
- --------------------------------------------------------------------------------
Bellary Steels & Alloys/(1)/ 310,000 $ 110,838
Integrated private sector steel
manufacturer.
Essar Steel Ltd./(1)/ 705 364
Manufacturer of sponge iron &
hot rolled coils.
Hindalco Industries Ltd. GDR 152,500 5,390,875
India's second largest
integrated aluminum producer.
Sterlite Industries (India)/(1)/ 107,800 807,747
India's only private sector
copper manufacturer.
Tata Iron & Steel/(1)/ 2,250 12,020
India's largest private sector
steel manufacturer.
- --------------------------------------------------------------------------------
$ 6,321,844
- --------------------------------------------------------------------------------
Oil and Gas -
Exploration and Production -- 3.3%
- --------------------------------------------------------------------------------
Hindustan Petroleum Corp./(1)/ 325,500 $ 4,127,849
India's second largest petroleum
refining company.
- --------------------------------------------------------------------------------
$ 4,127,849
- --------------------------------------------------------------------------------
Paper and Forest Products -- 0.5%
- --------------------------------------------------------------------------------
Tamil Nadu Newsprint and Paper/(1)/ 359,800 $ 603,017
Manufacturer of paper.
- --------------------------------------------------------------------------------
$ 603,017
- --------------------------------------------------------------------------------
Specialty Chemicals and Materials -- 0.3%
- --------------------------------------------------------------------------------
Flex Industries/(1)/ 400 $ 444
Flex Industries (wts) 4,274 3,552
Manufacturer of packaging
materials.
Paper Products Ltd. Primary 62,500 244,850
Manufacturer of sugar and
industrial alcohol.
Rubber Products/(1)/ 132,000 49,777
Manufacturer of various
industrial rubber goods.
Shaan Interwell (India) 112,700 18,888
Manufacturer of corrugated boxes.
Thiru Arooran Sugars/(1)/ 500 1,117
Manufacturer of sugar and
industrial alcohol.
- --------------------------------------------------------------------------------
$ 318,628
- --------------------------------------------------------------------------------
Telecommunications -- 5.8%
- --------------------------------------------------------------------------------
Himachal Futuristic
Communications/(1)/ 23,460 $ 11,894
Telecommunications equipment
producer.
Mahanger Telephone Nigam Ltd./(1)/ 833,100 7,068,551
Government owned monopoly,
provider of telephone services
to Bombay & Delhi.
Usha Beltron Ltd. GDR 290 290
Manufacturer of
telecommunications cable.
- --------------------------------------------------------------------------------
$ 7,080,735
- --------------------------------------------------------------------------------
Telephone Utilities -- 3.6%
- --------------------------------------------------------------------------------
Videsh Sanchar Nigam Ltd. 135,100 $ 4,377,542
India's monopoly international
telephone service provider.
- --------------------------------------------------------------------------------
$ 4,377,542
- --------------------------------------------------------------------------------
Transportation -- 0.0%
- --------------------------------------------------------------------------------
GE Shipping/(1)/ 700 $ 958
Diversified company with interests
in shipping and property development.
- --------------------------------------------------------------------------------
$ 958
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
11
<PAGE>
South Asia Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) Con't
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Total India
(identified cost $82,712,853) $100,496,782
- --------------------------------------------------------------------------------
Pakistan -- 9.0%
Chemicals -- 1.3%
- --------------------------------------------------------------------------------
Engro Chemical Pakistan Ltd./(1)/ 162,750 $ 575,793
Second largest fertilizer producer
in Pakistan
Fauji Fertilizer 500,000 $ 983,436
Largest fertilizer producer in Pakistan.
- --------------------------------------------------------------------------------
$ 1,559,229
- --------------------------------------------------------------------------------
Electric Utilities -- 1.0%
- --------------------------------------------------------------------------------
Hub Power Co., Ltd. GDR 34,000 $ 837,420
Provider of 10% of Pakistan's
electricity supply.
Karachi Electric Supply Co./(1)/ 1,225,040 363,698
Electric distributor for Karachi.
- --------------------------------------------------------------------------------
$ 1,201,118
- --------------------------------------------------------------------------------
Household Products -- 1.8%
- --------------------------------------------------------------------------------
Lever Brothers Pakistan Ltd. 110,000 $ 2,204,382
Soaps, detergents, ice cream and tea.
- --------------------------------------------------------------------------------
$ 2,204,382
- --------------------------------------------------------------------------------
Insurance -- 0.9%
- --------------------------------------------------------------------------------
Adamjee Insurance Co./(1)/ 490,938 $ 1,105,291
Leading supplier of general insurance
in Pakistan.
- --------------------------------------------------------------------------------
$ 1,105,291
- --------------------------------------------------------------------------------
Medical Products -- 0.1%
- --------------------------------------------------------------------------------
Searle Pakistan 158,077 $ 129,060
Pakistan unit of multinational
pharmaceutical company.
- --------------------------------------------------------------------------------
$ 129,060
- --------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 2.2%
- --------------------------------------------------------------------------------
Pakistan State Oil Co. Ltd./(1)/ 343,953 $ 2,774,121
National fuel oil and gasoline distributor.
- --------------------------------------------------------------------------------
$ 2,774,121
- --------------------------------------------------------------------------------
Telephone Utilities -- 1.6%
- --------------------------------------------------------------------------------
Pakistan Telecommunications GDR 25,750 $ 1,944,125
National domestic and long distance
telephone company.
- --------------------------------------------------------------------------------
$ 1,944,125
- --------------------------------------------------------------------------------
Textiles -- 0.1%
- --------------------------------------------------------------------------------
Nishat Chunian Ltd./(1)/ 305,840 $ 117,283
Textile spinning mill.
- --------------------------------------------------------------------------------
$ 117,283
- --------------------------------------------------------------------------------
Total Pakistan
(identified cost $12,347,390) $ 11,034,609
- --------------------------------------------------------------------------------
Sri Lanka -- 4.4%
Auto and Parts -- 0.0%
- --------------------------------------------------------------------------------
Kelani Tires 480 $ 53
Largest tire manufacturer in Sri Lanka.
- --------------------------------------------------------------------------------
$ 53
- --------------------------------------------------------------------------------
Banks and Money Services -- 1.1%
- --------------------------------------------------------------------------------
Development Finance Corp. 160,733 $ 783,192
Development finance corporation
responsible for long-term finance.
National Development Bank 78,900 350,727
Development finance corporation
responsible for long-term finance.
Sampath Bank 136,000 175,551
One of the four largest commercial
banks in Sri Lanka.
- --------------------------------------------------------------------------------
$ 1,309,470
- --------------------------------------------------------------------------------
Building Materials -- 0.1%
- --------------------------------------------------------------------------------
Royal Ceramic Lanka Ltd. 344,900 $ 182,799
Manufacturer of heavy duty ceramic
floor tile.
- --------------------------------------------------------------------------------
$ 182,799
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
12
<PAGE>
South Asia Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
Conglomerates -- 3.2%
- --------------------------------------------------------------------------------
<S> <C> <C>
Hayleys Ltd. 216,026 $ 941,813
Diversified group in transportation,
chemicals, agriculture and
electronics.
John Keells Holdings 328,408 1,715,313
John Keells Holdings GDR 135,830 1,256,425
Diversified group in hotels,
office equipment and general
trade.
- --------------------------------------------------------------------------------
$ 3,913,551
- --------------------------------------------------------------------------------
Total Sri Lanka
(identified cost $5,091,199) $ 5,405,873
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $101,323,490) $117,940,690
- --------------------------------------------------------------------------------
<CAPTION>
Bonds -- 0.0%
Principal
Amount
(000
omitted) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Flex Industries, 13.50%, $ 812 $ 22,680
12/31/99/(3)/
Hotel Leela Venture Ltd. NCD,
14.00%, 4/8/03/(3)/ 15 385
- --------------------------------------------------------------------------------
Total Bonds
(identified cost $26,599) $ 23,065
- --------------------------------------------------------------------------------
<CAPTION>
Convertible Bonds -- 0.4%
Principal
Amount
(000
omitted) Value
- --------------------------------------------------------------------------------
Republic of Pakistan, 6.00%, $ 500 $ 482,500
2/26/02
- --------------------------------------------------------------------------------
Total Convertible Bonds
(identified cost $500,000) $ 482,500
- --------------------------------------------------------------------------------
Total Investments -- 96.3%
(identified cost $101,850,089) $118,446,255
- --------------------------------------------------------------------------------
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 3.7% $ 4,566,538
- --------------------------------------------------------------------------------
Net Assets -- 100% $123,012,793
- --------------------------------------------------------------------------------
</TABLE>
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
* Non-income producing security.
/(1)/The above securities held by the Portfolio on June 30, 1997 are
unrestricted securities valued at market prices. Because of the length of
the registration process, the Portfolio would temporarily be unable to see
certain of these securities. At June 30, 1997, the aggregate value of these
securities amounted to $62,725,138 representing 50.9% of the Portfolio's
net assets (Note 5).
/(2)/Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
/(3)/Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
<PAGE>
South Asia Portfolio as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Top Ten Holdings
Percentage
Industry of Net
Company Sector Assets Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hindustan Lever Ltd. Household Products 9.2 % $11,272,733
Mahanger Telephone Nigam
Ltd. Telecommunications 5.7 7,068,551
State Bank of India
(Common & GDR) Banks and Money Services 5.7 7,054,126
Hoechst Marion Roussel Ltd. Medical Products 4.7 5,761,174
Hindalco Industries Ltd. GDR Metals - Industrial 4.4 5,390,875
Infosys Technologies Ltd. Computer Software 4.4 5,356,592
Thermax Ltd. Conglomerates 4.0 4,860,894
Videsh Sanchar Nigam Ltd. Telephone Utilities 3.6 4,377,542
Hindustan Petroleum Corp. Oil and Gas - Exploration
and Production 3.4 4,127,849
Bajaj Auto Ltd. Auto and Parts 2.4 2,891,631
</TABLE>
<TABLE>
<CAPTION>
Top Ten Industry Sectors
Percentage
of Net
Industry Sector Assets Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
Conglomerates 12.4 % $15,266,108
Household Products 11.0 13,477,444
Auto and Parts 10.5 12,894,994
Banks and Money Services 9.9 12,154,764
Medical Products 9.2 11,257,970
Telecommunications 5.8 7,080,735
Metals - Industrial 5.1 6,321,844
Telephone Utilities 5.1 6,321,667
Computer Software 4.4 5,356,592
Oil and Gas - Exploration and Production 3.4 4,127,849
</TABLE>
See notes to financial statements
14
<PAGE>
South Asia Portfolio as of June 30, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of June 30, 1997
(Expressed in United States Dollars)
Assets
- ---------------------------------------------------------------------------
<S> <C>
Investments, at value (Note 1A)
(identified cost, $101,850,089) $118,446,255
Cash 4,057,505
Foreign currency, at value
(identified cost, $3,363,257) 3,362,890
Receivable for investments sold 1,715,362
Dividends and interest receivable 313,345
Miscellaneous receivable 5,837
Tax reclaim receivable 2,593
Deferred organization expenses (Note 1C) 31,621
- ---------------------------------------------------------------------------
Total assets $127,935,408
- ---------------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------------
Payable for investments purchased $ 4,751,346
Payable to affiliate for Trustees' fees (Note 2) 1,841
Accrued expenses and other liabilities 169,428
- ---------------------------------------------------------------------------
Total liabilities $ 4,922,615
- ---------------------------------------------------------------------------
Net Assets applicable to investors' interest
in Portfolio $123,012,793
- ---------------------------------------------------------------------------
Sources of Net Assets
- ---------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $106,417,694
Net unrealized appreciation of investments (computed
on the basis of identified cost) 16,595,099
- ---------------------------------------------------------------------------
Total $123,012,793
- ---------------------------------------------------------------------------
<CAPTION>
Statement of Operations
For the Six Months Ended
June 30, 1997
(Expressed in United States Dollars)
Investment Income
- ---------------------------------------------------------------------------
Dividends (net of foreign taxes, $101,168) $ 467,813
Interest income 12,196
- ---------------------------------------------------------------------------
Total income $ 480,009
- ---------------------------------------------------------------------------
Expenses
- ---------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 408,819
Administration fee (Note 2) 136,242
Compensation of Trustees not members of the
Investment Adviser's or Administrator's
organization (Note 2) 5,750
Custodian fee (Note 1G) 253,955
Legal and accounting services 45,928
Amortization of organization expenses (Note 1C) 8,630
Miscellaneous 49,468
- ---------------------------------------------------------------------------
Total expenses $ 908,792
- ---------------------------------------------------------------------------
Deduct --
Reduction of custodian fee (Note 1G) $ 22,006
- ---------------------------------------------------------------------------
Total expense reductions $ 22,006
- ---------------------------------------------------------------------------
Net expenses $ 886,786
- ---------------------------------------------------------------------------
Net investment loss $ (406,777)
- ---------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- ---------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (5,910,590)
Foreign currency transactions (34,305)
- ---------------------------------------------------------------------------
Net realized loss on investments $ (5,944,895)
- ---------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 30,554,826
Foreign currency 8,654
- ---------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ 30,563,480
- ---------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 24,618,585
- ---------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 24,211,808
- ---------------------------------------------------------------------------
</TABLE>
See notes to financial statements
15
<PAGE>
South Asia Portfolio as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) June 30, 1997 Year Ended
in Net Assets (Unaudited) December 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment loss $ (406,777) $ (118,410)
Net realized loss on investments (5,944,895) (7,682,907)
Net change in unrealized
appreciation (depreciation) 30,563,480 (345,229)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $ 24,211,808 $ (8,146,546)
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 27,718,825 $ 130,235,008
Withdrawals (32,841,233) (55,600,406)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital transactions $ (5,122,408) $ 74,634,602
- --------------------------------------------------------------------------------
Net increase in net assets $ 19,089,400 $ 66,488,056
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $103,923,393 $ 37,435,337
- --------------------------------------------------------------------------------
At end of period $123,012,793 $ 103,923,393
- --------------------------------------------------------------------------------
</TABLE>
Statement of Cash Flows
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1997
Increase (Decrease) in Cash (Unaudited)
- --------------------------------------------------------------------------------
<S> <C>
Cash Flows From (For) Operating Activities --
Purchase of investments $ (17,563,533)
Proceeds from sale of investments 28,449,165
Dividends, interest and tax reclaims received 479,846
Operating expenses paid (787,420)
Foreign currency transactions (1,290,297)
- --------------------------------------------------------------------------------
Net cash from operating activities $ 9,287,761
- --------------------------------------------------------------------------------
Cash Flows From (For) Financing Activities --
Proceeds from capital contributions $ 27,718,825
Payments for capital withdrawals (32,841,233)
Demand notes payable (108,000)
- --------------------------------------------------------------------------------
Net cash used for financing activities $ (5,230,408)
- --------------------------------------------------------------------------------
Net increase in cash $ 4,057,353
- --------------------------------------------------------------------------------
Cash at Beginning of Period $ 152
- --------------------------------------------------------------------------------
Cash at End of Period $ 4,057,505
- --------------------------------------------------------------------------------
Reconciliation of Net Increase in Net Assets From
Operations to Net Cash From
Operating Activities
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 24,211,808
Increase in receivable for investments sold (192,221)
Increase in foreign currency (1,264,646)
Increase in dividends and interest receivable (164)
Decrease in deferred organizational expense 8,630
Increase in payable for investments purchased 3,305,298
Increase in payable to affiliate 659
Increase in accrued expenses and other liabilities 90,079
Net increase in investments (16,871,682)
- --------------------------------------------------------------------------------
Net cash from operating activities $ 9,287,761
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
16
<PAGE>
South Asia Portfolio as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data (Expressed in United States Dollars)
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1997 ------------------------------------------------------
(Unaudited) 1996 1995 1994 *
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratios to average daily net assets
- ---------------------------------------------------------------------------------------------------------------------------
Expenses/(1)/ 1.67%+ 1.51% 1.76% 1.16%+
Expenses after custodian fee reduction/(1)/ 1.63%+ 1.28% 1.35% --
Net investment income (loss) (0.75)%+ (0.11)% (0.18)% 0.01%+
Portfolio Turnover 20% 46% 38% 1%
- ---------------------------------------------------------------------------------------------------------------------------
Average commission rate/(2)/ $ 0.0747 $0.0496 $ -- $ --
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, May 2, 1994, to December 31,
1994.
/(1)/ The expense ratios for the six month period ended June 30, 1997 and the
years ended December 31, 1996 and 1995 have been adjusted to reflect a
change in reporting requirements. The new reporting guidelines require the
Fund to increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for the period
ended December 31, 1994 have not been adjusted to reflect this change.
/(2)/ Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the period by the total number of shares
purchased and sold during the period for which commissions were charged.
For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for security
trades on which commissions were charged.
See notes to financial statements
17
<PAGE>
South Asia Portfolio as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Expressed in United States Dollars)
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
cash or securities in 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.
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 purpose 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. 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.
18
<PAGE>
South Asia Portfolio as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
G Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT
receives a fee reduced by credits which are determined based on the average
daily cash balances the Portfolio maintains with IBT. All significant credit
balances used to reduce the Portfolio's custodian fees are reported as a
reduction of expenses in the statement of operations.
H Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
I 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.
J Interim Financial Information -- The interim financial statements relating
to June 30, 1997 and the six month period then ended have not been audited
by independent certified public accountants, but in the opinion of the
Fund's management reflect all adjustments, consisting 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, 1997, the annualized adviser fee was 0.75% of average net
assets and amounted to $408,819. In addition, an administration 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 June
30, 1997, the administration fee was 0.25% (annualized) of average net
assets and amounted to $136,242. Except as to Trustees of the Portfolio who
are not members of the Adviser or EVM's organization, officers and Trustees
receive remuneration for their services to the Portfolio out of such
investment adviser and administrative fees. Certain of the officers and
Trustees of the Portfolio are officers or trustees of the above
organizations.
3 Investment Transactions
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For the six months ended June 30, 1997, purchases and sales of investments,
other than short-term obligations, aggregated $20,868,831 and $28,641,386
respectively.
4 Federal Income Tax Basis of Investments
------------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at June 30, 1997, as computed on a federal income tax
basis, are as follows:
<TABLE>
<S> <C>
Aggregate cost $ 101,850,089
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Gross unrealized appreciation $ 25,886,136
Gross unrealized depreciation (9,289,971)
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Net unrealized depreciation $(16,596,165)
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</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.
19
<PAGE>
South Asia Portfolio as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
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 committed $120 million unsecured line of credit
agreement with a group of banks. The Portfolio may temporarily borrow from
the line of credit to satisfy redemption requests or settle investment
transactions. Interest is charged to each portfolio or fund based on its
borrowings at an amount above the banks' adjusted certificate of deposit
rate, eurodollar rate or federal funds rate. In addition, a fee computed at
an annual rate of 0.15% on the daily unused portion of the line of credit is
allocated among the participating portfolios and funds at the end of each
quarter. The Portfolio did not have any significant borrowings or allocated
fees during the six months ended June 30, 1997.
20
<PAGE>
EV Marathon Greater India Fund as of June 30, 1997
INVESTMENT MANAGEMENT
EV Marathon Greater India Fund
Officers Trustees
James B. Hawkes M. Dozier Gardner
President and Trustee Vice Chairman, Eaton Vance Management
Edward E. Smiley, Jr. Donald R. Dwight
Vice President President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
James L. O'Connor
Treasurer Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Alan R. Dynner Banking, Harvard University Graduate School
Secretary of Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Former Director, Fiduciary Company
Incorporated
Jack L. Treynor
Investment Adviser and Consultant
South Asia Portfolio
Officers Trustees
Hon. Robert Lloyd George Hon. Edward K.Y. Chen
President and Trustee Professor and Director, Center for Asian
Studies, University of Hong Kong
James B. Hawkes
Vice President and Donald R. Dwight
Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
Scobie Dickinson Ward
Vice President, Assistant Samuel L. Hayes, III
Secretary and Jacob H. Schiff Professor of Investment
Assistant Treasurer Banking, Harvard University Graduate
School of Business Administration
William Walter Raleigh Kerr
Vice President and Norton H. Reamer
Assistant Treasurer President and Director, United Asset
James L. O'Connor
Vice President and
Treasurer
Alan R. Dynner
Vice President and
Secretary
21
<PAGE>
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<PAGE>
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<PAGE>
Sponsor and Manager of
EV Marathon Greater India Fund
Administrator of South Asia Portfolio
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Advisor 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
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
EV Marathon Greater India Fund
24 Federal Street
Boston, MA 02110
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This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
- --------------------------------------------------------------------------------
M-GISRC- 8/97
