<PAGE> 1
EV Marathon Greater China Growth Fund
Semi-Annual Shareholder Report
February 28, 1995
TO SHAREHOLDERS
EV Marathon Greater China Growth Fund had a total return of -14.0 percent for
the six months ended February 28, 1995. That performance was the result of a
decline in net asset value per share from $13.16 on August 31, 1994, to $11.25
on February 28, 1995 and the reinvestment of $0.065 in dividends and $0.01 in
capital gain distributions. and does not include contingent deferred sales
charges paid by certain redeeming shareholders. By comparison, the Peregrine
Asia 100 -an unmanaged index of common stocks in the Greater China region -
declined 12.9 percent during the same period.
WHILE THE MARKETS WERE VOLATILE, THE CHINA ECONOMY GATHERED STEAM...
Despite some market volatility during the period due to rising interest rates
and jitters abroad, the Greater Chinese economy continued to build momentum.
Mainland China's economy performed strongly, with the value of industrial
production rising 11 percent in February from the same period a year ago,
according to the Ministry of Finance. Exports were especially strong, rising 88
percent to $9.2 billion in February. Retail sales were also robust, rising 34
percent in February.
While the economy gathered steam, progress was made on the inflation fight.
After peaking at an annualized rate of 27 percent in October, inflation declined
1.4 percentage points in January, the third consecutive month in which inflation
showed a decline. The figures suggest that the government's efforts to ease
inflationary pressures may finally be finding their mark.
U.S.-CHINA TRADE DISPUTE LEADS TO HARSH WORDS, THEN TO AN AMICABLE RESOLUTION...
In February, the U.S. and China reached an agreement on intellectual copyrights
that averted a costly trade war and possible trade sanctions. The pact should
prove beneficial to both nations, leading to increased market access and
improved judicial procedures for handling such disputes in the future.
A look at trade figures of recent years is illustrative. In 1989, China exported
around $12 billion in goods to the U.S. But as China has expanded its economic
reform movement during the 1990s, China's export business has exploded. In 1994,
China exported $39 billion in goods to the U.S. That represents a remarkable
growth record. More importantly, it shows the degree to which political
cooperation can help boost economic develop-ment. Naturally, past performance is
no guarantee of future results. But, as the economic and political ties increase
between China and the older industrialized nations, we expect that China will
provide many more investment opportunities. Greater China Growth Portfolio will
continue seeking those opportunities.
[PHOTO OF JAMES B. HAWKES]
Sincerely,
/s/ James B. Hawkes
James B. Hawkes,
President
April 20, 1995
1
<PAGE> 2
MANAGEMENT DISCUSSION: ROBERT LLOYD GEORGE
An interview with the Hon. Robert Lloyd George, President of Lloyd George
Management, and Investment Adviser to the Greater China Growth Portfolio.
[PHOTO OF HON. ROBERT LLOYD GEORGE]
HON. ROBERT LLOYD GEORGE
Q: ROBERT, HOW HAVE THE CHINA REGION MARKETS FARED DURING THE PAST SIX MONTHS?
A: The China region markets, especially Hong Kong, were buffeted by an unusual
confluence of events during the six-month period. And because Hong Kong
remains the largest country weighting in the Portfolio, the Fund's
performance reflected the difficult market environment. First, interest rates
in the U.S., which have a strong influence on Hong Kong rates and equities,
continued their upward bias. Second, the threat of a trade war between the
U.S. and China - while ultimately resolved - caused some anxious moments for
investors. Next, with speculation that Deng Xiaoping, China's aging leader
and the originator of the reform movement, was gravely ill, there was
uncertainty for investors concerned about future political developments.
Finally, unsettling events in Mexico and other emerging markets had a
temporarily disturbing impact on emerging markets around the world. So, in
sum, this six-month period provided many challenges for investors. Actually,
considering the number of obstacles faced by the market, the decline was
relatively modest. Interestingly, the market has recovered significantly
between the end of 1994 and February 28.
Q: WHERE HAVE YOU BEEN INVESTING?
A: The Portfolio has maintained its largest holdings in Hong Kong, with Thailand
the second largest country weighting, followed by Singapore, Malaysia, and
the Republic of Korea. Manufacturing remains the largest industry sector.
Manufacturers in the region continue to benefit from cheap labor costs and
strong demand from industrialized countries as well as a growing demand from
the nations of the China region.
Banking and financial services stocks comprise the second largest industry
weighting. With the growth of industry, infrastructure, and transportation,
there is an increasing demand for the financing and specialized banking
services provided by leading banks of the region, such as Hong Kong &
Shanghai Banking Corp. The third largest industry weighting is diversified
trading companies, like Jardine Matheson of Hong Kong. These companies play a
large role in the export of goods, utilizing their ability to facilitate
trade through wide distribution and transportation networks.
2
<PAGE> 3
ENJOYING GROWTH RATES EQUALLED BY FEW OTHER COUNTRIES SINGAPORE IS EXPANDING ITS
ROLE AS A LEADER INT HE DYNAMIC GREATER CHINA ECONOMY!
[MAP OF THE STRAITS OF SINGAPORE]
<TABLE>
<CAPTION>
Singapore Data
<S> <C> <C> <C> <C>
1 GDP growth 10%
2 Inflation rate 3.6%
3 Jobless rate 2.8%
4 Trade Surplus $2.4 Billion
5 For. reserves $ 60 Billion
6 Cap invest grow 20%
7
8 This illustration shows a map of Singapore with an inset
9 of economic data from 1994.
</TABLE>
Source: Financial Times.
Q. SINGAPORE IS THE THIRD LARGEST COUNTRY HOLDING. WHAT MAKES SINGAPORE
ATTRACTIVE AS AN INVESTMENT?
A. Over the past twenty-five years, Singapore has compiled a record of economic
growth matched by few other countries in the world. Between 1966 and 1990,
the Singapore economy grew at an average annual growth rate of 8.5 percent,
three times as fast as the U.S. Reports on global competitiveness by the
Organization for Economic Cooperation and Development last year ranked
Singapore as one of the top four world economies in terms of productivity,
together with Japan, Hong Kong, and the U.S. In 1994, according to the
Ministry of Trade and Industry, the Singapore economy grew by 10 percent,
with exports jumping 24 percent. Government forecasts estimate that the
economy will register double-digit growth again in 1995. Singapore enjoys
political stability, a highly skilled workforce, and foreign reserves of more
than $60 billion. Because the government increasingly emphasizes education,
the country has been able to sharply increase productivity in an competitive
regional and global marketplace.
Prosperity has been achieved primarily through the manufacture of high
technology products and the purveying of high skill services. For example,
Singapore now ranks as the world's
3
<PAGE> 4
largest producer of computer disk drives. Singapore is fast becoming a major
area for the manufacture of petrochemicals and pharmaceuticals. And,
Singapore now rivals Japan and Hong Kong in Asia for its expertise in
financial services.
Q. WHAT COMPANIES ARE YOU BUYING IN SINGAPORE?
A. Most of the Singapore stocks within the Portfolio are blue chip companies
that should prosper from the government's central economic strategies. For
example, Singapore Airlines should benefit from the increasing business
travel between Singapore and other Greater China capitals. In the commercial
real estate sector, Straits Steamship Land has enjoyed strong earnings
momentum with the soaring demand for office space in Singapore, which has
become a popular location for companies seeking a headquarters in the China
region. Elsewhere, Clipsal Industries manufactures electrical equipment and
lighting systems for export throughout the China region. Its business has
surged with the rise in commercial real estate development.
Q. HOW HAVE THE MAINLAND CHINESE MARKETS FARED DURING THIS PERIOD?
A. The China markets in Shanghai and Shenzhen also retreated during 1994,
bringing price-earnings multiples to record low levels, around 7-to-10 times
earnings. When compared to historical market patterns, the mainland Chinese
markets are significantly undervalued. The Portfolio had 2.6 percent of its
investments in mainland China at February 28. One holding, Shanghai Tyre &
Rubber, has recently sold at very low valuations, having suffered from
sharply rising rubber prices, which hurt the company's earnings. However, if
the company can contain its costs, it could be well-positioned. As China's
largest maker of radial tires, Tyre & Rubber should benefit from China's
plans to develop automobiles for widescale consumer purchases. Another
mainland holding, Shanghai Post and Telecom is a leading manufacturer of
telephone switches. While the company will be hard-pressed to compete
head-to-head with the global telecom giants, its ability to manufacture parts
locally makes it a likely beneficiary of the government's plan to make major
improvements additions to existing phone facilities.
GREATER CHINA GROWTH PORTFOLIO: ASSET ALLOCATION
Based on market value as of February 28, 1995
[CHART]
<TABLE>
<CAPTION>
China Pie data
<S> <C> <C>
1 Other 1.9%
2 China 2.6%
3 Indonesia 2.9%
4 Taiwan 5.1%
5 Philippines 6.8%
6 South Korea 8.2%
7 Malaysia 10.4%
8 Singapore 10.7%
9 Thailand 11.6%
10 Hong Kong 39.8%
11
12 This chart shows in pie chart form the holdings
13 of the China Portfolio broken down according to
14 nationality.
15 Source: Eaton Vance
</TABLE>
4
<PAGE> 5
[GRAPH OF CHINA'S EXPORTS TO THE U.S. CONTINUE TO SURGE!]
[MAP OF CHINA]
[MAP OF UNITED STATES]
<TABLE>
<CAPTION>
China's exports to the U.S.
<S> <C> <C>
1 1989 12 Billion
2 1990 15.2 Billion
3 1991 19 Billion
4 1992 25.7 Billion
5 1993 31.5 Billion
6 1994 38.8 Billion
7
8
9 This chart shows the growth of exports in
10 bar chart form from China to the U.S. from 1989
11 through 1994. A background of maps of India and
12 the U.S.
13 Headline: "China's exports to the U.S. continue to surge!"
14 Source: China Ministry of Trade
</TABLE>
Q. YOU INDICATED THAT BANKING WAS A LARGE INDUSTRY SEGMENT WITHIN THE PORTFOLIO.
CAN YOU GIVE EXAMPLES OF THE BANKS IN WHICH YOU HAVE INVESTMENTS?
A. Yes. Hong Kong and Shanghai Banking Corp. is Hong Kong's leading bank, with
assets totaling $270 billion. With one-third of its assets employed in Hong
Kong and the Pacific region, HSBC is also the most active foreign bank in
mainland China. Its profits jumped a larger-than-expected 14 percent in 1994.
In addition to its strong Asian presence, the bank has major business in
Europe and the U.S., proving that it is truly a global banking power.
Elsewhere in the region, Siam Commercial Bank is one of Thailand's largest
commercial banks in terms of assets. The company plans to expand its
operations in mainland China, including opening branches in Shanghai and
Canton. And in Singapore, Development Bank of Singapore is contributing to
the financing of industrial and real estate development within that
city-state.
Q. IN PAST REPORTS, YOU'VE DISCUSSED VARIOUS INFRASTRUCTURE INVESTMENTS WITHIN
THE PORTFOLIO. COULD YOU EXPAND ON THAT THEME?
A. Yes. The building of an adequate infrastructure is absolutely fundamental to
China's growth prospects. That is true of transportation and
telecommunications - two themes I've discussed in the past - and especially
true of electric power generation. Earlier this year, the Beijing government
sanctioned the first of fifty
5
<PAGE> 6
TO MEET RISING POWER DEMANDS, CHINA'S ELECTRIC GENERATION INDUSTRY IS EXPANDING
RAPIDLY!
[CHART]
<TABLE>
<CAPTION>
Electric power chart
<S> <C> <C>
1 1995 capacity 183,000 megawatts
2 2000 capacity 300,000 megawatts
3 Est investment $67 billion
4
5 This chart is against the backdrop of an electric
6 power grid and shows the upcoming power needs of China
7 and the estimated investment needed to
8 fund that infrastructure.
9
10 Source: Financial Times
</TABLE>
new power station projects, and -important for investors,- has streamlined
the approval process needed to bring projects on line.
Clearly, additional power stations are needed to satisfy the explosive
economic growth of the industrial sector, which is responsible for 73 percent
of power sales. However, consumer and residential sales are rising sharply as
well, reflecting a surge in the use of household electrical appliances.
Improving standards of living and rising consumer confidence have boosted the
sales of air conditioners, washing machines, televisions, microwave ovens,
and refrigerators. For example, according to the China Household Electrical
Appliance Association, China produced 8.2 million washing machines in the
first 9 months of 1994, a 27 percent increase over the same period in 1993.
In 1995, output is expected to reach 10 million.
Naturally, the task of providing electric power sufficient to fuel China's
economic engine is a daunting one. According to the China Ministry of
Electric Power, China currently suffers from a nationwide 20 percent power
shortage, with the problem especially severe in the southern coastal economic
zones. To combat those shortages, China plans to add 117,000 megawatts of
generating capacity by the year 2000, at an estimated cost of $67 billion.
To encourage investment, the Ministry of Power has indicated it will allow
returns on investment in the 15-to-22 percent range, significantly higher
than those for similar projects in the U.S. and elsewhere. That bodes well
for investors and for companies participating in these projects, including
engineering companies and makers of power generating equipment, like
Consolidated Electric Power of Asia, a Hong Kong-based holding of the
Portfolio.
6
<PAGE> 7
- --------------------------------------------------------------------------------
RECENT U.S. INVESTMENTS* IN CHINA:
- - OWENS-CORNING CORP. - the Toledo, Ohio based leaser in glass fiber technology
announced in February that its would invest $150 millian to build two plants
to produce fiberglass insulation materials for China's infrastructure and
construction industries.
- - MCDONNELL DOUGLAS - the U.S. aerospace company, signed a contract with China
in November to deliver 34 new MD-90 aircraft. Half of the aircraft will be
manufactured in China with U.S.-supplied parts. The deal is valued at $1.6
billion.
- - MORGAN STANLEY - agreed in October to set up China's first international
investment bank. China Internation Capital Corporation will begin with $100
million in capital, and be used as a model to introduce modern investment
banking techniques to China.
* Thes U.S. companies are not investments of the Portfolio.
- --------------------------------------------------------------------------------
Q. ONE MAJOR DEVELOPMENT OF THE PAST SIX MONTHS WAS THE CONTINUING STRENGTH OF
THE JAPANESE YEN. HOW HAS THAT AFFECTED THE PROSPECTS OF CHINA REGION
COMPANIES?
A. The strength of the yen, which reached post-war highs during the period, has
been a positive development for certain Greater China exporters. A stronger
yen hurts Japanese exporters by reducing the value of dollar-based revenues.
To make up the difference they must often raise prices, which may make them
less competitive in the China region. Some Japanese manufacturers have
managed to remain competitive by cutting expenses to the bone, or by shifting
production facilities abroad. However, the relentless strength of the yen has
nearly eliminated the value of the cost-cutting. That has given the edge to
foreign competitors. For example, Korean manufacturers like Pohang Iron &
Steel, a Portfolio holding, have advanced competitively and gained a better
foothold in China and elsewhere.
Q. ROBERT, WHAT IS YOUR CURRENT OUTLOOK FOR THE GREATER CHINA MARKETS?
A. With many of the trade frictions resolved and interest rates in the U.S.
likely to level, the outlook for the Hong Kong market is favorable.
Nonetheless, I believe that occasional volatility is something investors can
continue to expect from time to time. There is, of course, continuing
uncertainty about the succession process after Deng. And inflation, while
improving, is a continuing hurdle to be overcome. But even within those broad
risk parameters, the economy of Greater China continues to post unparalleled
growth. As I mentioned before, Chinese consumers are pioneering new ground
with their purchases of washing machines, microwave ovens, and automobiles.
While past performance does not guarantee future results, this is an exciting
new frontier for the Chinese people and continues to represent a major
opportunity for long-term investors.
7
<PAGE> 8
EV MARATHON GREATER CHINA GROWTH FUND
FINANCIAL STATEMENTS
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995
(Unaudited)
<TABLE>
<S> <C> <C>
ASSETS:
Investment in Greater China Growth Portfolio, at value (Note 1A)
(identified cost, $345,778,239) $334,287,512
Receivable for Fund shares sold 366,604
Deferred organization expenses (Note 1D) 32,100
------------
Total assets $334,686,216
LIABILITIES:
Payable for Fund shares redeemed $1,462,627
Payable to affiliates -
Trustees' fees 796
Custodian fee 840
Accrued expenses 102,775
----------
Total liabilities 1,567,038
------------
NET ASSETS for 29,622,315 shares of beneficial interest outstanding $333,119,178
============
SOURCES OF NET ASSETS:
Paid-in capital $362,537,445
Accumulated distributions in excess of net investment income (1,755,091)
Accumulated undistributed net realized loss on investment and foreign
currency transactions from the Portfolio (16,172,449)
Unrealized depreciation of investments and foreign currency transactions
from Portfolio (computed on the basis of identified cost) (11,490,727)
------------
Total $333,119,178
============
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE (NOTE 6) PER SHARE
($333,119,178 / 29,622,315 shares of beneficial interest) $ 11.25
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
STATEMENT OF OPERATIONS
For the six months ended February 28, 1995
(Unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME (Note 1B):
Investment income allocated from Portfolio
(net of foreign taxes of $277,981) $ 3,511,116
Expenses allocated from Portfolio (2,041,511)
-------------
Net investment income from Portfolio $ 1,469,605
Expenses -
Management fee (Note 3) $ 449,703
Compensation of Trustees not members of the
Administrator's organization 1,586
Custodian fee (Note 3) 46,792
Distribution fees (Note 5) 1,475,187
Transfer and dividend disbursing agent fees 233,692
Printing and postage 90,941
Legal and accounting services 9,959
Amortization of organization expenses (Note 1D) 4,853
Miscellaneous 25,259
------------
Total expenses 2,337,972
-------------
Net investment loss $ (868,367)
REALIZED AND UNREALIZED LOSS FROM PORTFOLIO:
Net realized loss -
Investments (net of foreign capital gains taxes of $335,715) $ (3,521,379)
Foreign currency (164,576)
-------------
Net realized loss (3,685,955)
Change in unrealized appreciation of investments and
foreign currency transactions (51,649,130)
-------------
Net realized and unrealized loss $ (55,335,085)
-------------
Net decrease in net assets from operations $ (56,203,452)
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the six
months ended For the year
February 28, 1995 ended
(Unaudited) August 31, 1994
----------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations -
Net investment loss $ (868,367) $ (1,540,352)
Net realized loss from Portfolio (3,685,955) (11,727,498)
Change in unrealized appreciation (depreciation)
from Portfolio (51,649,130) 37,116,048
------------- -------------
Net increase (decrease) in net assets
from operations $ (56,203,452) $ 23,848,198
------------- -------------
Distributions to shareholders (Note 2)
In excess of net investment income $ (1,966,576) $ --
In excess of net realized gain on
investments transactions (302,615) (456,955)
------------- -------------
Total distributions $ (2,269,191) $ (456,955)
------------- -------------
Transactions in shares of beneficial interest (Note 4)
Proceeds from sale of shares $ 37,920,069 $ 370,568,876
Net asset value of shares issued to
shareholders in payment of distributions declared 1,996,861 405,243
Cost of shares redeemed (40,803,817) (65,558,628)
------------- -------------
Increase (decrease) in net assets from
Fund share transactions $ (886,887) $ 305,415,491
------------- -------------
Net increase (decrease) in net assets $ (59,359,530) $ 328,806,734
NET ASSETS:
At beginning of period 392,478,708 63,671,974
------------- -------------
At end of period $ 333,119,178 $ 392,478,708
============= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the six
months ended For the
February 28, 1995 year ended
(Unaudited) August 31, 1994
----------------- ---------------
<S> <C> <C>
NET ASSET VALUE, beginning of period $ 13.160 $ 10.540
-------- --------
Income from Investment Operations:
Net investment loss $ (0.010) $ (0.039)
Net realized and unrealized gain (loss)
on investments and foreign currency transactions (1.825) 2.684
-------- --------
Total income (loss) from investment operations $ (1.835) $ 2.645
-------- --------
Less distributions
In excess of net investment income $ (0.065) $ --
Distributions in excess of net realized gain on investment transactions (0.010) (0.025)
-------- --------
Total distributions $ (0.075) (0.025)
-------- --------
NET ASSET VALUE, end of period $ 11.250 $ 13.160
======== ========
TOTAL RETURN** (14.03)% 25.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $333,119 $392,479
Ratio of net expenses to average daily net assets (1) 2.44%* 2.38%
Ratio of net investment loss to average daily net assets (0.48)%* (0.55)%
</TABLE>
(1) Includes the Fund's share of Greater China Growth Portfolio's allocated
expenses.
* Annualized
** 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 record date. See notes to financial statements
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
================================================================================
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Marathon Greater China Growth Fund (the Fund) is a diversified series of
Eaton Vance Growth Trust (the Trust). The Trust is an entity of the type
commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund invests all of its investable assets in interests in Greater
China Growth 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 (54.7% at February 28, 1995). The performance of the Fund is directly
affected by the performance of the Portfolio. The financial statements of the
Portfolio, including the Portfolio of investments, are included elsewhere in
this report and should be read in conjunction with the Fund's financial
statements. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. Investment Valuations - Valuation of securities by the Portfolio is discussed
in Note 1 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. Income - The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted accounting
principles.
C. Federal Taxes - The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its net investment income, and any
net realized capital gains. Accordingly, no provision for federal income or
excise tax is necessary. Net capital losses of $11,056,776 attributable to
security and currency transactions incurred after October 31, 1993, are treated
as arising on the first day of the Fund's current 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. Distribution Costs - For book purposes, commissions paid on the sale of Fund
shares and other distribution costs are charged to operations. For tax purposes,
commissions paid were charged to paid-in capital prior to November 16, 1994 and
subsequently charged to operations. The change in the tax accounting practice
was prompted by a recent Internal Revenue Service ruling and has no effect on
either the Fund's current yield or total return (Note 5).
F. Reclassification - Certain prior year amounts have been reclassified to
conform to the current year presentation.
G. Interim Financial Information - The interim financial statements relating to
February 28, 1995 and for 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 necessary for the fair presentation of the
financial statements.
================================================================================
(2) DISTRIBUTIONS TO SHAREHOLDERS
It is the present policy of the Fund to make at least one distribution annually
(normally in December) of all or substantially all of the investment income
allocated to the Fund by the Portfolio, less the Fund's direct and allocated
expenses (other than sales commissions incurred on the sale of Fund shares,
which commissions are charged to the Fund's paid-in capital for tax purposes)
and at least one distribution annually of all or substantially all of the net
realized capital gains (reduced by any available capital loss carryforwards from
prior years) allocated by the Portfolio to the Fund, if any.
12
<PAGE> 13
================================================================================
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 statements and tax earnings
and profits which result in temporary over distributions for financial statement
purposes are classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital. During
the period ended February 28, 1995, $616,326 was reclassified from accumulated
distributions in excess of net investment income to paid-in capital, due to
permanent differences between book and tax accounting for distribution costs
being considered as permanent differences. Net investment income, net realized
gains and net assets were not affected by this reclassification.
================================================================================
(3) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The management fee is earned by Eaton Vance Management (EVM) as compensation for
management and administration of the business affairs of the Fund. The fee is
based on a percentage of average daily net assets. For the six months ended
February 28, 1995 the fee was equivalent to 0.25% of the Fund's average net
assets for such period and amounted to $449,703. Except as to Trustees of the
Fund who are not members of EVM's organization, officers and Trustees receive
remuneration for their services to the Fund out of such management fee.
Investors Bank & Trust Company (IBT), an affiliate of EVM, serves as custodian
of the Fund. Pursuant to the custodian agreement, IBT receives a fee reduced by
credits which are determined based on the average daily cash balances the Fund
maintains with IBT. Certain officers and Trustees of the Fund and the Portfolio
are officers and directors/trustees of the above organizations.In addition,
investment adviser, administrative fees, and custodian 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.
================================================================================
(4) 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>
For the six
months ended For the
February 28, 1995 year ended
(Unaudited) August 31, 1994
------------ -------------
<S> <C> <C>
Sales 3,105,740 28,933,950
Issued to shareholders electing to receive
payments of distributions in Fund shares 173,961 29,118
Redemptions (3,490,641) (5,170,232)
---------- -----------
Net increase (decrease) (210,940) 23,792,836
========== ===========
</TABLE>
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
(5) DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
Principal Underwriter, Eaton Vance Distributors, Inc. (EVD) amounts equal to
1/365 of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 5% of the
aggregate amount received by the Fund for 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 the aggregate amount of contingent deferred sales charges (see Note
6) and daily amounts theretofore paid to EVD. The amount payable to EVD with
respect to each day is accrued on such day as a liability of the Fund and,
accordingly, reduces the Fund's net assets. The Fund accrued $1,349,110 as
payable to EVD for the six months ended February 28, 1995, representing 0.75% of
average daily net assets. At February 28, 1995, the amount of Uncovered
Distribution Charges of EVD calculated under the Plan was approximately
$15,588,672.
In addition, the Plan authorizes the Fund to make payments of service fees to
the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have initially implemented the Plan by authorizing the Fund to make
quarterly payments of service fees to the Principal Underwriter and Authorized
Firms in amounts not expected to exceed 0.25% per annum of the Fund's average
daily net assets based on the value of Fund shares sold by such persons and
remaining outstanding for at least one year. 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 months ended February 28, 1995 amounted to
$126,077.
Certain officers and Trustees of the Fund are officers or directors of EVD.
================================================================================
(6) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon the
lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by reinvestment of dividends or capital gain
distributions. The CDSC is imposed at declining rates that begin at 5% in the
first and second year of redemption after purchase, (6% and 5% respectively for
shares purchased prior to August 1, 1994) declining one percentage point each
year thereafter. 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 retained by the Fund. EVD received approximately $933,599
of CDSC paid by shareholders for the six months ended February 28, 1995.
================================================================================
(7) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$40,479,873 and $43,140,335, respectively.
14
<PAGE> 15
GREATER CHINA GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
February 28, 1995
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------------------------------
COMMON STOCKS - 98.6%
- ------------------------------------------------------------------------------------
<S> <C> <C>
CHINA, 2.6%
Dazhong Taxi 1,106,105 $ 807,457
Shanghai Diesel Engineering* 1,960,000 1,528,800
Shanghai Erfangji Co. Ltd 5,595,160 1,096,651
Shanghai Industrial Sewing Machine* 740,000 236,800
Shanghai Jin Jiang Tower 2,054,000 792,844
Shanghai Phoenix Bicycle Co. 2,615,000 779,270
Shanghai Posts & Telecommunications 150,000 90,300
Shanghai Yaohua Pilkington* 4,770,500 4,770,500
Shanghai Tyre and Rubber 5,717,600 1,703,845
Shenzhen China Bicycles Co. 8,745,000 3,766,472
Shenzhen Vanke Co. Ltd 397,600 179,993
-------------
$ 15,752,932
-------------
HONG KONG, 39.8%
Applied International Holdings 1,890,000 $ 217,539
Applied International Holdings (Warrants) 578,000 21,675
Chen Hsong Holdings 11,320,000 6,186,380
Cheung Kong Holdings Ltd 3,680,000 16,040,384
CIM Company Ltd 1,800,000 3,026,579
Citic Pacific Ltd 3,600,000 8,963,280
Consolidated Electric Power Asia* 2,938,180 6,118,466
Dah Sing Financial Holdings 2,849,800 5,713,279
Hong Kong Aircraft & Engineering Co. Ltd 765,600 2,465,691
Hong Kong Electric Co. 3,105,000 9,296,991
Hong Kong Land Holdings 2,238,000 4,269,656
Hong Kong Telecommunications Ltd 6,958,000 12,509,092
Hopewell Holdings 16,778,000 12,803,292
HSBC Holdings PLC 1,632,600 17,156,993
Hua Xin Cement Co. Ltd 1,341,100 297,724
Hutchison Whampoa 4,673,000 19,824,735
Jardine Matheson HK Registry 2,299,600 21,156,320
Johnson Electric Holdings 1,301,500 2,592,458
Li & Fung Ltd 6,446,000 3,918,523
Maanshan Iron & Steel Co. 6,120,000 1,227,060
Ming Pao Enterprises 9,413,000 5,356,938
National Mutual Ltd 15,606,000 10,092,400
New World Development 3,398,000 9,273,482
Peregrine Investments Holdings 479,666 586,296
</TABLE>
15
<PAGE> 16
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
San Miguel Brewery Ltd 3,170,000 $ 2,747,122
Shanghai Haixing Shipping 17,230,000 3,209,949
Shanghai Petrochemical 26,784,000 8,228,045
Siu Fung Ceramics Holdings 24,084,000 3,581,291
South China Industries 4,930,000 516,664
South Sea Development Co. 6,184,464 408,175
Sun Hung Kai Properties Ltd 1,654,000 11,124,308
Television Broadcasts Ltd 1,351,000 5,084,894
Tem Fat Hing Fung 26,696,000 4,039,105
Varitronix International Ltd 3,782,000 5,527,771
Wharf Holdings 4,610,000 15,860,705
Yizheng Chemical Fibre Co. 7,800,000 2,749,500
Zhenhai Refining & Chemical Co. 4,722,000 1,099,282
-------------
$ 243,292,044
-------------
INDONESIA, 2.9%
Bank International Indonesia 356,000 $ 927,344
Gajah Tunggal 2,027,000 2,492,324
PT Indah Kiat Pulp & Paper 6,434,400 9,432,187
PT Indonesian Satellite 139,600 4,973,250
-------------
$ 17,825,105
-------------
REPUBLIC OF KOREA, 8.2%
Daewoo Corp. 10,277 $ 134,057
Daewoo Heavy Industries 60,000 790,224
Daewoo Heavy Industries Pfd 199,114 1,545,702
Dong Chang Paper Mfg.* 80,008 1,074,004
Goldstar Co. 70,000 2,554,419
Korea Electric Power Corp. 411,200 14,152,928
Korea Exchange Bank* 593,380 6,094,250
Korea Exchange Bank Rights 172,620 308,230
Pohang Iron & Steel Co. Ltd 45,060 4,281,457
Sam Sung Electronics 41,402 6,136,475
Samsung Fire & Marine Insurance* 3,920 651,306
Samwhan Ltd 25,795 614,128
Yukong Ltd 285,073 11,978,368
-------------
$ 50,315,548
-------------
</TABLE>
16
<PAGE> 17
================================================================================
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
MALAYSIA, 10.4%
Aokam Perdana Berhad 427,000 $ 2,475,618
Berjaya Textiles Berhad 540,000 1,988,442
DCB Holdings Berhad 100,000 221,330
Genting Berhad 1,229,000 10,639,822
Hong Leong Industries Berhad 1,357,000 6,591,628
IOI Properties Berhad 406,000 1,479,099
Kim Hin Industry Berhad 1,105,000 5,237,700
Kim Hin Industry Berhad Warrants* 221,000 273,576
Land & General Berhad 5,343,000 15,174,654
Leader Universal Holdings Ltd 1,050,000 3,681,300
Leader Universal Holdings Ltd. (A Shares) 916,666 3,052,222
Mulpha International Trading 696,666 1,135,287
Perlis Plantations Berhad 770,000 2,548,854
Sime Darby Berhad 3,780,000 9,180,864
-------------
$ 63,680,396
-------------
THE PHILIPPINES, 6.8%
Ayala Corp. Class B 2,961,460 $ 3,975,464
Bacnotan Consolidated Industries 453,351 2,804,747
Belle Corp. Class B* 31,900,000 8,067,510
Belle Corp. Class B Rights 7,200,000 1,260,700
Philippine Long Distance Telephone 201,700 11,900,300
San Miguel Corporation 1,797,800 8,254,419
SM Prime Holdings* 17,223,000 5,093,183
-------------
$ 41,356,323
-------------
SINGAPORE, 10.7%
Cerebos Pacific Ltd 1,129,000 $ 6,426,720
City Developments 924,000 4,526,584
Clipsal Industries Holdings Ltd 2,200,000 4,928,000
Clipsal Industries Warrants* 234,000 184,860
Development Bank of Singapore 820,000 7,921,036
Overseas Union Bank 1,716,000 10,004,966
Sembawang Maritime 2,266,000 9,459,190
Singapore Airlines Ltd 1,125,000 11,255,400
Straits Steamship Land 2,452,500 7,580,923
United Overseas Bank 309,000 3,006,199
-------------
$ 65,293,878
-------------
</TABLE>
17
<PAGE> 18
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
TAIWAN, 5.1%
China Trust Business Bank 1,654,580 $ 3,673,829
Formosa Chemical 1,387,360 2,101,018
Formosa Plastics 2,490,000 4,961,823
Nan Ya Plastic 3,067,085 6,402,847
Sampo 3,006,080 3,982,154
Taiwan Polypropylene 776,000 1,973,446
Taiwan Semiconductor 402,000 2,365,046
United Microelectronics Co. 2,500,000 4,042,250
Victor Taichung Machinery* 820,000 1,851,888
-------------
$ 31,354,301
-------------
THAILAND, 11.6%
Bangkok Bank 518,200 $ 4,446,467
Electricity Generating (Foreign) 4,241,700 11,480,161
Krung Thai Bank Ltd. (Foreign) 1,180,000 3,524,896
Saha Union Corp. Ltd. (Local) 700,000 919,240
Shinawatra Satellite (Foreign) 3,210,000 6,950,280
Siam Cement (Local) 234,400 13,345,939
Siam Cement (Foreign) 151,900 9,196,831
Siam Commercial Bank 1,591,300 13,781,931
Thai Petrochemical (Foreign) 160,000 352,847
Thailand Military Bank (Foreign) 1,972,500 6,485,383
-------------
$ 70,483,975
-------------
UNITED STATES, 0.5%
AES China Generating Co. Ltd.* 210,000 $ 1,863,750
Pacific Basin Bulk Shipping 84,500 1,151,313
-------------
$ 3,015,063
-------------
TOTAL INVESTMENTS (Identified cost, $600,922,443) $ 602,369,565
OTHER ASSETS - 1.4% 8,433,506
-------------
NET ASSETS - 100.0% $ 610,803,071
=============
</TABLE>
* Non-income producing security
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE> 19
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995
(Unaudited)
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (Identified cost, $600,922,443) $ 602,369,565
Cash denominated in foreign currencies (cost, $1,387,256) 1,378,170
Cash 5,613,598
Receivable for investments sold 2,096,695
Dividends and interest receivable 567,555
Deferred organization expenses (Note 1C) 77,668
--------------
Total assets $ 612,103,251
LIABILITIES:
Payable for investments purchased $1,268,737
Payable for forward foreign currency exchange contracts 1,996
Payable to affiliate -
Custodian fee 28,334
Accrued expenses 1,113
----------
Total liabilities $ 1,300,180
--------------
NET ASSETS applicable to investors' interest in Portfolio $ 610,803,071
==============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $ 609,357,561
Net unrealized appreciation of investments (computed on the
basis of identified cost) 1,447,122
Net unrealized depreciation of foreign currencies (1,612)
--------------
TOTAL $ 610,803,071
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE> 20
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Statement of Operations
For the six months ended February 28, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Income -
Dividends (net of foreign taxes of $516,485) $ 6,517,367
Interest 11,315
-------------
Total income $ 6,528,682
Expenses -
Investment adviser fee (Note 2) $ 2,456,952
Administration fee (Note 2) 802,285
Custodian fee (Note 2) 457,412
Legal & audit fees 38,794
Amortization of organization expense (Note 1C) 14,201
Trustees' fees 6,250
Miscellaneous 4,958
------------
Total expenses 3,780,852
-------------
Net investment income $ 2,747,830
-------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss -
Investments (net of foreign capital gains taxes of $621,026) $ (6,536,590)
Foreign currency transactions (305,631)
-------------
Net realized loss on investments and foreign currency transactions $ (6,842,221)
Change in unrealized appreciation -
Investments $ (95,892,899)
Foreign currency (4,864)
-------------
Decrease in unrealized appreciation $ (95,897,763)
-------------
Net realized and unrealized loss on investments and
foreign currency transactions $(102,739,984)
-------------
Net decrease in net assets from operations $ (99,992,154)
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE> 21
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the six
months ended For the year
February 28, 1995 ended
INCREASE (DECREASE) IN NET ASSETS: (Unaudited) August 31, 1994
----------------- ---------------
<S> <C> <C>
From operations -
Net investment income $ 2,747,830 $ 4,024,714
Net realized loss on investment and foreign currency transactions (6,842,221) (11,068,453)
Net increase (decrease) in unrealized appreciation (depreciation)
of investments (95,892,899) 79,234,677
Net increase (decrease) in unrealized appreciation (depreciation)
of foreign currency (4,864) 1,952
------------- -------------
Increase (decrease) in net assets from operations $ (99,992,154) $ 72,192,890
------------- -------------
Capital transactions:
Contributions $ 82,882,989 $ 636,873,995
Withdrawals (104,700,441) (184,497,094)
------------- -------------
Increase (decrease) in net assets resulting from capital transactions $ (21,817,452) $ 452,376,901
------------- -------------
Total increase (decrease) in net assets $(121,809,606) $ 524,569,791
NET ASSETS:
At beginning of period 732,612,677 208,042,886
------------- -------------
At end of period $ 610,803,071 $ 732,612,677
============= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE> 22
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
For the six
months ended For the year
February 28, 1995 ended
(Unaudited) August 31, 1994
----------------- ---------------
<S> <C> <C>
Ratios (As a percentage of average net assets):
Expenses 1.14%+ 1.15%
Net investment income 0.83%+ 0.73%
PORTFOLIO TURNOVER 18% 36%
</TABLE>
+Annualized
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES
Greater China Growth Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 as a diversified, open end investment company
which was organized as a trust under the laws of the State of New York on
September 1, 1992. 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, 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 has elected to be treated as a partnership for
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 Trust's
understanding of the applicable countries' tax rules and rates.
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. FUTURES CONTRACTS - Upon the entering of a financial futures contract, the
Portfolio is required to deposit ("initial margin") either in cash or securities
an amount equal to a certain percentage of the purchase price indicated in the
financial futures contract. Subsequent payments are made or received by the
Portfolio ("margin maintenance") each day, dependent on daily fluctuations in
the value of the underlying security, and are recorded for book purposes as
unrealized gains or losses by the Portfolio. 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.
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
E. FOREIGN CURRENCY TRANSLATION - Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investment securities and income and expenses are converted
into U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. Recognized gains or losses on investment
transactions attributable to foreign currency rates are recorded for financial
statement purposes as net realized gains and losses on investments. That portion
of unrealized gains and losses on investments that result from fluctuations in
foreign currency exchange rates are not separately disclosed.
F. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - The Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counterparties to
meet the terms of their contracts and from movements in the value of a foreign
currency relative to the U.S. dollar. The Portfolio will enter into forward
contracts for hedging purposes as well as non-hedging purposes. The forward
foreign currency exchange contracts are adjusted by the daily exchange rate of
the underlying currency and any gains or losses are recorded for financial
statement purposes as unrealized until such time as the contracts have been
closed or offset.
G. OTHER - Investment transactions are accounted for on the date the investments
are purchased or sold. Dividend income is recorded on the ex-dividend date.
However, if the ex-dividend date has passed, certain dividends from foreign
securities are recorded as the Portfolio is informed of the ex-dividend date.
Interest income is recorded on the accrual basis.
H. INTERIM FINANCIAL INFORMATION - The interim financial statements relating to
February 28, 1995 and for 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 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 Management (Hong Kong)
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 February 28, 1995 the adviser
fee was 0.74% of average net assets. In addition, an administrative fee is
earned by Eaton Vance Management (EVM) for managing and administering the
business affairs of the Portfolio. Under the administration agreement, EVM earns
a monthly fee in the amount of 1/48th of 1% (equal to 0.25% annually) of the
average daily net assets of the Portfolio up to $500,000,000, and at reduced
rates as daily net assets exceed that level. For the six months ended February
28, 1995, the administration fee was 0.24% of average net assets. Except as to
Trustees of the Portfolio who are not members of the Adviser or EVM's
organization, officers and Trustees receive remuneration for their services to
the Portfolio out of such investment adviser and administrative fees. Investors
Bank & Trust Company (IBT), an affiliate of EVM, serves as custodian of the
Portfolio. Pursuant to the custodian agreement, IBT receives a fee reduced by
credits which are determined based on the average daily cash balances the
Portfolio maintains with IBT. Certain of the officers and Trustees of the
Portfolio are officers or directors/trustees of the above organizations.
24
<PAGE> 25
- --------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than short- term obligations,
aggregated $118,062,038 and $139,005,319, respectively.
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the investments
owned at February 28, 1995, as computed on a federal income tax basis, are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Aggregate cost $600,922,443
============
Gross unrealized appreciation $ 65,625,344
Gross unrealized depreciation (64,178,222)
------------
Net unrealized appreciation $ 1,447,122
============
</TABLE>
- --------------------------------------------------------------------------------
(5) RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
Investing in securities issued by companies whose principal business activities
are outside the United States may involve significant risks not present in
domestic investments. For example, there is generally less publicly available
information about foreign companies, particularly those not subject to the
disclosure and reporting requirements of the U.S. securities laws. Foreign
issuers are generally not bound by uniform accounting, auditing, and financial
reporting requirements and standards of practice comparable to those applicable
to domestic issuers. Investments in foreign securities also involve the risk of
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the Portfolio, political or financial instability or diplomatic
and other developments which could affect such investments. Foreign stock
markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In general, there is less
overall governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the United States.
25
<PAGE> 26
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
(6) FINANCIAL INSTRUMENTS
The Portfolio regularly trades in financial instruments with off-balance sheet
risk in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options, forward foreign currency exchange contracts and financial 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.
A summary of obligations under these financial instruments at February 28, 1995
is as follows:
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
SALES
In Exchange for Net Unrealized
Settlement (in United Appreciation
Dates Deliver States Dollars) (Depreciation)
- ---------- ----------------------------- --------------- --------------
<S> <C> <C> <C> <C>
3/7/95 Malaysian Ringgit 2,894,782 $ 1,132,854 $ (1,132)
3/2/95 Thai Baht 10,575,675 423,535 (509)
----------- ---------
$ 1,556,389 $ (1,641)
=========== =========
<CAPTION>
PURCHASES
Deliver Net Unrealized
Settlement (in United Appreciation
Dates In Exchange for States Dollars) (Depreciation)
- ---------- ----------------------------- --------------- --------------
<S> <C> <C> <C> <C>
3/10/95 Malaysian Ringgit 1,678,279 $ 657,427 $ 13
3/1/95 Thai Baht 15,245,748 611,665 (368)
----------- ---------
$ 1,269,092 $ (355)
=========== =========
</TABLE>
- --------------------------------------------------------------------------------
(7) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a $120 million unsecured line of credit agreement with a bank.
The line of credit consists of a $20 million committed facility and a $100
million discretionary facility. Borrowings will be made by the Portfolio solely
to facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each portfolio based on its borrowings at
an amount above either the bank's adjusted certificate of deposit rate, a
variable adjusted certificate of deposit rate, or a federal funds effective
rate. In addition, a fee computed at an annual rate of 1/4 of 1% on the $20
million committed facility and on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds and portfolios
at the end of each quarter. The Portfolio did not have any significant
borrowings or allocated fees during the period.
26
<PAGE> 27
EV MARATHON GREATER CHINA GROWTH FUND
OFFICERS
- -------------------------------------------------------------
JAMES B. HAWKES
President, Trustee
LANDON T. CLAY
Vice President, Trustee
M. DOZIER GARDNER
Vice President
PETER F. KIELY
Vice President, Trustee
JAMES L. O'CONNOR
Treasurer
THOMAS OTIS
Secretary
WILLIAM J. AUSTIN, JR.
Assistant Treasurer
JANET E. SANDERS
Assistant Treasurer and Assistant Secretary
INDEPENDENT TRUSTEES
- -------------------------------------------------------------
DONALD R. DWIGHT
President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
SAMUEL L. HAYES, III
Jacob Schiff Professor of Investment Banking,
Harvard University Graduate School of Business Administration
NORTON H. REAMER
President and Director, United Asset Management Company
JOHN L. THORNDIKE
Director, Fiduciary Company Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
GREATER CHINA GROWTH PORTFOLIO
OFFICERS
- -------------------------------------------------------------
HON. ROBERT LLOYD GEORGE
President, Trustee and Portfolio Co-Manager
JAMES B. HAWKES
Vice President and Trustee
SCOBIE DICKINSON WARD
Vice President, Assistant Secretary,
Assistant Treasurer and Portfolio Co-Manager
WILLIAM WALTER RALEIGH KERR
Vice President, Secretary and Assistant Treasurer
JAMES L. O'CONNOR
Vice President and Treasurer
THOMAS OTIS
Vice President and Assistant Secretary
JANET E. SANDERS
Assistant Secretary
WILLIAM J. AUSTIN, JR.
Assistant Treasurer
INDEPENDENT TRUSTEES
- -------------------------------------------------------------
SAMUEL L. HAYES, III
Jacob Schiff Professor of Investment Banking,
Harvard University Graduate School of Business Administration
STUART HAMILTON LECKIE
Managing Director and Actuary, Wyatt Company, Hong Kong
HON. EDWARD K.Y. CHEN
Professor and Director, Center for Asian Studies,
University of Hong Kong
27
<PAGE> 28
SPONSOR AND MANAGER OF EV MARATHON GREATER CHINA GROWTH FUND & ADMINISTRATOR OF
GREATER CHINA GROWTH PORTFOLIO
Eaton Vance Management
24 Federal Street
Boston, MA 02110
ADVISER OF GREATER CHINA GROWTH PORTFOLIO
Lloyd George Management
(Hong Kong) Limited
3408 One Exchange Square
Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EV MARATHON GREATER CHINA GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
M-CGSRC
EV MARATHON GREATER CHINA GROWTH FUND
SEMI-ANNUAL SHAREHOLDER REPORT
FEBRUARY 28, 1995
