<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS
COMMON STOCKS -- 93.4%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
-------------------------------------------------------------------
</TABLE>
HONG KONG -- 65.7%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Broadcast Services / Programming -- 1.4%
-------------------------------------------------------------------
Phoenix Satellite Television Holdings,
Ltd.(1) 8,142,000 $ 2,348,895
Hong Kong based TV program producer with
special emphasis on Mandarin speaking
audience in mainland China.
-------------------------------------------------------------------
$ 2,348,895
-------------------------------------------------------------------
Building - Heavy Construction -- 0.9%
-------------------------------------------------------------------
New World Infrastructure(1) 1,347,400 $ 1,528,938
The group owns roads and bridges,
container terminals in Hong Kong and
China, power stations, water treatment
plants, and information
infrastructure projects.
-------------------------------------------------------------------
$ 1,528,938
-------------------------------------------------------------------
Distribution / Wholesale -- 7.7%
-------------------------------------------------------------------
Li & Fung, Ltd. 3,000,000 $ 13,078,264
Largest global intermediator between
garment suppliers and retailers.
-------------------------------------------------------------------
$ 13,078,264
-------------------------------------------------------------------
Diversified Operations -- 2.2%
-------------------------------------------------------------------
China Resources Enterprises 1,404,000 $ 2,088,214
Property investment and development.
Citic Pacific, Ltd. 358,000 1,707,560
Diversified company engaged in
infrastructure, trading, and
distribution, property and
industrial manufacturing.
-------------------------------------------------------------------
$ 3,795,774
-------------------------------------------------------------------
Diversified Trading -- 10.3%
-------------------------------------------------------------------
Hutchison Whampoa 1,241,000 $ 17,503,077
Diversified company with interests in
property development, ports, retailing,
manufacturing, telecommunications,
media, energy, finance and investment.
-------------------------------------------------------------------
$ 17,503,077
-------------------------------------------------------------------
Electric - Generation -- 1.0%
-------------------------------------------------------------------
Huaneng Power International, Inc. 4,000,000 $ 1,666,838
Largest independant power generation
company in China.
-------------------------------------------------------------------
$ 1,666,838
-------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
-------------------------------------------------------------------
Finance - Other Services -- 0.4%
-------------------------------------------------------------------
Hong Kong Exchange and Clearing(1) 330,000 $ 683,339
Engaged in the stock exchange, futures
exchange, and securities clearing
services in Hong Kong.
-------------------------------------------------------------------
$ 683,339
-------------------------------------------------------------------
Financial -- 12.5%
-------------------------------------------------------------------
China Everbright, Ltd. 3,456,000 $ 3,234,793
A proxy on China's fast growing
financial market.
HSBC Holdings PLC 1,262,700 17,971,036
One of the largest banking and financial
services organizations in the world.
-------------------------------------------------------------------
$ 21,205,829
-------------------------------------------------------------------
Industrial / Manufacturing -- 1.9%
-------------------------------------------------------------------
CIM Co., Ltd.(1)(2) 1,800,000 $ 0
Diversified company with interests in
property and investment, public
transportation, trading and
hotel operations.
Varitronix International, Ltd. 1,520,000 3,166,992
Designs, manufactures and sells liquid
crystal displays and related products.
-------------------------------------------------------------------
$ 3,166,992
-------------------------------------------------------------------
Metal Processors & Fabricator -- 0.7%
-------------------------------------------------------------------
Angang New Steel Co., Ltd. 9,504,000 $ 1,169,843
Specializes in cold-rolled sheets, wire
rods, and thick plates.
-------------------------------------------------------------------
$ 1,169,843
-------------------------------------------------------------------
Oil Companies - Integrated -- 1.7%
-------------------------------------------------------------------
PetroChina Co., Ltd. 12,388,000 $ 2,954,365
An integrated oil and gas company with
operations in China.
-------------------------------------------------------------------
$ 2,954,365
-------------------------------------------------------------------
Real Estate Operating / Development -- 9.1%
-------------------------------------------------------------------
Cheung Kong Holdings, Ltd. 830,000 $ 10,801,749
Property development and construction.
Kerry Properties, Ltd. 1,500,000 2,134,834
Property development, investment
and management.
Sun Hung Kai Properties, Ltd.(1) 184,000 1,751,718
Property development and investment,
hotel ownership.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
-------------------------------------------------------------------
Real Estate Operating / Development (continued)
-------------------------------------------------------------------
Wharf Holdings, Ltd. 333,000 $ 792,024
Diversified company with interests in
property development and investments,
terminals and warehousing, public
transportation and communications.
-------------------------------------------------------------------
$ 15,480,325
-------------------------------------------------------------------
Telecommunications -- 0.6%
-------------------------------------------------------------------
Pacific Century Cyberworks, Ltd.(1) 533,700 $ 992,236
Telecommunication company and technology
related business.
-------------------------------------------------------------------
$ 992,236
-------------------------------------------------------------------
Telecommunications - Cellular -- 11.1%
-------------------------------------------------------------------
China Mobile(1) 2,450,000 $ 18,848,087
The largest mobile operator in China.
-------------------------------------------------------------------
$ 18,848,087
-------------------------------------------------------------------
Telecommunications Services -- 1.5%
-------------------------------------------------------------------
China Unicom, Ltd.(1) 1,060,000 $ 2,459,996
China's second largest
telecommunications provider.
-------------------------------------------------------------------
$ 2,459,996
-------------------------------------------------------------------
Television -- 1.3%
-------------------------------------------------------------------
Television Broadcasts, Ltd. 400,000 $ 2,261,770
Hong Kong's dominant Chinese-language TV
program provider.
-------------------------------------------------------------------
$ 2,261,770
-------------------------------------------------------------------
Transportation -- 1.4%
-------------------------------------------------------------------
China Merchants Holdings 2,937,000 $ 2,315,949
Engaged in the Industrial and
Infrastructure business.
-------------------------------------------------------------------
$ 2,315,949
-------------------------------------------------------------------
Total Hong Kong
(identified cost $56,933,135) $111,460,517
-------------------------------------------------------------------
</TABLE>
MALAYSIA -- 1.3%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
-------------------------------------------------------------------
Commercial Banks -- 1.3%
-------------------------------------------------------------------
RHB Capital Berhad 2,010,000 $ 2,179,263
Third largest bank in Malaysia with a
retail focus.
-------------------------------------------------------------------
$ 2,179,263
-------------------------------------------------------------------
Total Malaysia
(identified cost $2,023,487) $ 2,179,263
-------------------------------------------------------------------
</TABLE>
REPUBLIC OF KOREA -- 4.4%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Electric Products - Miscellaneous -- 3.1%
-------------------------------------------------------------------
Samsung Electronics 21,085 $ 5,201,125
World's largest DRAM company and a
leading mobile handset manufacturer.
-------------------------------------------------------------------
$ 5,201,125
-------------------------------------------------------------------
Internet Service Provider -- 0.0%
-------------------------------------------------------------------
Korea Thrunet Co., Ltd., Class A(1) 5,940 $ 50,119
Is the leading provider of broadband
internet services via cable modem
in Korea.
-------------------------------------------------------------------
$ 50,119
-------------------------------------------------------------------
Telecommunications Services -- 1.3%
-------------------------------------------------------------------
Korea Telecom Corp. ADR 56,800 $ 2,151,300
Monopolistic telecom service provider
for South Korea.
-------------------------------------------------------------------
$ 2,151,300
-------------------------------------------------------------------
Total Republic of Korea
(identified cost $3,405,208) $ 7,402,544
-------------------------------------------------------------------
</TABLE>
TAIWAN -- 21.2%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Capacitors -- 1.3%
-------------------------------------------------------------------
Walsin Technology Corp.(1) 509,490 $ 2,150,232
The company researches, develops,
manufactures, and markets ceramic
electronic components for electronic and
electrical industries.
-------------------------------------------------------------------
$ 2,150,232
-------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
-------------------------------------------------------------------
Chemicals -- 1.7%
-------------------------------------------------------------------
Nan Ya Plastic 1,763,442 $ 2,925,814
Producer of PVC/non-PVC secondary
processed goods, polyester fibers, PCB's
and CCLs.
-------------------------------------------------------------------
$ 2,925,814
-------------------------------------------------------------------
Computers -- 2.8%
-------------------------------------------------------------------
Compal Electronics 2,489,262 $ 4,771,620
Production of color monitors, portable
computers, terminals and others.
-------------------------------------------------------------------
$ 4,771,620
-------------------------------------------------------------------
Computers - Memory Devices -- 0.5%
-------------------------------------------------------------------
CMC Magnetics Corp.(1) 368,212 $ 806,650
Is a leading provider of optical and
magnetic storage media.
-------------------------------------------------------------------
$ 806,650
-------------------------------------------------------------------
Electronic Components - Miscellaneous -- 1.7%
-------------------------------------------------------------------
Asustek Computer, Inc. 472,098 $ 2,904,984
Highly profitable motherboard producer
in Taiwan supplying to Intel.
-------------------------------------------------------------------
$ 2,904,984
-------------------------------------------------------------------
Electronic Connectors -- 3.7%
-------------------------------------------------------------------
Hon Hai Precision Industry 814,000 $ 6,215,142
Taiwan's largest connector manufacturer
and one of the largest global PC
case manufacturers.
-------------------------------------------------------------------
$ 6,215,142
-------------------------------------------------------------------
Financial -- 1.2%
-------------------------------------------------------------------
Bank Sinopac(1) 3,511,629 $ 2,002,443
The company is one of the banks
in Taiwan.
-------------------------------------------------------------------
$ 2,002,443
-------------------------------------------------------------------
Power Converters / Power Supply Equipment -- 4.1%
-------------------------------------------------------------------
Delta Electronics 1,788,000 $ 6,854,768
Produces switching power supplies, local
area network components and electrical
parts, filters and electrical
magnetic components.
-------------------------------------------------------------------
$ 6,854,768
-------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
-------------------------------------------------------------------
Semiconductor Components / Integrated
Circuits -- 4.2%
-------------------------------------------------------------------
Taiwan Semiconductor Manufacturing,
Co.(1) 865,920 $ 3,752,134
One of the world's largest contract
manufacturers of integrated circuits
(foundry) for third parties.
United Microelectronics Corp., Ltd.(1) 1,251,600 3,326,579
Is a leader in advanced process
technology in the
semiconductor industry.
-------------------------------------------------------------------
$ 7,078,713
-------------------------------------------------------------------
Total Taiwan
(identified cost $25,119,593) $ 35,710,366
-------------------------------------------------------------------
</TABLE>
THAILAND -- 0.8%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
Utilities -- 0.8%
-------------------------------------------------------------------
Electricity Generating (Foreign)(1) 1,100,000 $ 1,285,172
Involved in privatizing electricity
in Thailand.
-------------------------------------------------------------------
$ 1,285,172
-------------------------------------------------------------------
Total Thailand
(identified cost $2,474,939) $ 1,285,172
-------------------------------------------------------------------
Total Common Stocks -- 93.4%
(identified cost $89,956,362) $158,037,862
-------------------------------------------------------------------
Other Assets, Less Liabilities -- 6.6% $ 11,143,188
-------------------------------------------------------------------
Net Assets -- 100.0% $169,181,050
-------------------------------------------------------------------
</TABLE>
Company descriptions are unaudited.
ADR - American Depositary Receipt
(1) Non-income producing security.
(2) Security valued at fair value using methods determined in good faith by
or at the direction of the Trustees.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
PERCENTAGE
COMPANY INDUSTRY SECTOR OF NET ASSETS VALUE
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
China Mobile Telecommunications - Cellular 11.1% $18,848,087
HSBC Holdings PLC Financial 10.6 17,971,036
Hutchison Whampoa Diversified Trading 10.3 17,503,077
Li & Fung, Ltd. Distribution/Wholesale 7.7 13,078,264
Cheung Kong Holdings, Ltd. Real Estate Operating/ Development 6.4 10,801,749
Delta Electronics Power Converters/Power Supply Equipment 4.1 6,854,768
Hon Hai Precision Industry Electronic Connectors 3.7 6,215,142
Samsung Electronics Electric Products - Miscellaneous 3.1 5,201,125
Compal Electronics Computers 2.8 4,771,620
Taiwan Semiconductor Manufacturing, Co. Semiconductor Components/ Integration
Circuits 2.2 3,752,134
</TABLE>
INDUSTRY CONCENTRATION -- BELOW ARE THE TOP TEN INDUSTRY SECTORS REPRESENTED IN
THE PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
PERCENTAGE
COMPANY OF NET ASSETS VALUE
<S> <C> <C>
--------------------------------------------------------------------
Financial 13.7% $23,208,272
Telecommunications - Cellular 11.1 18,848,087
Diversified Trading 10.3 17,503,077
Real Estate Operating/Development 9.1 15,480,325
Distribution/Wholesale 7.7 13,078,264
Semiconductor Components/Integrated 4.2
Circuits 7,078,713
Power Converters/Power Supply Equipment 4.1 6,854,768
Electronic Connectors 3.7 6,215,142
Electric Products - Miscellaneous 3.1 5,201,125
Computers 2.8 4,771,620
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF AUGUST 31, 2000
<S> <C>
Assets
------------------------------------------------------
Investments, at value
(identified cost, $89,956,362) $158,037,862
Cash 9,037,183
Foreign currency, at value
(identified cost, $1,778,616) 1,779,935
Interest and dividends receivable 327,687
Prepaid expenses 435
------------------------------------------------------
TOTAL ASSETS $169,183,102
------------------------------------------------------
Liabilities
------------------------------------------------------
Accrued expenses $ 2,052
------------------------------------------------------
TOTAL LIABILITIES $ 2,052
------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $169,181,050
------------------------------------------------------
Sources of Net Assets
------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $101,098,967
Net unrealized appreciation (computed on
the basis of identified cost) 68,082,083
------------------------------------------------------
TOTAL $169,181,050
------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31, 2000
<S> <C>
Investment Income
-----------------------------------------------------
Dividends (net of foreign taxes,
$101,374) $ 2,860,155
Interest 25,479
-----------------------------------------------------
TOTAL INVESTMENT INCOME $ 2,885,634
-----------------------------------------------------
Expenses
-----------------------------------------------------
Investment adviser fee $ 1,376,522
Administration fee 458,639
Trustees fees and expenses 13,272
Custodian fee 354,244
Legal and accounting services 63,878
Miscellaneous 22,072
-----------------------------------------------------
TOTAL EXPENSES $ 2,288,627
-----------------------------------------------------
Deduct --
Reduction of custodian fee $ 345,679
-----------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 345,679
-----------------------------------------------------
NET EXPENSES $ 1,942,948
-----------------------------------------------------
NET INVESTMENT INCOME $ 942,686
-----------------------------------------------------
Realized and Unrealized Gain (Loss)
-----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis)
(net of foreign taxes, $4,317) $ 9,709,189
Foreign currency transactions (106,732)
-----------------------------------------------------
NET REALIZED GAIN $ 9,602,457
-----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $32,199,065
Foreign currency (28,695)
-----------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $32,170,370
-----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $41,772,827
-----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $42,715,513
-----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS AUGUST 31, 2000 AUGUST 31, 1999
<S> <C> <C>
--------------------------------------------------------------------------
From operations --
Net investment income $ 942,686 $ 1,720,943
Net realized gain (loss) 9,602,457 (15,205,254)
Net change in unrealized
appreciation (depreciation) 32,170,370 95,861,420
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 42,715,513 $ 82,377,109
--------------------------------------------------------------------------
Capital transactions --
Contributions $ 59,859,330 $ 87,077,591
Withdrawals (101,495,501) (142,001,532)
--------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
CAPITAL TRANSACTIONS $ (41,636,171) $ (54,923,941)
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 1,079,342 $ 27,453,168
--------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------
At beginning of year $ 168,101,708 $ 140,648,540
--------------------------------------------------------------------------
AT END OF YEAR $ 169,181,050 $ 168,101,708
--------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------------
Ratios (As a percentage of
average daily net assets):
Expenses 1.25% 1.23% 1.19% 1.19% 1.19%
Expenses after custodian
fee reduction 1.06% 1.05% 1.07% 1.16% 1.12%
Net investment income 0.51% 1.08% 1.19% 0.72% 0.94%
Portfolio Turnover 34% 57% 42% 48% 42%
-----------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S
OMITTED) $169,181 $168,102 $140,649 $537,782 $510,298
-----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
-------------------------------------------
Greater China Growth Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Portfolio, which was organized as a trust
under the laws of the State of New York on September 1, 1992, seeks long-term
capital appreciation by investing primarily in common stocks of companies
which, in the opinion of the investment adviser, will benefit from the
economic development and growth of the People's Republic of China. 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 Income Taxes -- The Portfolio has elected to be treated as a partnership for
United States Federal tax purposes. No provision is made by the Portfolio for
federal or state taxes on any taxable income of the Portfolio because each
investor in the Portfolio is ultimately responsible for the payment of any
taxes. Since one of the Portfolio's investors is a regulated investment
company that invests all or substantially all of its assets in the Portfolio,
the Portfolio normally must satisfy the applicable source of income and
diversification requirements (under the Internal Revenue Code) in order for
its investors to satisfy them. The Portfolio will allocate at least annually
among its investors each investor's distributive share of the Portfolio's net
investment income, net realized capital gains, and any other items of income,
gain, loss, deduction or credit. Withholding taxes on foreign dividends and
capital gains have been provided for in accordance with the Portfolio's
understanding of the applicable countries' tax rules and rates.
C Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balance the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reported as a reduction of
total expenses in the Statement of Operations.
D Financial Futures Contracts -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit (initial margin) either in
cash or securities an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by the Portfolio (margin maintenance) each day, dependent on
the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by the Portfolio.
The Portfolio's investment in financial futures contracts is designed only to
hedge against anticipated future changes in interest or currency exchange
rates. Should interest or currency exchange rates move unexpectedly, the
Portfolio may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss. If the Portfolio enters into a closing
transaction, the Portfolio will realize, for book purposes, a gain or loss
equal to the difference between the value of the financial futures contract
to sell and financial futures contract to buy.
E Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
F Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to changes in foreign currency exchange
rates are recorded for financial
23
<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
statement purposes as net realized gains and losses on investments. That
portion of unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed.
G Forward Foreign Currency Exchange Contracts -- The Portfolio may enter into
forward 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.
H Other -- Investment transactions are accounted for on a trade date basis.
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.
2 Investment Adviser Fee and Other Transactions with Affiliates
-------------------------------------------
The investment adviser fee is earned by Lloyd George Management (Bermuda)
Limited (the Adviser), an affiliate of Eaton Vance, as compensation for
management and investment advisory services rendered to the Portfolio. Under
the advisory agreement, the Adviser receives a monthly fee of 0.0625% (0.75%
annually) of the average daily net assets of the Portfolio up to
$500,000,000, and at reduced rates as daily net assets exceed that level. For
the year ended August 31, 2000, the adviser fee was equivalent to 0.75% of
average daily net assets. In addition, an administrative fee is earned by
Eaton Vance Management (EVM) for managing and administering the business
affairs of the Portfolio. Under the administration agreement, EVM earns a
monthly fee in the amount of 1/48th of 1% (0.25% annually) of the average
daily net assets of the Portfolio up to $500,000,000, and at reduced rates as
daily net assets exceed that level. For the year ended August 31, 2000, the
administrative fee was 0.25% of average daily net assets. Except as to
Trustees of the Portfolio who are not members of the Adviser or EVM's
organization, officers and Trustees receive remuneration for their services
to the Portfolio out of such investment adviser and administrative fees.
Certain officers and Trustees of the Portfolio are officers of the above
organizations.
3 Investment Transactions
-------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $59,300,379 and $108,152,868, respectively, for the year ended
August 31, 2000.
4 Federal Income Tax Basis of Investments
-------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at August 31, 2000, as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $91,334,178
-----------------------------------------------------
Gross unrealized appreciation $75,122,940
Gross unrealized depreciation (8,419,256)
-----------------------------------------------------
NET UNREALIZED APPRECIATION $66,703,684
-----------------------------------------------------
</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 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.
24
<PAGE>
GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
6 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 written
options, 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. There were
no obligations under these financial instruments
at August 31, 2000.
7 Line of Credit
-------------------------------------------
The Portfolio participates with other portfolios and funds managed by Boston
Management and Research and EVM and its affiliates in a $150 million
unsecured line of credit agreement with a group of banks. 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
participating portfolio or fund based on its borrowings at an amount above
either the Eurodollar rate or federal funds rate. In addition, a fee computed
at an annual rate of 0.10% on the daily unused portion of the line of credit
is allocated among the participating portfolios and funds at the end of each
quarter. The Portfolio did not have any significant borrowings or allocated
fees during the year
ended August 31, 2000.
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GREATER CHINA GROWTH PORTFOLIO AS OF AUGUST 31, 2000
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND INVESTORS
OF GREATER CHINA GROWTH PORTFOLIO:
---------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Greater China Growth Portfolio as of
August 31, 2000, and the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended August 31,
2000 and 1999 and the supplementary data for each of the years in the five year
period ended August 31, 2000. These financial statements and supplementary data
are the responsibility of the Portfolio's management. Our responsibility is to
express an opinion on these financial statements and supplementary data based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and supplementary data are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
the securities owned at August 31, 2000 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Greater China Growth
Portfolio at August 31, 2000, the results of its operations, the changes in its
net assets and its supplementary data for the respective stated period, in
conformity with accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 13, 2000
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EATON VANCE GREATER CHINA GROWTH FUND AS OF AUGUST 31, 2000
INVESTMENT MANAGEMENT
GREATER CHINA GROWTH PORTFOLIO
Officers
Hon. Robert Lloyd George
President and Trustee
James B. Hawkes
Vice President and Trustee
William Walter Raleigh Kerr
Vice President and
Assistant Treasurer
Adaline Mang-Yee Ko
Portfolio Manager
James L. O'Connor
Vice President and Treasurer
Alan R. Dynner
Secretary
Trustees
Hon. Edward K.Y. Chen
President of Lingnan College,
University of Hong Kong
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
President, Unicorn
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