<PAGE>
[LOGO]
[GRAPHIC]
ANNUAL REPORT DECEMBER 31, 1999
EATON VANCE
EMERGING MARKETS
FUND
GLOBAL MANAGEMENT-GLOBAL DISTRIBUTION
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
- -------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
[PHOTO]
JAMES B. HAWKES
PRESIDENT
Eaton Vance Emerging Markets Fund, Class A shares, had a total return of 82.13%
for the year ended December 31, 1999. That return was the result of an increase
in net asset value per share (NAV) from $8.06 on December 31, 1998 to $14.68 on
December 31, 1999.(1)
The Fund's Class B shares had a total return of 81.60% during the year ended
December 31, 1999. This return resulted from an increase in NAV from $7.99 on
December 31, 1998 to $14.51 on December 31, 1999. (1)
By comparison, the Morgan Stanley Capital International Emerging Markets Index -
an unmanaged index of common stocks traded in the emerging markets - had a total
return of 68.82% during the same period.(2)
The emerging markets generated a remarkable recovery in 1999...
The emerging markets came roaring back to life in 1999. Asian markets have been
boosted primarily by financial reforms and a new determination to avoid the
crippling current account deficits of recent memory. In this improved climate,
the stock markets responded enthusiastically. South Korea surged 82.8%; Hong
Kong was up 68.8%; and Taiwan was up 31.6%. The same was true of Latin America,
where Brazil's Bovespa Index rose 152% and Mexico's IPC Index rose 80.1%. But
even more encouraging was the fact that these robust returns were precipitated
by economic reform initiatives. Increasingly, governments in emerging economies
are working to reduce current account deficits, reduce inflation and maintain
stable currencies. That suggests that the future of these markets should remain
bright.
The 1998 market pullback presented a major buying opportunity in the emerging
markets...
The 1998 market pullback proved to be a remarkable buying opportunity in the
emerging markets, and the Fund was able to find excellent values in fast-growth
companies in Asia, Latin America and Eastern Europe. While these countries tend
to move in different cycles and respond to different stimuli, there is no
shortage of opportunities. The emerging markets are likely to remain volatile,
but we believe they warrant the attention of growth-minded long-term investors.
In the pages that follow, portfolio manager Kiersten Christensen reviews the
year just ended, and looks ahead to 2000.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
February 9, 2000
FUND INFORMATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
PERFORMANCE(3) Class A Class B
- -------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- -------------------------------------------------------------------------------
<S> <C> <C>
One Year 82.13% 81.60%
Five Years 9.44 8.78
Life of Fund+ 9.20 8.54
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- -------------------------------------------------------------------------------
<S> <C> <C>
One Year 71.70% 76.60%
Five Years 8.15 8.50
Life of Fund+ 7.93 8.39
+Inception dates: Class A: 12/8/94; Class B: 11/30/94
<CAPTION>
TEN LARGEST HOLDINGS(4)
- -------------------------------------------------------------------------------
<S> <C>
Korea Mobile Telecom Corp. 5.2%
Korea Telecom Corp. ADR 4.7
Dauo Technology, Inc. 4.5
Compania Brasiliera de Distribuicao 4.1
Li & Fund Ltd. 4.1
Videsh Sanchar Nigam Ltd. GDR 3.7
Taiwan Semiconductor Manufacturing Co. 3.6
Surgutneftegaz ADR 3.5
Tecnomatix Technologies Ltd. 3.4
Cia Cervejaria Brahma sp ADR 3.3
</TABLE>
(1) These returns do not include the 5.75% maximum sales charge for the Fund's
Class A shares or the applicable contingent deferred sales charges (CDSC)
for Class B shares. (2) It is not possible to invest directly in an
Index. (3) Returns are historical and are calculated by determining the
percentage change in net asset value with all distributions reinvested.
SEC returns for Class A reflect the maximum 5.75% sales charge. SEC
returns for Class B reflect applicable CDSC based on the following
schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th
year; 1% - 6th year. Effective 2/1/00, Class A shares redeemed within 3
months of purchase, including exchanges, will be subject to a 1% early
redemption fee. (4) Ten largest holdings account for 40.1% of the
Portfolio's net assets, determined by dividing the total market value of
the holdings by the total net assets of the Portfolio. Holdings are
subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
2
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
[PHOTO]
KIERSTEN CHRISTENSEN
PORTFOLIO MANAGER
AN INTERVIEW WITH
KIERSTEN CHRISTENSEN,
LLOYD GEORGE MANAGEMENT,
PORTFOLIO MANAGER OF
EMERGING MARKETS PORTFOLIO.
Q: Kiersten, 1999 brought a strong rebound in the emerging markets. What
drove the recovery?
A: Several developments prompted the markets to rally in 1999. Many emerging
countries addressed the economic problems that have plagued them in recent
years. In Asia, widespread corporate restructuring and deleveraging has
dramatically improved the economic outlook. Meanwhile, the recession in
Latin America was less severe than expected, with a continued decline in
inflation and relatively stable currencies. Finally, the Eastern European
markets were buoyed by a surge in oil prices. While the trends in these
emerging markets were positive, a continuing strong U.S. economy and a
promising recovery in Japan provided a favorable backdrop for the overall
global economy.
Q: What contributed to the Fund's strong outperformance in 1999?
A: The Portfolio's large exposure to East Asia, the China region, was the
primary driver of performance. The area constituted 41.4% of the Portfolio
at December 31. Corporate profits showed significant improvement on the
strength of solid GDP growth and strong exports. The region also benefited
from its leadership role in technology and from growing enthusiasm over
China's imminent entry into the World Trade Organization.
Latin America, 29.2% of the Portfolio at December 31, was another success
story, especially in the fourth quarter. Brazil, in particular, made
excellent progress in containing inflation, abandoning its fixed currency
rate in January 1999. Inflation fell to 8% in 1999 and is expected to
improve further this year. Mexico exhibited strong economic growth
throughout the year, with its economy closely tied to that of the U.S.
Eastern Europe and the Mediterranean constituted 16.2% of the Portfolio at
December 31. Turkey was the leading market in the region, rising 244% in
1999. In an effort to qualify for membership in the European Union, the
Turkish government furthered its efforts to privatize industry, slow
inflation and implement modest political reforms.
Q: Let's turn first to East Asia. What did you find attractive in that region?
A: Because Japan is a large consumer of goods as well as a major provider of
capital, the revival of the Japanese economy gave a boost to most Asian
economies. Also, the strong Japanese
- -------------------------------------------------------------------------------
Five Largest Industry Weightings(1)
- -------------------------------------------------------------------------------
By total net assets
[GRAPH]
<TABLE>
<S> <C>
Telephone Utilities 14.1%
Telecommunications Services 8.6%
Banks & Money Services 8.4%
Computer Services 8.4%
Foods 7.9%
</TABLE>
Regional Distributions(1)
- -------------------------------------------------------------------------------
By total investments
[CHART]
<TABLE>
<S> <C>
East Asia 41.4%
Latin America 29.2%
Eastern Europe/Mediterranean 16.2%
South Asia 9.1%
Africa 4.1%
</TABLE>
(1)Because the Portfolio is actively managed, Industry Weightings and Regional
Distributions presented at 12/31/99 are subject to change.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
3
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION CONT'D
yen provided a competitive edge to Korean and Taiwanese technology
companies, which witnessed robust export growth. Emerging from a recession,
South Korea has been among Asia's strongest economies, benefiting from a
sharp decline in interest rates. Many of Korea's companies have improved
productivity through restructurings, leading to faster earnings growth.
Korea Telecom Corp. was a large Korean investment for the Portfolio. As a
monopoly provider of telecom service in Korea, the company announced in June
an agreement with software giant Microsoft to build an Internet
infrastructure for Korea. As part of a productivity drive, KT dramatically
cut costs, cut its workforce by 15,000 and sharply reduced its debt.
In Taiwan, economic growth resumed toward year-end following a devastating
earthquake in September. GDP rose around 5.4% for the year, up from 4.6% in
1998. Taiwan Semicon-ductor Manufacturing Co. (TSMC), a leader in the
manufacture and testing of semiconductors, expanded its capacity in 1999
with the purchase of competitor Acer's business. The company has also
benefited from outsourcing by U.S. manufacturers. Motorola announced that it
was closing some unproductive U.S. plants in favor of an outsourcing
agreement with TSMC.
In Hong Kong, strong exports helped the economic recovery. Li & Fung Ltd.
was a large Hong Kong-based holding. The company provides a full range of
trading services for manufacturers in Asia, including the sourcing of raw
materials and the monitoring of production. Li & Fung's customers have
included U.S. household names such as the shoe manufacturer Reebok, the
clothing chain The Limited, and cosmetics manufacturer Avon.
Q: What companies have you favored in Latin America?
A: The climate in Latin America took a turn for the better in late 1999.
Brazil accompanied the bold move to float its currency with strong
leadership and further economic reforms. The result was a vast improvement
in confidence for consumers and investors alike. The Portfolio's core
Brazilian holdings fared very well. Tele Norte Leste is one of Brazil's
three regional, fixed-line phone carriers. Not only has the company
benefited from strong demand for fixed-line service - only 11% of
Brazilians currently have a fixed-line connection - but also from explosive
growth in Internet traffic.
Compania Brasiliera de Distribuicao was another Brazilian holding. As the
country's largest grocery chain, CBD generated impressive revenue growth and
devised an Internet strategy in an improving economy. The stock nearly
tripled in price in 1999.
In Mexico, the Portfolio maintained a position in Telefonos de Mexico
(Telmex). While the company has long been the monopoly supplier of
fixed-line telephone service in Mexico, recent growth has been fueled by the
Internet explosion in Latin America. The company's Internet accounts reached
390,000 in 1999 while its cellular customer base neared 5 million. In
addition to its core business in Mexico, Telmex is seeking to expand beyond
Latin America through strategic alliances, including a recent business
partnership with Microsoft.
Q: Can we discuss briefly some investments in Europe and the Mediterranean?
A: Yes. In the Mediterranean, Israel is rapidly becoming a major force in
technology, with a wealth of software and programming talent. Tecnomatix
Technologies Ltd. develops software that integrates manufacturing plants,
linking all phases from supplies through assembly. With the help of key
acquisitions, the company has achieved fast growth, with revenues
4
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
- -------------------------------------------------------------------------------
MANAGEMENT DISCUSSION CONT'D
rising 34% in the first half of 1999. Tecnomatix includes Canon, Philips
Electronics, Volks-wagen and Mazda among its customers.
In Eastern Europe, the Portfolio established a position in Haci Omer Sabanci
Holding, a Turkish conglomerate with business interests in retailing, food
packaging, textiles and banking. The company's broad reach across Turkey's
economy has made it a major beneficiary of the country's economic revival.
Sabanci is likely to expand further in Eastern Europe and recently signed a
textile manufacturing agreement with the U.S. chemical giant DuPont.
Q: Kiersten, what is your outlook for the emerging markets in the coming year?
A: Following 1998's declines, investors were understandably nervous about the
emerging markets. In the wake of that volatility, many governments renewed
their commitment to economic reform. More important, many companies have
taken steps to restructure their operations. Those are fundamental steps
that helped restore the confidence of investors.
As we have said in past reports, there is enormous growth potential in the
emerging markets. As these economies recover from last year's crisis, the
stage is being set for a powerful economic future and the markets should
reflect that progress. The Fund will look increasingly to areas such as
Brazil, where growth is still in its early stages, and in industries such as
telecommunications and Internet-related sectors, which anticipate remarkable
growth in coming years. Investors were rewarded for their patience and
long-term outlook in 1999. I'm confident that more opportunities lie ahead
in 2000.
[GRAPH]
<TABLE>
<CAPTION>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE EMERGING
MARKETS FUND CLASS B VS. THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING
MARKETS INDEX*
November 30, 1994 - December 30, 1999
Date Fund MSCIEMI
<S> <C> <C>
11/30/1994 $10,000 $10,000
12/31/1994 $9,960 $9,474
1/31/1995 $9,590 $8,431
2/28/1995 $9,660 $8,275
3/31/1995 $9,640 $8,368
4/30/1995 $9,820 $8,528
5/31/1995 $10,440 $8,802
6/30/1995 $10,450 $8,763
7/31/1995 $10,610 $8,886
8/31/1995 $10,480 $8,582
9/30/1995 $10,410 $8,667
10/31/1995 $10,100 $8,373
11/30/1995 $9,710 $8,152
12/31/1995 $10,050 $8,455
1/31/1996 $11,020 $8,833
2/29/1996 $11,420 $8,705
3/31/1996 $11,130 $8,816
4/30/1996 $11,890 $9,423
5/31/1996 $12,550 $9,220
6/30/1996 $12,580 $9,321
7/31/1996 $11,740 $8,674
8/31/1996 $12,110 $8,856
9/30/1996 $12,360 $8,922
10/31/1996 $12,270 $8,664
11/30/1996 $12,660 $8,809
12/31/1996 $12,903 $8,805
1/31/1997 $14,029 $9,372
2/28/1997 $14,699 $9,745
3/31/1997 $14,324 $9,479
4/30/1997 $14,405 $9,517
5/31/1997 $14,912 $9,728
6/30/1997 $15,794 $10,271
7/31/1997 $16,007 $10,439
8/31/1997 $14,253 $9,223
9/30/1997 $14,790 $9,281
10/31/1997 $12,822 $7,672
11/30/1997 $12,406 $7,372
12/31/1997 $12,454 $7,474
1/31/1998 $11,576 $6,963
2/28/1998 $13,029 $7,729
3/31/1998 $13,332 $7,979
4/30/1998 $13,416 $7,823
5/31/1998 $11,304 $6,739
6/30/1998 $10,059 $6,044
7/31/1998 $10,373 $6,218
8/31/1998 $7,414 $4,475
9/30/1998 $7,445 $4,754
10/31/1998 $7,592 $5,262
11/30/1998 $8,355 $5,681
12/31/1998 $8,355 $5,583
1/31/1999 $8,125 $5,488
2/28/1999 $8,083 $5,588
3/31/1999 $8,690 $6,275
4/30/1999 $10,007 $7,069
5/31/1999 $9,840 $7,004
6/30/1999 $11,021 $7,868
7/31/1999 $10,394 $7,564
8/31/1999 $10,540 $7,765
9/30/1999 $10,070 $7,442
10/31/1999 $10,760 $7,649
11/30/1999 $12,558 $8,234
12/31/1999 $15,173 $9,278
$15,073(with CDSC)
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE+ Class A Class B
- -------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- -------------------------------------------------------------------------------
<S> <C> <C>
One Year 82.13% 81.60%
Five Years 9.44 8.78
Life of Fund++ 9.20 8.54
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- -------------------------------------------------------------------------------
<S> <C> <C>
One Year 71.70% 76.60%
Five Years 8.15 8.50
Life of Fund++ 7.93 8.39
++Inception dates: Class A: 12/8/94; Class B: 11/30/94
</TABLE>
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced
11/30/94.
The chart compares the Fund's total return with that of the Morgan Stanley
Capital International Emerging Markets Index, a broad-based, unmanaged market
index of common stocks traded in the world's emerging markets. Returns are
calculated by determining the percentage change in net asset value (NAV) with
all distributions reinvested. The lines on the chart represent the total
returns of $10,000 hypothetical investments in the Fund and the Index. An
investment in the Fund's Class A shares on 12/8/94 at net asset value would
have been worth $15,624 on December 31, 1999; $14,726 including the 5.75%
sales charge. The Index's total return does not reflect commissions or
expenses that would have been incurred if an investor individually purchased
or sold the securities represented in the Index. It is not possible to invest
directly in an Index.
+ Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 5.75% sales charge. SEC returns for Class B
reflect applicable CDSC based on the following schedule: 5% - 1st and 2nd
years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. Effective
2/1/00, Class A shares redeemed within 3 months of purchase, including
exchanges, will be subject to a 1% early redemption fee.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
5
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
<S> <C>
Assets
- -----------------------------------------------------
Investment in Emerging Markets
Portfolio, at value
(identified cost, $7,189,145) $11,279,730
Receivable for Fund shares sold 50,339
Receivable from the Investment Adviser 21,490
Receivable from the Manager 14,327
- -----------------------------------------------------
TOTAL ASSETS $11,365,886
- -----------------------------------------------------
Liabilities
- -----------------------------------------------------
Accrued expenses $ 18,526
- -----------------------------------------------------
TOTAL LIABILITIES $ 18,526
- -----------------------------------------------------
NET ASSETS $11,347,360
- -----------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------
Paid-in capital $ 9,861,996
Accumulated net realized loss from
Portfolio (computed on the basis of
identified cost) (2,602,466)
Accumulated net investment loss (2,755)
Net unrealized appreciation from
Portfolio (computed on the basis of
identified cost) 4,090,585
- -----------------------------------------------------
TOTAL $11,347,360
- -----------------------------------------------------
Class A Shares
- -----------------------------------------------------
NET ASSETS $ 4,481,775
SHARES OUTSTANDING 305,359
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(Net assets DIVIDED BY shares of
beneficial interest outstanding) $ 14.68
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $14.68) $ 15.58
- -----------------------------------------------------
Class B Shares
- -----------------------------------------------------
NET ASSETS $ 6,865,585
SHARES OUTSTANDING 473,215
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(Net assets DIVIDED BY shares of
beneficial interest outstanding) $ 14.51
- -----------------------------------------------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1999
<S> <C>
Investment Income
- ----------------------------------------------------
Dividend income allocated from the
Portfolio
(net of foreign taxes, $14,954) $ 149,173
Expenses allocated from Portfolio (110,527)
- ----------------------------------------------------
NET INVESTMENT INCOME FROM PORTFOLIO $ 38,646
- ----------------------------------------------------
Expenses
- ----------------------------------------------------
Management fee $ 20,038
Trustees fees and expenses 10
Distribution and service fees
Class A 16,644
Class B 43,896
Registration fees 27,876
Amortization of organization expenses 25,766
Transfer and dividend disbursing agent
fees 17,456
Printing and postage 16,055
Legal and accounting services 15,379
Custodian fee 10,501
Miscellaneous 10,200
- ----------------------------------------------------
TOTAL EXPENSES $ 203,821
- ----------------------------------------------------
Deduct --
Reduction of management fee $ 20,038
Allocation of expenses to the
Investment Adviser 21,490
Allocation of expenses to the Manager 14,327
- ----------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 55,855
- ----------------------------------------------------
NET EXPENSES $ 147,966
- ----------------------------------------------------
NET INVESTMENT LOSS $ (109,320)
- ----------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- ----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) (net of foreign
taxes, $14,211) $ 844,677
Foreign currency and forward foreign
currency exchange
contract transactions (10,123)
- ----------------------------------------------------
NET REALIZED GAIN $ 834,554
- ----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $4,471,017
Foreign currency and forward foreign
currency exchange contracts (14,676)
- ----------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $4,456,341
- ----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $5,290,895
- ----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $5,181,575
- ----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS DECEMBER 31, 1999 DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
From operations --
Net investment loss $ (109,320) $ (171,193)
Net realized gain (loss) 834,554 (2,936,493)
Net change in unrealized appreciation
(depreciation) 4,456,341 (1,001,891)
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 5,181,575 $ (4,109,577)
- ------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 3,068,265 $ 1,790,820
Class B 1,379,734 1,560,888
Issued in reorganization of EV
Traditional Emerging Markets Fund
Class A -- 4,989,133
Cost of shares redeemed
Class A (3,774,533) (2,105,721)
Class B (1,637,478) (4,069,955)
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS $ (964,012) $ 2,165,165
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ 4,217,563 $ (1,944,412)
- ------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------
At beginning of year $ 7,129,797 $ 9,074,209
- ------------------------------------------------------------------------------
AT END OF YEAR $ 11,347,360 $ 7,129,797
- ------------------------------------------------------------------------------
Accumulated net
investment loss included
in net assets
- ------------------------------------------------------------------------------
AT END OF YEAR $ (2,755) $ (3,098)
- ------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
------------------------
YEAR ENDED DECEMBER 31,
------------------------
1999 1998
<S> <C> <C>
- --------------------------------------------------------
Net Asset Value -- Beginning
of year $ 8.060 $11.970
- --------------------------------------------------------
Income (loss) from operations
- --------------------------------------------------------
Net investment loss $(0.112) $(0.146)
Net realized and unrealized
gain (loss) 6.732 (3.764)
- --------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 6.620 $(3.910)
- --------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $14.680 $ 8.060
- --------------------------------------------------------
TOTAL RETURN(1) 82.13% (32.66)%
- --------------------------------------------------------
Ratios/Supplemental Data+
- --------------------------------------------------------
Net assets, end of year
(000's omitted) $ 4,482 $ 3,066
Ratios (As a percentage of
average daily net assets):
Net expenses(2) 3.02% 3.25%
Net expenses after
custodian fee
reduction(2) 2.95% 2.95%
Net investment loss (1.02)% (1.34)%
Portfolio Turnover of the
Portfolio 95% 117%
- --------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio
may reflect a reduction of the investment adviser fee
and/or management fee, an allocation of expenses to
the Investment Adviser, and/or Manager, or both. Had
such actions not been taken, the ratios and net
investment loss per share would have been as follows:
Ratios (As a percentage of
average daily net assets):
Expenses(2) 4.70% 3.65%
Expenses after custodian
fee reduction(2) 4.63% 3.35%
Net investment loss (2.70)% (1.74)%
Net investment loss per share $(0.296) $(0.188)
- --------------------------------------------------------
</TABLE>
(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
reinvested at the net asset value on the reinvestment date. Total
return is not computed on an annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Net Asset Value -- Beginning
of year $7.990 $11.910 $12.720 $10.050 $ 9.960
- ---------------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------------
Net investment loss $(0.159) $(0.236) $(0.012) $(0.143) $(0.268)
Net realized and unrealized
gain (loss) 6.679 (3.684) (0.436) 2.988 0.358
- ---------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $6.520 $(3.920) $(0.448) $2.845 $ 0.090
- ---------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------
From net realized gain $-- $-- $-- $(0.175) $ --
In excess of net realized gain -- -- (0.362) -- --
- ---------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $-- $-- $(0.362) $(0.175) $ --
- ---------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $14.510 $7.990 $11.910 $12.720 $10.050
- ---------------------------------------------------------------------------
TOTAL RETURN(1) 81.60% (32.91)% (3.48)% 28.49% 0.90%
- ---------------------------------------------------------------------------
Ratios/Supplemental Data+
- ---------------------------------------------------------------------------
Net assets, end of year
(000's omitted) $6,866 $4,064 $9,074 $6,725 $ 1,801
Ratios (As a percentage of
average daily net assets):
Net expenses(2) 3.47% 3.70% 3.50% 3.41% 6.19%
Net expenses after
custodian fee
reduction(2) 3.40% 3.40% 3.32% 3.19% 6.19%
Net investment loss (1.59)% (1.79)% (1.92)% (1.76)% (4.64)%
Portfolio Turnover of the
Portfolio 95% 117% 160% 125% 98%
- ---------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio may reflect a
reduction of the investment adviser fee and/or management fee, an
allocation of expenses to the Investment Adviser, and/or Manager, or
both. Had such actions not been taken, the ratios and net investment
loss per share would have been as follows:
Ratios (As a percentage of
average daily net assets):
Expenses(2) 5.15% 4.10% 3.79% 4.52% 11.35%
Expenses after custodian
fee reduction(2) 5.08% 3.80% 3.61% 4.30% 11.35%
Net investment loss (3.27)% (2.19)% (2.21)% (2.87)% (9.80)%
Net investment loss per share $(0.327) $(0.289) $(0.014) $(0.233) $(0.566)
- ---------------------------------------------------------------------------
</TABLE>
(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
reinvested at the net asset value on the reinvestment date. Total
return is not computed on an annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Eaton Vance Emerging Markets Fund (the Fund) is a mutual fund seeking
long-term capital appreciation through investment in a portfolio of equity
securities of companies in countries with emerging markets. 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 offers two classes of
shares. Class A shares are generally sold subject to a sales charge imposed
at the time of purchase. Class B shares are sold at net asset value and are
subject to a contingent deferred sales charge (see Note 6). Each class
represents a pro rata interest in the Fund, but votes separately on
class-specific matters and (as noted below) is subject to different expenses.
Realized and unrealized gains and losses and net investment income, other
than class specific expenses, are allocated daily to each class of shares
based on the relative net assets of each class to the total net assets of the
Fund. Each class of shares differs in its distribution plan and certain other
class specific expenses. The Fund invests all of its investable assets in
interests in Emerging Markets 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 (77.9% at December 31, 1999). The performance of
the Fund is directly affected by the performance of the Portfolio. The
financial statements of the Portfolio, including the portfolio of
investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuation -- Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B Income -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund determined in accordance with generally accepted
accounting principles.
C Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
to the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based
on the average daily cash balances the Fund or the Portfolio maintains with
IBT. All significant credit balances used to reduce the Fund's custodian fees
are reported as a reduction of total expenses in the Statement of Operations.
D Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its net investment income, and
any net realized capital gains. Accordingly, no provision for federal income
or excise tax is necessary. At December 31, 1999, the Fund, for federal
income tax purposes had a capital loss carryover of $2,716,368 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. The capital loss carryover expires on December 31,
2006. Additionally, at December 31, 1999, net currency losses of $2,755
attributable to security transactions incurred after October 31, 1999, are
treated as arising on the first day of the Fund's next taxable year.
E Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization, including registration costs, had been amortized on
the straight-line basis over five years and are fully amortized at
December 31, 1999.
F Other -- Investment transactions are accounted for on a trade-date basis.
G Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
2 Distributions to Shareholders
- -------------------------------------------
It is the present policy of the Fund to make at least one distribution
annually (normally in December) of all or substantially all of the net
investment income allocated to the Fund by the Portfolio, less the Fund's
direct and allocated expenses and to distribute at least annually all or
substantially all of the net realized capital gains (reduced
10
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
by any available capital loss carryforwards from prior years) allocated by
the Portfolio to the Fund, if any. 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 ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial reporting
basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition
or classification of income between the financial statements and tax earnings
and profits which result in temporary over distributions for financial
statement purposes are classified as distributions in excess of net
investment income or accumulated net realized gains. Permanent differences
between book and tax accounting are reclassified to paid-in capital.
During the year ended December 31, 1999, $109,663 was reclassified from
accumulated net investment loss to paid-in capital due to permanent
differences between book and tax accounting for operating losses.
Additionally, $24,340 was reclassified from accumulated net realized loss
from Portfolio to paid-in capital due to permanent differences between book
and tax accounting for capital losses. Net investment loss, net realized gain
on investment transactions and net assets were unaffected by
these reclassifications.
3 Shares of Beneficial Interest
- -------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Such shares may be issued in a number of different series (such as
the Fund) and classes. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
CLASS A 1999 1998
<S> <C> <C>
------------------------------------------------------------------
Sales 304,930 196,494
Redemptions (379,809) (233,164)
Issued to EV Traditional Emerging
Markets Fund shareholders -- 416,908
------------------------------------------------------------------
NET INCREASE (DECREASE) (74,879) 380,238
------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
CLASS B 1999 1998
<S> <C> <C>
------------------------------------------------------------------
Sales 139,418 154,536
Redemptions (174,921) (407,659)
------------------------------------------------------------------
NET DECREASE (35,503) (253,123)
------------------------------------------------------------------
</TABLE>
4 Management Fee and Other Transactions
with Affiliates
- -------------------------------------------
The management fee is earned by Eaton Vance Management (EVM) (the Manager) as
compensation for management and administration of the business affairs of the
Fund. The fee is based on a percentage of average daily net assets. For the
year ended December 31, 1999, the fee was equivalent to 0.25% of the Fund's
average daily net assets for such period and amounted to $20,038. To reduce
the net operating loss of the Fund, the Manager reduced the management fee by
$20,038. In addition, the Manager was allocated $14,327 of the Fund's
operating expenses. 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 of the above
organization. In addition, investment adviser and administrative fees are
paid by the Portfolio to Lloyd George Management (Bermuda) (the Adviser), and
to EVM and its affiliates. To reduce the net investment loss of the Fund, the
Adviser was allocated $21,490 of the Fund's operating expenses. See Note 2 of
the Portfolio's Notes to Financial Statements, which are included elsewhere
in this report.
5 Distribution Plans
- -------------------------------------------
The Fund has in effect distribution plans for Class A (Class A Plan) and for
Class B (Class B Plan), (collectively, the Plans) pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plans require the Fund to pay
the Principal Underwriter, Eaton Vance Distributors, Inc. (EVD) an amount
equal to (a) 0.50% of that portion of the Fund's Class A shares average daily
net assets attributable to Class A shares of the Fund which have remained
outstanding for less than one year and (b) 0.25% of that portion of the
Fund's Class A average daily net assets which is attributable to Class A
shares of the Fund which have remained outstanding for more than one year and
an amount equal to 1/365 of 0.75% of the Fund's average daily net assets
attributable to Class B shares for providing ongoing distribution services
and facilities to the Fund. The Fund will automatically discontinue payments
attributable to Class B shares during any period in which there are no
11
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
outstanding Uncovered Distribution Charges, which are equivalent to the sum
of (i) 5% of the aggregate amount received by the Fund for the Class B shares
sold plus, (ii) interest calculated by applying the rate of 1% over the
prevailing prime rate to the outstanding balance of Uncovered Distribution
Charges of EVD, reduced by the aggregate amount of the contingent deferred
sales charge (see Note 6) and daily amounts theretofore paid to EVD. The Fund
paid or accrued $11,753 and $35,426 for Class A and Class B shares,
respectively, to EVD for the year ended December 31, 1999, representing 0.35%
and 0.75% of average daily net assets for Class A and Class B shares,
respectively. At December 31, 1999, the amount of Uncovered Distribution
Charges of EVD calculated under the Plan was approximately $238,000 for
Class B shares.
The Plans authorize the Fund to make payments of service fees to EVD,
investments dealers and other persons in amounts not exceeding 0.25% of the
Fund's average daily net assets attributable to Class A and Class B shares
for each fiscal year. The Trustees initially implemented the Plan by
authorizing the Fund to make quarterly service fee payments to EVD and
investment dealers equal to 0.25% per annum of the Fund's average daily net
assets attributable to Class A and Class B shares based on the value of Fund
shares sold by such persons and remaining outstanding for at least one year.
On October 4, 1999, the Trustees approved service fee payments equal to 0.25%
per annum of the Fund's average net assets attributed to Class B shares for
any fiscal year on shares of the Fund sold on or after October 12, 1999.
Service fee payments will be made for personal services and/or the
maintenance of shareholder accounts. Service fees are separate and distinct
from the sales commissions and distribution fees payable by the Fund to EVD,
and as such, are not subject to automatic discontinuance when there are no
outstanding Uncovered Distribution Charges to EVD. The Fund paid or accrued
service fees to EVD for the year ended December 31, 1999 in the amounts
$4,891 and $8,470 for Class A shares and Class B shares, respectively.
Certain officers and Trustees of the Fund are officers of the above
organization.
6 Contingent Deferred Sales Charge
- -------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on any
redemption of Class B shares made within six years of purchase. Generally,
the CDSC is based upon the lower of the net asset value at date of redemption
or date of purchase. No charge is levied on shares acquired by reinvestment
of dividends or capital gain distributions. The CDSC for Class B shares is
imposed at declining rates that begin at 5% in the first and second year of
redemption after purchase, declining one percentage point each subsequent
year. No CDSC is levied on shares which have been sold to EVD or its
affiliates or to their respective employees or clients and may be waived
under other certain limited conditions. CDSC charges are paid to EVD to
reduce the amount of Uncovered Distribution Charges calculated under the
Fund's Class B Distribution Plan. CDSC charges received when no Uncovered
Distribution Charges exist will be retained by the Fund. EVD received
approximately $26,000 of CDSC paid by shareholders for Class B shares for the
year ended December 31, 1999. A CDSC of 1% is imposed on any redemption of
Class A shares made within 12 months of purchase that were acquired at net
asset value because the purchase amount was $1 million or more.
7 Investment Transactions
- -------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio aggregated
$4,481,170 and $5,783,493, respectively, for the year ended December 31,
1999.
8 Transfer of Net Assets
- -------------------------------------------
On January 1, 1998, EV Marathon Emerging Markets Fund acquired the net assets
of EV Traditional Emerging Markets Fund pursuant to an Agreement and Plan of
Reorganization dated June 23, 1997. In accordance with the agreement, EV
Marathon Emerging Markets Fund, at the closing, issued 416,908 Class A shares
of the Fund having an aggregate value of $4,989,133. As a result, the Fund
issued one Class A share for each share of EV Traditional Emerging Markets
Fund. The transaction was structured for tax purposes to qualify as a tax
free reorganization under the Internal Revenue Code. The EV Traditional
Emerging Markets Fund's net assets at the date of the transaction was
$4,989,133, including $229,578 of unrealized appreciation. Directly after the
merger, the combined net assets of the Eaton Vance Emerging Markets Fund
(formerly EV Marathon Emerging Markets Fund) were $14,063,342 with a net
asset value of $11.97 and $11.91 for Class A and Class B shares,
respectively.
12
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS
OF EATON VANCE SPECIAL INVESTMENT TRUST:
- ---------------------------------------------
We have audited the accompanying statement of assets and liabilities of Eaton
Vance Emerging Markets Fund (the Fund) (one of the series constituting Eaton
Vance Special Investment Trust) as of December 31, 1999, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years then ended and the financial highlights for
each of the years in the five-year period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Eaton Vance
Emerging Markets Fund at December 31, 1999, and the results of its operations,
the changes in its net assets and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 11, 2000
13
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 97.2%
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Aircraft Manufacture -- 2.2%
- ----------------------------------------------------------------------
Embraer - Empresa Brasileira de
Aeronautica SA 65,000 $ 323,831
Brazil's regional aircraft manufacturer
- ----------------------------------------------------------------------
$ 323,831
- ----------------------------------------------------------------------
Banks and Money Services -- 8.4%
- ----------------------------------------------------------------------
China Everbright Pacific, Ltd. 304,000 $ 250,302
One of China's fastest growing banks
Grupo Financiero Banamex(1) 100,000 400,844
Mexico's largest private bank
OTP Bank Rt. GDR 3,950 230,087
Hungary's biggest bank
Unibanco GDR 11,000 331,375
Brazil's third largest private bank
- ----------------------------------------------------------------------
$ 1,212,608
- ----------------------------------------------------------------------
Beverages -- 6.6%
- ----------------------------------------------------------------------
Cia Cervejaria Brahma-sp ADR 34,000 $ 476,000
Largest beer brewer in Brazil and Latin
America
Pan American Beverages, Inc. ADR 11,000 226,188
Latin America's largest anchor Coke
bottler with exposure to Mexico, Brazil,
Venezuela, Guatemala, Costa Rica,
Nicaragua and Colombia
Vina Concha y Toro ADR 6,500 246,188
Wine producer/exporter
- ----------------------------------------------------------------------
$ 948,376
- ----------------------------------------------------------------------
Broadcasting and Cable -- 1.9%
- ----------------------------------------------------------------------
TV Azteca SA 30,000 $ 270,000
Mexico's second largest television
company
- ----------------------------------------------------------------------
$ 270,000
- ----------------------------------------------------------------------
Computer Services -- 8.4%
- ----------------------------------------------------------------------
Dauo Technology, Inc.(1) 18,902 $ 657,533
Korean software provider to bigger
system integrators
El Sitio, Inc.(1) 2,000 73,500
A Latin American internet network and
content provider
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Computer Services (continued)
- ----------------------------------------------------------------------
Korea Information & Communications
Co., Ltd.(1) 3,230 $ 232,401
Info-tech company involved in creating
on-line markets for consumer products,
smart cards, and credit cards
Stone Electronic Technology, Ltd.(1) 350,000 247,652
Largest shareholder in China's largest
internet provider Sina.com
- ----------------------------------------------------------------------
$ 1,211,086
- ----------------------------------------------------------------------
Computer Software -- 3.4%
- ----------------------------------------------------------------------
Tecnomatix Technololgies, Ltd.(1) 16,907 $ 486,076
Israeli company concentrating in
computer aided production equipment
technology
- ----------------------------------------------------------------------
$ 486,076
- ----------------------------------------------------------------------
Conglomerates -- 3.6%
- ----------------------------------------------------------------------
Haci Omer Sabanci Holding AS 4,850,000 $ 281,665
One of Turkey's largest conglomerates
emcompassing banking, retailing, and
telephony
John Keells Holdings 2,449 12,857
Sri Lankan conglomerate involved in tea,
hotels, and beverages
John Keells Holdings GDR 81,000 229,972
Sri Lankan conglomerate involved in tea,
hotels, and beverages
- ----------------------------------------------------------------------
$ 524,494
- ----------------------------------------------------------------------
Electrical / Electronics -- 1.8%
- ----------------------------------------------------------------------
Hon Hai Precision Industry(1) 35,000 $ 261,244
Taiwan's largest connector manufacturer
and one of the largest global PC case
manufacturers
- ----------------------------------------------------------------------
$ 261,244
- ----------------------------------------------------------------------
Electronics - Semiconductors -- 3.6%
- ----------------------------------------------------------------------
Taiwan Semiconductor Manufacturing,
Co.(1) 98,400 $ 524,172
One of the world's largest contract
manufacturers of integrated circuits
(foundry) for third parties
- ----------------------------------------------------------------------
$ 524,172
- ----------------------------------------------------------------------
Foods -- 7.9%
- ----------------------------------------------------------------------
Carulla SA ADR 80,000 $ 70,000
Columbian grocery and supermarket chain
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Foods (continued)
- ----------------------------------------------------------------------
Compania Brasileira de Distribuicao
Grupo Pao de Acurcar 18,500 $ 597,781
Supermarket chain
President Chain Store Corp. 106,200 469,177
Taiwanese operator of 7-11 convenience
stores and other consumer businesses
- ----------------------------------------------------------------------
$ 1,136,958
- ----------------------------------------------------------------------
Insurance -- 2.5%
- ----------------------------------------------------------------------
Liberty Life Associates of Africa 18,360 $ 211,780
One of South Africa's most efficient
life insurance companies
Samsung Fire & Marine Insurance 4,896 156,086
Korea's largest non-life insurance
company established in 1952 and
belonging to the Samsung Group
- ----------------------------------------------------------------------
$ 367,866
- ----------------------------------------------------------------------
Investment Services -- 4.1%
- ----------------------------------------------------------------------
Li & Fung, Ltd. 234,000 $ 587,032
Largest global intermediator between
garment suppliers and retailers
- ----------------------------------------------------------------------
$ 587,032
- ----------------------------------------------------------------------
Machinery -- 1.9%
- ----------------------------------------------------------------------
Siam Cement Co. Ltd.(1) 8,500 $ 282,356
Largest industrial and building material
producer in Thailand
- ----------------------------------------------------------------------
$ 282,356
- ----------------------------------------------------------------------
Manufacturing -- 1.4%
- ----------------------------------------------------------------------
Tata Engineering and Locomotion GDR 39,000 $ 209,625
Largest automobile manufacturer in India
with a dominant position in the
commercial vehicle business
- ----------------------------------------------------------------------
$ 209,625
- ----------------------------------------------------------------------
Media & Leisure -- 2.1%
- ----------------------------------------------------------------------
Corporacion Interamericana
de Entretenimiento S.A.(1) 75,040 $ 299,606
Mexican fully integrated entertainment
company comprising 15 subsidiaries
operating in North America, South
America and Europe
- ----------------------------------------------------------------------
$ 299,606
- ----------------------------------------------------------------------
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Metals - Industrial -- 4.7%
- ----------------------------------------------------------------------
Anglo American PLC 5,700 $ 366,711
The world's largest producer of gold,
platinum, and diamonds
Hindalco Industries Ltd. GDR 13,300 314,545
India's second largest aluminum producer
and lowest cost producer in the world
- ----------------------------------------------------------------------
$ 681,256
- ----------------------------------------------------------------------
Oil and Gas - Integrated -- 3.5%
- ----------------------------------------------------------------------
Surgutneftegaz ADR 30,000 $ 510,000
Russia's second largest oil company
- ----------------------------------------------------------------------
$ 510,000
- ----------------------------------------------------------------------
Publishing -- 2.1%
- ----------------------------------------------------------------------
Hurriyet Gazetecilik ve Matbaacilik AS 16,668,300 $ 307,306
Turkey's most widely read newspaper
- ----------------------------------------------------------------------
$ 307,306
- ----------------------------------------------------------------------
Semiconductors -- 4.4%
- ----------------------------------------------------------------------
Chartered Semiconductor
Manufacturing, Ltd.(1)* 35,000 $ 238,660
Singapore based DRAM foundry business
Samsung Electronics 1,720 402,924
World's biggest and most profitable
semiconductor company
- ----------------------------------------------------------------------
$ 641,584
- ----------------------------------------------------------------------
Telecommunications Services -- 8.6%
- ----------------------------------------------------------------------
ECtel, Ltd.(1) 13,140 $ 239,805
Israeli technology company specializing
in fraud management and network
monitoring systems
Hellenic Telecommunications Organization
SA ADR 21,000 252,000
Incumbent Greek telecommunications
operator with both fixed and mobile
operations
Korea Mobile Telecom Corp.* 200 747,690
Korea's dominant mobile
telecommunications company
- ----------------------------------------------------------------------
$ 1,239,495
- ----------------------------------------------------------------------
Telephone Utilities -- 14.1%
- ----------------------------------------------------------------------
Korea Telecom Corp. ADR(1) 9,070 $ 677,983
Monopolistic telecom service provider
for South Korea
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Telephone Utilities (continued)
- ----------------------------------------------------------------------
Tele Norte Leste Participacoes ADR 15,000 $ 382,500
One of Brazil's three fixed line holding
companies, located in the northeast of
Brazil
Telefonos de Mexico ADR 4,000 450,000
Largest telecom operator with interests
in local and long distance
telecommunications
Videsh Sanchar Nigam Ltd., GDR 21,500 533,200
India's monopoly international telephone
service provider
- ----------------------------------------------------------------------
$ 2,043,683
- ----------------------------------------------------------------------
Total Common Stocks
(identified cost $9,017,665) $14,068,654
- ----------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 0.8%
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Banks and Money Centers -- 0.8%
- ----------------------------------------------------------------------
Siam Commercial Bank(1) 90,000 $ 109,844
One of Thailand's major banks
- ----------------------------------------------------------------------
$ 109,844
- ----------------------------------------------------------------------
Total Convertible Preferred Stocks
(identified cost $63,235) $ 109,844
- ----------------------------------------------------------------------
PREFERRED STOCKS -- 0.0%
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Electric Utilities -- 0.0%
- ----------------------------------------------------------------------
Centrais Geradoras do Sul do Brasil S.A. 7,000,000 $ 7,091
This company is an electricity
generator.
- ----------------------------------------------------------------------
$ 7,091
- ----------------------------------------------------------------------
Total Preferred Stocks
(identified cost $25,810) $ 7,091
- ----------------------------------------------------------------------
WARRANTS -- 0.3%
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Banks and Money Services -- 0.3%
- ----------------------------------------------------------------------
Siam Commercial Bank 90,000 $ 41,788
One of Thailand's major banks
- ----------------------------------------------------------------------
$ 41,788
- ----------------------------------------------------------------------
Total Warrants
(identified cost $0) $ 41,788
- ----------------------------------------------------------------------
RIGHTS -- 0.1%
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Insurance -- 0.1%
- ----------------------------------------------------------------------
Samsung Fire & Marine Insurance 1,001 $ 8,025
Korea's largest non-life insurance
company established in 1952 and
belonging to the Samsung Group
- ----------------------------------------------------------------------
$ 8,025
- ----------------------------------------------------------------------
Total Rights
(identified cost $0) $ 8,025
- ----------------------------------------------------------------------
Total Investments -- 98.4%
(identified cost $9,106,710) $14,235,402
- ----------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.6% $ 236,837
- ----------------------------------------------------------------------
Net Assets -- 100.0% $14,472,239
- ----------------------------------------------------------------------
</TABLE>
Company descriptions are unaudited.
ADR - American Depositary Receipt
GDR - Global Depository Receipt
* Security valued at fair value using methods determined in good faith by or
at direction of the Trustees.
(1) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
COUNTRY CONCENTRATION OF PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
COUNTRY OF NET ASSETS VALUE
<S> <C> <C>
- -------------------------------------------------------------------
Argentina 0.5% $ 73,500
Brazil 14.6 2,118,578
Chile 1.7 246,188
China 3.4 497,954
Colombia 0.5 70,000
Greece 1.7 252,000
Hong Kong 4.1 587,032
Hungary 1.6 230,088
India 7.3 1,057,370
Israel 5.0 725,881
Mexico 11.4 1,646,637
Republic of Korea 19.9 2,882,641
Russia 3.5 510,000
Singapore 1.7 238,660
South Africa 4.0 578,492
Sri Lanka 1.7 242,829
Taiwan 8.7 1,254,593
Thailand 3.0 433,988
Turkey 4.1 588,971
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
<S> <C>
Assets
- -----------------------------------------------------
Investments, at value
(identified cost, $9,106,710) $14,235,402
Cash 71,337
Foreign currency, at value
(identified cost, $192,568) 192,861
Dividends receivable 14,590
- -----------------------------------------------------
TOTAL ASSETS $14,514,190
- -----------------------------------------------------
Liabilities
- -----------------------------------------------------
Accrued expenses $ 41,951
- -----------------------------------------------------
TOTAL LIABILITIES $ 41,951
- -----------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $14,472,239
- -----------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------
Net proceeds from capital contributions
and withdrawals $ 9,343,180
Net unrealized appreciation (computed on
the basis of identified cost) 5,129,059
- -----------------------------------------------------
TOTAL $14,472,239
- -----------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1999
<S> <C>
Investment Income
- ----------------------------------------------------
Dividends (net of foreign taxes,
$17,539) $ 172,400
- ----------------------------------------------------
TOTAL INVESTMENT INCOME $ 172,400
- ----------------------------------------------------
Expenses
- ----------------------------------------------------
Investment adviser fee $ 71,563
Administration fee 23,919
Trustees fees and expenses 7,261
Custodian fee 73,735
Legal and accounting services 45,608
Amortization of organization expenses 3,473
Miscellaneous 6,365
- ----------------------------------------------------
TOTAL EXPENSES $ 231,924
- ----------------------------------------------------
Deduct --
Reduction of investment adviser fee $ 71,563
Reduction of administration fee 23,919
Reduction of custodian fee 6,755
- ----------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 102,237
- ----------------------------------------------------
NET EXPENSES $ 129,687
- ----------------------------------------------------
NET INVESTMENT INCOME $ 42,713
- ----------------------------------------------------
Realized and Unrealized
Gain (Loss)
- ----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) (net of foreign
taxes, $15,535) $ 862,026
Foreign currency and forward foreign
currency exchange
contract transactions (11,942)
- ----------------------------------------------------
NET REALIZED GAIN $ 850,084
- ----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $5,633,614
Foreign currency and forward foreign
currency exchange contracts (17,572)
- ----------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $5,616,042
- ----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $6,466,126
- ----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $6,508,839
- ----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS DECEMBER 31, 1999 DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
From operations --
Net investment income $ 42,713 $ 45,011
Net realized gain (loss) 850,084 (3,643,640)
Net change in unrealized
appreciation (depreciation) 5,616,042 (1,140,696)
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 6,508,839 $ (4,739,325)
- ------------------------------------------------------------------------------
Capital transactions --
Contributions $ 6,286,238 $ 3,995,966
Withdrawals (6,199,686) (9,933,398)
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL TRANSACTIONS $ 86,552 $ (5,937,432)
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ 6,595,391 $ (10,676,757)
- ------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------
At beginning of year $ 7,876,848 $ 18,553,605
- ------------------------------------------------------------------------------
AT END OF YEAR $ 14,472,239 $ 7,876,848
- ------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------
Ratios to average daily net assets+
- -------------------------------------------------------------------------
Net expenses 1.42% 1.71% 1.53% 1.54% 2.58%
Net expenses after custodian
fee reduction 1.35% 1.41% 1.35% 1.32% 2.58%
Net investment income (loss) 0.45% 0.37% 0.08% 0.14% (1.00)%
Portfolio Turnover 95% 117% 160% 125% 98%
- -------------------------------------------------------------------------
NET ASSETS, END OF YEAR
(000'S OMITTED) $14,472 $7,877 $18,554 $10,659 $3,587
- -------------------------------------------------------------------------
+ The operating expenses of the Portfolio may reflect a reduction of the
investment adviser fee and/or administration fee, an allocation of
expenses to the Investment Adviser and/or Administrator, or both. Had
such actions not been taken, the ratios would have been as follows:
Expenses 2.42% 1.87% 1.81% 2.24% 5.24%
Expenses after custodian
fee reduction 2.35% 1.57% 1.63% 2.02% 5.24%
Net investment income (loss) (0.55)% 0.21% (0.20)% (0.56)% (3.66)%
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Emerging Markets 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 significant
accounting policies of the Portfolio. The policies are in conformity with
accounting principles generally accepted in the United States of America.
A Investment Valuation -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement prices. Unlisted or
listed securities for which closing sales prices are not available are valued
at the mean between the latest bid and asked prices. Short term debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost which approximates value. Other fixed income and debt
securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service. Investments for which valuations or market
quotations are unavailable or are considered unreliable are valued at fair
value using methods determined in good faith by or at the direction of the
Trustees.
B Income -- Dividend income is recorded on the ex-dividend date. However, if
the ex-dividend date has passed, certain dividends from securities are
recorded as the Portfolio is informed of the ex-dividend date. Interest
income is recorded on the accrual basis.
C Federal Taxes -- The Portfolio has elected to be treated as a partnership for
United States Federal tax purposes. No provision is made by the Portfolio for
federal or state taxes on any taxable income of the Portfolio because each
investor in the Portfolio is 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
Internal Revenue Code) in order for its investors to satisfy them. The
Portfolio will allocate, at least annually among its investors, each
investor's distributive share of the Portfolio's net investment income, net
realized capital gains, and any other items of income, gain, loss, deduction
or credit. Withholding taxes on foreign dividends and capital gains have been
provided for in accordance with the Portfolio's understanding of the
applicable countries' tax rules and rates.
D Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balance the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reported as a reduction of
total expenses in the Statement of Operations.
E Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization, including registration costs, had been
amortized on the straight-line basis over five years and are fully amortized
at December 31, 1999.
F 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 the daily
fluctuations in the value of the underlying security, and are recorded for
book purposes as unrealized gains or losses by the Portfolio. The Portfolio's
investment in financial futures contracts is designed only to hedge against
anticipated future changes in interest or currency exchange rates. Should
interest or currency exchange rates move unexpectedly, the Portfolio may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. If the Portfolio enters into a closing transaction, the
Portfolio will realize, for book purposes, a gain or loss equal to the
difference between the value of the financial futures contract to sell and
financial futures contract to buy.
G Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency rates are recorded
for financial statement purposes as net
21
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
realized gains and losses on investments. That portion of unrealized gains
and losses on investments that result from fluctuations in foreign currency
exchange rates are not separately disclosed.
H Forward Foreign Currency Exchange Contracts -- The Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risk may arise
upon entering these contracts from the potential inability of counterparties
to meet the terms of their contracts and from movements in the value of a
foreign currency relative to the U.S. dollar. The Portfolio 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.
I Other -- Investment transactions are accounted for on a trade date basis.
J Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
2 Investment Adviser Fee and Other Transactions with Affiliates
- -------------------------------------------
The investment adviser fee is earned by Lloyd George Investment Management
(Bermuda) Limited (the Adviser) as compensation for management and investment
advisory services rendered to the Portfolio. Under the advisory agreement,
the Adviser receives a monthly fee of 0.0625% (0.75% annually) of the average
daily net assets of the Portfolio up to $500,000,000, and at reduced rates as
daily net assets exceed that level. For the year ended December 31, 1999, the
adviser fee was 0.75% of average daily net assets and amounted to $71,563. To
enhance the net income of the Portfolio, the Adviser made a reduction of the
investment adviser fee of $71,563. In addition, an administrative fee is
earned by Eaton Vance Management (EVM) for managing and administrating the
business affairs of the Portfolio. Under the administration agreement, EVM
earns a monthly fee in the amount of 1/48th of 1% (0.25% annually) of the
average daily net assets of the Portfolio up to $500,000,000, and at reduced
rates as daily net assets exceed that level. For the year ended December 31,
1999, the administration fee was 0.25% of average daily net assets and
amounted to $23,919. To enhance the net income of the Portfolio, the
administrator reduced fees in the amount of $23,919. Except as to Trustees of
the Portfolio who are not members of the Adviser or EVM's organization,
officers and Trustees receive remuneration for their services to the
Portfolio out of such investment adviser and administrative fees. Certain
officers and Trustees of the Portfolio are officers of the above
organizations.
3 Investment Transactions
- -------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $8,785,429 and $8,935,445, respectively, for the year ended
December 31, 1999.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at December 31, 1999, as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $9,106,710
----------------------------------------------------
Gross unrealized appreciation $5,631,818
Gross unrealized depreciation (503,126)
----------------------------------------------------
NET UNREALIZED APPRECIATION $5,128,692
----------------------------------------------------
</TABLE>
5 Line of Credit
- -------------------------------------------
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a $150 million unsecured line of credit agreement with a
group of banks. The Portfolio may temporarily borrow from the line of credit
to satisfy redemption requests or settle investment transactions. Interest is
charged to each portfolio or fund based on its borrowings at an amount above
the Eurodollar rate or Federal Funds rate. In addition, a fee computed at an
annual rate of 0.10% on the daily unused portion of the line of credit is
allocated among the participating portfolios and funds at the end of each
quarter. The Portfolio did not have any significant borrowings or allocated
fees during the year ended December 31, 1999.
6 Risks Associated with Foreign Investments
- -------------------------------------------
Investing in securities issued by companies whose principal business
activities are outside the United States may
22
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
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.
7 Financial Instruments
- -------------------------------------------
The Portfolio may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include forward
foreign currency exchange contracts and futures contracts and may involve, to
a varying degree, elements of risk in excess of the amounts recognized for
financial statement purposes. The notional or contractual amounts of these
instruments represent the investment the Portfolio has in particular classes
of financial instruments and does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with
these instruments is meaningful only when all related and offsetting
transactions are considered. At December 31, 1999, there were no obligations
under these financial instruments outstanding.
8 Subsequent Event
- -------------------------------------------
Effective May 1, 2000, Jacob Rees-Mogg will be co-portfolio manager of the
Emerging Markets Portfolio. Mr. Rees-Mogg is an Investment Manager for Lloyd
George Investment Management (Bermuda) Limited and has been employed by Lloyd
George for more than five years.
23
<PAGE>
EMERGING MARKETS PORTFOLIO AS OF DECEMBER 31, 1999
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND INVESTORS
OF EMERGING MARKETS PORTFOLIO:
- ---------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Emerging Markets Portfolio (the Portfolio) as
of December 31, 1999, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years then
ended and the supplementary data for each of the years in the five-year period
then ended. These financial statements and supplementary data are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and supplementary data based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999 by correspondence with the custodian and brokers; where
replies were not received from brokers, alternative auditing procedures were
performed. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Emerging Markets Portfolio
at December 31, 1999, and the results of its operations, the changes in its net
assets and its supplementary data for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 11, 2000
24
<PAGE>
EATON VANCE EMERGING MARKETS FUND AS OF DECEMBER 31, 1999
INVESTMENT MANAGEMENT
EATON VANCE EMERGING MARKETS FUND
Officers
James B. Hawkes
President and Trustee
Edward E. Smiley, Jr.
Vice President
Michael B. Terry
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
EMERGING MARKETS PORTFOLIO
Officers
Hon. Robert Lloyd George
President and Trustee
James B. Hawkes
Vice President and Trustee
Scobie Dickinson Ward
Vice President, Assistant
Secretary and Assistant Treasurer
William Walter Raleigh Kerr
Vice President and
Assistant Treasurer
James L. O'Connor
Vice President and Treasurer
Alan R. Dynner
Secretary
Trustees
Hon. Edward K. Y. Chen
President of Lingnan College,
University of Hong Kong
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
25
<PAGE>
INVESTMENT ADVISER OF
EMERGING MARKETS PORTFOLIO
Lloyd George Management
(Bermuda) Limited
3808 One Exchange Square
Central, Hong Kong
SPONSOR AND MANAGER OF
EATON VANCE EMERGING MARKETS FUND
AND ADMINISTRATOR OF EMERGING MARKETS PORTFOLIO
Eaton Vance Management
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
EATON VANCE DISTRIBUTORS, INC.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
PFPC GLOBAL FUND SERVICES
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
200 Berkeley Street
Boston, MA 02116-5022
EATON VANCE EMERGING MARKETS FUND
The Eaton Vance Building
255 State Street
Boston, MA 02109
- -------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- -------------------------------------------------------------------------------
132-12/99 EMSRC-12/99
