As filed with the Securities and Exchange Commission on April 28, 1995
File No. 811-8332
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 1 [X]
EMERGING MARKETS PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
3808 One Exchange Square
Central, Hong Kong
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (617) 482-8260
Thomas Otis
24 Federal Street, Boston, Massachusetts 02110
(Name and Address of Agent for Service)
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EXPLANATORY NOTE
This Registration Statement, as amended, has been filed by the
Registrant pursuant to Section 8(b) of the Investment Company Act of 1940,
as amended. However, interests in the Registrant have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), because
such interests will be issued solely in private placement transactions
that do not involve any "public offering" within the meaning of Section
4(2) of the 1933 Act. Investments in the Registrant may be made only by
investment companies, common or commingled trust funds, organizations or
trusts described in Sections 401(a) or 501(a) of the Internal Revenue Code
of 1986, as amended, or similar organizations or entities that are
"accredited investors" within the meaning of Regulation D under the 1933
Act. This Registration Statement, as amended, does not constitute an
offer to sell, or the solicitation of an offer to buy, any interests in
the Registrant.
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PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant
to Paragraph 4 of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant
Emerging Markets Portfolio (the "Portfolio") is a diversified,
open-end management investment company which was organized as a trust
under the laws of the State of New York on January 18, 1994. Interests in
the Portfolio are issued solely in private placement transactions that do
not involve any "public offering" within the meaning of Section 4(2) of
the Securities Act of 1933, as amended (the "1933 Act"). Investments in
the Portfolio may be made only by U.S. and foreign investment companies,
common or commingled trust funds, organizations or trusts described in
Section 401(a) or 501(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), or similar organizations or entities that are "accredited
investors" within the meaning of Regulation D under the 1933 Act. This
Registration Statement, as amended, does not constitute an offer to sell,
or the solicitation of an offer to buy, any "security" within the meaning
of the 1933 Act.
The Portfolio's investment objective is to seek long-term capital
appreciation. The Portfolio seeks to achieve its objective by investing
in equity securities of companies in countries with emerging markets
("Emerging Market Countries"). Emerging Market Countries are located in
Asia, Latin America, the Middle East, Southern Europe, Eastern Europe,
Africa and the region comprising the former Soviet Union. The Portfolio
considers countries with emerging markets to be all countries that are
generally considered to be developing or emerging countries by the
International Bank for Reconstruction and Development (more commonly
referred to as the "World Bank") or the International Finance Corporation,
as well as countries that are classified by the United Nations or
otherwise regarded by their own authorities as developing.
The Portfolio is intended for long-term investors and is not
intended to be a complete investment program. Prospective investors
should take into account their objectives and other investments when
considering the purchase of an interest in the Portfolio. The Portfolio
cannot assure achievement of its investment objective. The investment
objective of the Portfolio is nonfundamental. Investments in Emerging
Markets Countries can be considered speculative, and therefore may offer
higher potential for gains and losses than investments in the developed
markets of the world. Additional information about the investment
policies of the Portfolio appears in Part B.
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Investment in Emerging Markets
The following is a general discussion of certain features of the
Emerging Market Country economies in which the Portfolio intends to
invest. There can be no assurance that the Portfolio will be able to
capitalize on the factors described herein. Opinions expressed herein are
the good faith opinions of the Portfolio's investment adviser, Lloyd
George Investment Management (Bermuda) Limited (the "Adviser").
The Adviser believes that the long-term growth rates of the eco-
nomies of certain Emerging Market Countries may be substantially higher
than those of developed countries. For a discussion of the risks
associated with investing in Emerging Market Countries, see "Special
Investment Methods and Risk Factors."
The Adviser believes that factors favoring investment in the
economies of many Emerging Market Countries include:
. Political changes in governments which favor a shift from
socialism and government involvement in the private
sector to a market-driven economy. Emerging Market
Countries in Asia, Latin America, the Middle East,
Southern Europe, Eastern Europe, Africa, and the region
comprising the former Soviet Union are in the process of
implementing broad market reforms to revitalize their
economies. The Adviser believes that these reforms have
helped lead to significantly higher levels of economic
activity.
. Privatizations of government-owned and -operated
companies in certain Emerging Market Countries, which
provide a source of capital for government budgets and
can result in improved operating efficiencies and
services. The Adviser believes that many privatized
companies may have significant growth potential arising
from the demand created by increasing economic activity.
. A favorable regulatory climate. Given the essential role
of private enterprise in economic growth, many Emerging
Market Country governments have in the past provided
support to help companies to finance the considerable
capital expenditures they need to expand. This support
has taken a variety of forms, including tax concessions,
more favorable rate or tariff structures, and limited
monopolies on services.
According to the World Bank, the combined market capitalization
of developing countries has grown from $67 billion in 1982 to over $1,629
billion, as of September 30, 1994. World Bank data indicate that
developing countries are experiencing more rapid economic growth than
industrialized countries.
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As a result of such factors, the Adviser believes that
substantial opportunities for long-term capital appreciation will be
presented by investments in the equity securities of companies in Emerging
Market Countries.
How the Portfolio Invests Its Assets
The Portfolio seeks to achieve its objective through investing in
a carefully selected and continuously managed portfolio consisting
primarily of equity securities of companies in Emerging Market Countries.
A company will be considered to be in an Emerging Market Country if it is
domiciled or has significant operations in that country. The Portfolio
will, under normal market conditions, invest at least 65% of its total
assets in such securities ("Emerging Market investments"). Substantially
all of the Portfolio's assets, however, will normally be invested in
equity securities, warrants, and options on equity securities and indices.
The Portfolio will ordinarily be invested in at least three Emerging
Market Countries.
Equity securities, for purposes of the 65% policy, will be
limited to common and preferred stocks; equity interests in trusts,
partnerships, joint ventures and other unincorporated entities or
enterprises; special classes of shares available only to foreign investors
in markets that restrict ownership by foreign investors to certain classes
of equity securities; convertible preferred stocks; and other convertible
instruments. The convertible instruments in which the Portfolio will
invest will generally not be rated, but will typically be equivalent in
credit quality to securities rated below investment grade. Convertible
debt securities that are not investment grade have risks similar to equity
securities; they have speculative characteristics and changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with
higher grade debt securities. Such debt securities will no exceed 20% of
total assets.
When consistent with its investment objective, the Portfolio may
also invest in equity securities of companies outside of Emerging Market
Countries, as well as warrants, options on equity securities and indices,
options on currency, futures contracts, options on futures contracts,
forward foreign currency exchange contracts, currency swaps and other
non-equity investments. However, such investments will not, under normal
market conditions, exceed 35% of the Portfolio's total assets. The Port-
folio will not invest more than 5% of its net assets in warrants.
The Portfolio may, for temporary defensive purposes, invest some
or all of its total assets in debt securities of foreign and United States
companies, foreign governments and the U.S. Government, and their
respective agencies, instrumentalities, political subdivisions and
authorities, as well as in high quality money market instruments
denominated in U.S. dollars or a foreign currency.
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Special Investment Methods and Risk Factors
The Portfolio is intended for long-term investors who can accept
the risks associated with investing primarily in Emerging Market
investments as well as the risks associated with investments denominated
in foreign currencies. In addition, certain of the Portfolio's potential
investment and management techniques entail special risks. See Part B for
a description of additional active management techniques available to the
Portfolio. These active management techniques include foreign currency
transactions, forward foreign currency exchange contracts, currency swaps,
options on currency, securities and securities indices, futures contracts
and options on futures contracts.
Investing in Foreign Securities. Investing in securities issued
by foreign companies and governments involves considerations and possible
risks not typically associated with investing in securities issued by the
U.S. Government and domestic corporations. The values of foreign invest-
ments are affected by changes in currency rates or exchange control
regulations, application of foreign tax laws, including withholding taxes,
changes in governmental administration or economic or monetary policy (in
this country or abroad) or changed circumstances in dealings between
nations. Because investment in foreign securities will usually involve
currencies of foreign countries, the value of the assets of the Portfolio
as measured in U.S. dollars may be adversely affected by changes in
foreign currency exchange rates. Such rates may fluctuate significantly
over short periods of time causing the Portfolio's net asset value to
fluctuate as well. Costs are incurred in connection with conversions
between various currencies. In addition, foreign brokerage commissions,
custody fees and other costs of investing are generally higher than in the
United States, and foreign securities markets may be less liquid, more
volatile and less subject to governmental supervision than in the United
States. Investments in foreign issuers could be affected by other factors
not present in the United States, including expropriation, confiscatory
taxation, lack of uniform accounting and auditing standards and potential
difficulties in enforcing contractual obligations.
More than 25% of the Portfolio's total assets, adjusted to
reflect currency transactions and positions, may be denominated in any
single currency. Concentration in a particular currency will increase the
Portfolio's exposure to adverse developments affecting the value of such
currency. An issuer of securities purchased by the Portfolio may be
domiciled in a country other than the country in whose currency the
securities are denominated.
Since the Portfolio will, under normal market conditions, invest
at least 65% of its total assets in Emerging Market investments, its
investment performance will be especially affected by events affecting
companies in Emerging Market Countries. The value and liquidity of
Emerging Market investments may be affected favorably or unfavorably by
political, economic, fiscal, regulatory or other developments in Emerging
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Market Countries. Foreign investment in the securities of issuers in
Emerging Market Countries is usually restricted or controlled to some
degree. The extent of economic development, political stability and
market depth of different Emerging Market Countries varies widely.
Certain Emerging Market Countries are either comparatively underdeveloped
or are in the process of becoming developed. Emerging Market investments
typically involve greater potential for gain or loss than investments in
securities of issuers in developed countries. In comparison to the United
States and other developed countries, Emerging Market Countries may have
relatively unstable governments and economies based on only a few
industries. Given the Portfolio's investments, the Portfolio will likely
be particularly sensitive to changes in the economies of Emerging Market
Countries as the result of any reversals of economic liberalization in
those countries, political unrest or changes in their trading status.
Securities Trading Markets. The securities markets in Emerging
Market Countries are substantially smaller, less liquid and more volatile
than the major securities markets in the United States. A high proportion
of the shares of many issuers may be held by a limited number of persons
and financial institutions, which may limit the number of shares available
for investment by the Portfolio. The prices at which the Portfolio may
acquire investments may be affected by trading by persons with material
non-public information and by securities transactions by brokers in
anticipation of transactions by the Portfolio in particular securities.
Emerging Market Country securities are susceptible to being influenced by
large investors trading significant blocks of securities. Similarly,
volume and liquidity in the bond markets in Emerging Market Countries are
less than in the United States and, at times, price volatility can be
greater than in the United States. The limited liquidity of these
securities markets in Emerging Market Countries may also affect the
Portfolio's ability to acquire or dispose of securities at the price and
time it wishes to do so.
The stock markets in many Emerging Market Countries are un-
dergoing a period of growth and change, which may result in trading or
price volatility and difficulties in the settlement and recording of
transactions, and in interpreting and applying the relevant law and
regulations. The securities industries in these countries are com-
paratively underdeveloped, and stockbrokers and other intermediaries may
not perform as well as their counterparts in the United States and other
more developed securities markets.
Settlement of securities transactions may be delayed and is
generally less frequent than in the U.S., which could affect the liquidity
of the Portfolio's assets. In addition, disruptions due to work stoppages
and trading improprieties in these securities markets have caused such
markets to close. If extended closings were to occur in stock markets
where the Portfolio was heavily invested, the Portfolio's ability to
redeem Portfolio interests could become correspondingly impaired. To
mitigate these risks, the Portfolio may have to maintain a higher cash
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position than it otherwise would, thereby possibly diluting its return, or
the Portfolio may have to sell more liquid securities which it would not
otherwise choose to sell. In some cases, the Portfolio may find it
necessary or desirable to borrow funds on a short-term basis, within the
limits set by the Investment Company Act of 1940, as amended, (the "1940
Act"), to help meet redemption requests. Such borrowings would result in
increased expense to the Portfolio. The Portfolio may suspend redemption
privileges or postpone the date of payment for more than seven days after
a redemption order is received under certain circumstances.
Emerging Market Countries. The Portfolio will invest in Emerging
Market Countries, in which political and economic structures may be
undergoing significant evolution and rapid development. Such countries
may lack the social, political and economic stability characteristic of
the United States. Certain of such countries may have in the past failed
to recognize private property rights and have at times nationalized or
expropriated the assets of private companies. The laws of Emerging Market
Countries relating to limited liability of corporate shareholders,
fiduciary duties of officers and directors, and the bankruptcy of state
enterprises may be less well developed than or different from such laws in
the United States. It may be more difficult to obtain a judgment in a
court of an Emerging Market Country than it is in the United States. In
addition, unanticipated political or social developments may affect the
values of the Portfolio's investments in those countries and the avail-
ability to the Portfolio of additional investments in those countries.
Governmental actions can have a significant effect on the
economic conditions in Emerging Market Countries, which could adversely
affect the value and liquidity of the Portfolio's investments. Although
some governments in Emerging Market Countries have recently begun to
institute economic reform policies, there can be no assurances that they
will continue to pursue such policies or, if they do, that such policies
will succeed.
Unlisted Securities. The Portfolio may invest up to 15% of its
net assets in securities of companies that are neither listed on a stock
exchange nor traded over the counter. Unlisted securities may include new
and early stage companies, which may involve a high degree of business and
financial risk that can result in substantial losses and may be considered
speculative. Such securities will generally be deemed to be illiquid.
Because of the absence of any public trading market for these investments,
the Portfolio may take longer to liquidate these positions than would be
the case for publicly traded securities. Although these securities may be
resold in privately negotiated transactions, the prices realized from
these sales could be less than those originally paid by the Portfolio or
less than what may be considered the fair value of such securities.
Furthermore, issuers whose securities are not publicly traded may not be
subject to public disclosure and other investor protection requirements
applicable to publicly traded securities. If such securities are required
to be registered under the securities laws of one or more jurisdictions
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before being resold, the Portfolio may be required to bear the expenses of
registration. In addition, any capital gains realized on the sale of such
securities may be subject to higher rates of taxation than taxes payable
on the sale of listed securities.
Derivative Instruments. The Portfolio may purchase or sell
derivative instruments (which are instruments that derive their value from
another instrument, security, index or currency) to enhance return, to
hedge against fluctuations in securities prices, interest rates or
currency exchange rates, or as a substitute for the purchase or sale of
securities or currencies. The Portfolio's transactions in derivative
instruments may be in the U.S. or abroad and may include the purchase or
sale of futures contracts on securities, securities indices, other
indices, other financial instruments or currencies; options on futures
contracts; exchange-traded and over-the-counter options on securities,
indices or currencies; and forward foreign currency exchange contracts.
The Portfolio's transactions in derivative instruments involve a risk of
loss or depreciation due to unanticipated adverse changes in securities
prices, interest rates, the other financial instruments' prices or
currency exchange rates, the inability to close out a position or default
by the counterparty. The loss on derivative instruments (other than
purchased options) may exceed the Portfolio's initial investment in these
instruments. In addition, the Portfolio may lose the entire premium paid
for purchased options that expire before they can be profitably exercised
by the Portfolio. The Portfolio incurs transaction costs in opening and
closing positions in derivative instruments. There can be no assurance
that the Adviser's use of derivative instruments will be advantageous to
the Portfolio.
The Portfolio may write (sell) covered call and put options on
securities, currencies and indices with respect to up to 50% of its net
assets, as measured by the aggregate value of the securities underlying
such written call and put options. If a written covered call option is
exercised, the Portfolio will be unable to realize further price
appreciation on the underlying securities and portfolio turnover will
increase, resulting in higher brokerage costs. The Portfolio may purchase
call and put options on any securities in which the Portfolio may invest
or options on any securities index composed of securities in which the
Portfolio may invest. The Portfolio does not intend to purchase an option
on any security if, after such transaction, more than 5% of its net
assets, as measured by the aggregate of all premiums paid for all such
options held by the Portfolio, would be so invested.
To the extent that the Portfolio enters into futures contracts,
options on futures contracts and options on foreign currencies traded on
an exchange regulated by the Commodity Futures Trading Commission, in each
case that are not for bona fide hedging purposes (as defined by the CFTC),
the aggregate initial margin and premiums required to establish these
positions (excluding the amount by which options are "in-the-money") may
not exceed 5% of the liquidation value of the Portfolio's portfolio, after
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taking into account unrealized profits and unrealized losses on any
contracts the Portfolio has entered into.
Forward contracts are individually negotiated and privately
traded by currency traders and their customers. A forward contract
involves an obligation to purchase or sell a specific currency (or basket
of currencies) for an agreed price at a future date, which may be any
fixed number of days from the date of the contract. The Portfolio may
engage in cross-hedging by using forward contracts in one currency (or
basket of currencies) to hedge against fluctuations in the value of
securities denominated in a different currency if the Adviser determines
that there is an established historical pattern of correlation between the
two currencies (or the basket of currencies and the underlying currency).
Use of a different foreign currency magnifies the Portfolio's exposure to
foreign currency exchange rate fluctuations. The Portfolio may also use
forward contracts to shift its exposure to foreign currency exchange rate
changes from one currency to another.
Currency Swaps. The Portfolio may enter into currency swaps for
both hedging and non-hedging purposes. Currency swaps involve the ex-
change of rights to make or receive payments in specified currencies.
Since currency swaps are individually negotiated, the Portfolio expects to
achieve an acceptable degree of correlation between its portfolio
investments and its currency swap positions. Currency swaps usually
involve the delivery of the entire principal value of one designated
currency in exchange for the other designated currency. Therefore, the
entire principal value of a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery
obligations. The use of currency swaps is a highly specialized activity
which involves special investment techniques and risks. If the Adviser is
incorrect in its forecasts of market values and currency exchange rates,
the Portfolio's performance will be adversely affected.
Lending of Portfolio Securities. The Portfolio may seek to earn
additional income by lending portfolio securities to broker-dealers or
other institutional borrowers. As with other extensions of credit there
are risks of delay in recovery or even loss of rights in the securities
loaned if the borrower of the securities fails financially. However, the
loans will be made only to organizations deemed by the Adviser to be
sufficiently creditworthy and when, in the judgment of the Adviser, the
consideration which can be earned from securities loans of this type
justifies the attendant risk.
Repurchase Agreements. The Portfolio may enter into repurchase
agreements with respect to its permitted investments, but currently
intends to do so only with member banks of the Federal Reserve System or
with primary dealers in U.S. Government securities. In the event of the
bankruptcy of the other party to a repurchase agreement, the Portfolio
might experience delays in recovering its cash. To the extent that, in
the meantime, the value of the securities the Portfolio purchased may have
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decreased, the Portfolio could experience a loss. The Portfolio does not
expect to invest more than 5% of its total assets in repurchase
agreements, under normal circumstances.
Other Investment Companies. The Portfolio reserves the right to
invest up to 10% of its total assets in the securities of other investment
companies unaffiliated with the Adviser or Eaton Vance Management ("Eaton
Vance") that have the characteristics of closed-end investment companies.
The Portfolio will indirectly bear its proportionate share of any
management fees paid by investment companies in which it invests in
addition to the advisory fee paid by the Portfolio. The value of closed-
end investment securities, which are usually traded on an exchange, is
affected by demand for the securities themselves, independent of the
demand for the underlying portfolio assets and, accordingly, such
securities can trade at a discount from their net asset values.
Portfolio Turnover. While it is the policy of the Portfolio to
seek long-term capital appreciation, and generally not to engage in
trading for short-term gains, the Portfolio will effect portfolio
transactions without regard to its holding period if, in the judgment of
the Adviser, such transactions are advisable in light of a change in
circumstances of a particular company or within a particular industry, or
in light of general market, economic or political conditions.
Accordingly, the Portfolio may engage in short-term trading under such
circumstances. It is anticipated that the annual portfolio turnover rate
of the Portfolio will be not more than 100%.
Investment Restrictions
The Portfolio has adopted certain fundamental investment
restrictions which are enumerated in detail in Part B and which may not be
changed unless authorized by an investor vote. Except for such enumerated
restrictions and as otherwise indicated in this Part A, the investment
objective and policies of the Portfolio are not fundamental policies and
accordingly may be changed by the Trustees without obtaining the approval
of the investors in the Portfolio. The Portfolio's investors will receive
written notice thirty days prior to any change in the investment objective
of the Portfolio. If any changes were made, the Portfolio might have an
investment objective different from the objective which an investor
considered appropriate at the time of its initial investment.
Under the 1940 Act and the rules promulgated thereunder, the
Portfolio's investments in the securities of any company that, in its most
recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities is limited to 5% of any class of the
issuer's equity securities and 10% of the outstanding principal amount of
the issuer's debt securities, provided that the Portfolio's aggregate
investments in the securities of any such issuer does not exceed 5% of the
Portfolio's total assets. Many of the companies available for investment
in Emerging Market Countries, including enterprises being privatized by
such countries, are financial services businesses that engage in
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securities-related activities. The Portfolio's ability to invest in such
enterprises may thus be limited.
Item 5. Management of the Portfolio
The Portfolio is organized as a trust under the laws of the State
of New York. The Portfolio intends to comply with all applicable Federal
and state securities laws.
Investment Adviser
The Portfolio engages Lloyd George Investment Management
(Bermuda) Limited (the "Adviser") as its investment adviser. The
Portfolio is co-managed by Robert Lloyd George and Scobie Dickinson Ward.
The Adviser, which maintains offices in Hong Kong and in Bombay, India, is
a corporation formed on October 29, 1991 under the laws of Bermuda. The
Adviser is registered as an investment adviser with the U.S. Securities
and Exchange Commission (the "Commission"). The Adviser is a subsidiary
of Lloyd George Management (B.V.I.) Limited ("LGM"). LGM and its
subsidiaries act as investment adviser to various individual and
institutional clients with total assets under management of more than $1
billion.
LGM specializes in providing investment management services with
respect to equity securities of companies trading in many emerging
markets. LGM currently manages portfolios for both private clients and
institutional investors seeking long-term capital growth. LGM's core
investment team consists of ten experienced investment professionals who
have worked together over a number of years successfully managing client
portfolios in non-U.S. stock markets. The team has a unique knowledge of,
and experience with, Asian emerging markets. In particular, while at
Indosuez Asia Investment Securities Ltd., members of the team launched and
managed the $100 million Himalayan Fund, which invested in Indian listed
equities. In 1993, LGM established an office in Bombay, India and
launched the LG India Fund. The Adviser is registered as a Foreign
Institutional Investor with the Securities and Exchange Board of India.
LGM is ultimately controlled by the Hon. Robert J.D. Lloyd George,
President and Trustee of the Portfolio and Chairman and Chief Executive
Officer of the Adviser. LGM's only business is portfolio management.
LGM and the Adviser have adopted a conservative management style,
providing a blend of Asian and multinational expertise with the most
rigorous international standards of fundamental security analysis.
Although focused primarily in Asia, LGM and the Adviser maintain a network
of international contacts in order to monitor international economic and
stock market trends and offer clients a global management service.
The Honourable Robert Lloyd George. Chairman. Born in London in
1952 and educated at Eton College, where he was a King's Scholar, and at
Oxford University. Prior to founding LGM, Mr. Lloyd George was Managing
Director of Indosuez Asia Investment Services Ltd., which, under his
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supervision, grew in assets under management to over $1 billion from 1984
to 1991. Much of this growth was based on the successful launch of
products as the Asian Growth Fund (1984), Pacific Gold Fund (1986), Siam
Fund (1988), Malacca Fund (1989), Manila Fund (1989) and Himalayan Fund
(1990).
In 1983 Mr. Lloyd George launched and managed the Henderson Japan
Special Situations Trust. Prior to that he spent four years with the
Fiduciary Trust Company of New York researching international securities,
in the United States and Europe, for the United Nations Pension Fund. Mr.
Lloyd George is the author of numerous published articles and two books -
"A Guide to Asian Stock Markets" (Longmans, Hong Kong, 1989) and "The
East West Pendulum" (Woodhead - Faulkner, Cambridge, 1991).
William Walter Raleigh Kerr. Finance Director and Chief
Operating Officer. Born in 1950 and educated at Ampleforth and Oxford.
Mr. Kerr qualified as a Chartered Accountant at Thomson McLintock & Co.
before joining The Oldham Estate Company plc as Financial Controller.
Prior to joining LGM, Mr. Kerr was a Director of Banque Indosuez's
corporate finance subsidiary, Financiere Indosuez Limited, in London.
Prior to that Mr. Kerr worked for First Chicago Limited.
Scobie Dickinson Ward. Director. Born in 1966, cum laude
graduate of both Phillips Academy Andover, and Harvard College. Mr. Ward
joined Indosuez Asia Investment Services in 1989, where he managed the
$100 million Himalayan Fund, and the Indosuez Tasman Fund, investing in
Australia and New Zealand. Messrs. Ward and Lloyd George manage Eaton
Vance's Greater China Growth Portfolio and South Asia Portfolio (which
invests in India and the Indian subcontinent).
M. F. Tang. Director. Born in 1946 and educated in Hong Kong.
Mr. Tang is a Fellow of the Chartered Association of Certified
Accountants. Mr. Tang joined LGM having worked for Australian Mutual
Provident Society in Sydney where he was a Portfolio Manager responsible
for Asian Equities. Prior thereto Mr. Tang worked for Barclays Australia
Investment Services Ltd. From 1978 to 1986 Mr. Tang worked for Barings
International Investment Management and prior to that he spent six years
with Peat Marwick Mitchell & Co. Mr. Tang is fluent in the Cantonese and
Mandarin dialects of the Chinese language.
Bidare Narayanrao Manjunath. Chief Representative, India. Born
in 1958 and educated at Birla Institute of Technology and Science where he
received a Masters Degree, Mr. Manjunath joined Canara Bank in 1982 where
he worked in the economic research department before joining its mutual
fund division in 1987. In 1992, Mr. Manjunath joined Credit Capital
Finance Corporation Ltd where he served as Associate Vice President before
becoming Lloyd George Management's Chief Representative, India in 1993.
Mr. Manjunath was involved in the investment process for both the
Himalayan Fund and the LG India Fund, which he co-manages.
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Parameswaran Subramanian Kalpathy. Investment Analyst. Born in
1967 and educated at Paddar College, Bombay, Mr. Parameswaran is qualified
as a Chartered Accountant from the Institute of Chartered Accountants of
India. He served as an investment analyst at Merwanjee Securities Bombay
before joining the Adviser in 1993.
The Adviser, acting under the general supervision of the Board of
Trustees, manages the Portfolio's investments and affairs. Under its
investment advisory agreement with the Portfolio, the Adviser receives a
monthly advisory fee of 0.0625% (equivalent to 0.75% annually) of the
average daily net assets of the Portfolio up to $500 million which fee
declines at intervals above $500 million. For the period from the start
of business, December 8, 1994, to December 31, 1994, the Portfolio paid
the Adviser advisory fees equivalent to 0.75% (annualized) of the
Portfolio's average daily net assets for such period. The Adviser also
furnishes for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the investment of
the Portfolio.
The Adviser places the portfolio securities transactions of the
Portfolio with many broker-dealer firms and uses its best efforts to
obtain execution of such transactions at prices which are advantageous to
the Portfolio and at reasonably competitive commission rates. Subject to
the foregoing, the Adviser may consider sales of shares of certain
investment companies managed or administered by Eaton Vance as a factor in
the selection of firms to execute portfolio transactions.
Administrator
Eaton Vance, its affiliates and its predecessor companies have
been managing assets of individuals and institutions since 1924 and
managing investment companies since 1931. Eaton Vance acts as investment
adviser to investment companies and various individual and institutional
clients with assets under management of approximately $15 billion. Eaton
Vance is a wholly-owned subsidiary of Eaton Vance Corp., a publicly held
holding company. Eaton Vance Corp., through its subsidiaries and
affiliates, engages in investment management and marketing activities,
fiduciary and banking services, oil and gas operations, real estate
investment, consulting and management, and development of precious metals
properties. Eaton Vance Corp. also owns 2% of the A Shares and 20% of the
Preferred Shares issued by LGM.
Eaton Vance, acting under the general supervision of the Board of
Trustees of the Portfolio, administers the business affairs of the
Portfolio. Eaton Vance's services include monitoring and providing
reports to the Trustees of the Portfolio concerning the investment
performance achieved by the Adviser for the Portfolio, recordkeeping,
preparation and filing of documents required to comply with Federal and
state securities laws, supervising the activities of the custodian of the
Portfolio, providing assistance in connection with Trustees' and
interestholders' meetings and other administrative services necessary to
conduct the business of the Portfolio. Eaton Vance does not provide any
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investment management or advisory services to the Portfolio. Eaton Vance
also furnishes for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for administering the business
affairs of the Portfolio.
Under its administration agreement with the Portfolio, Eaton
Vance receives a monthly fee in the amount of 1/48 of 1% (equal to 0.25%
annually) of the average daily net assets of the Portfolio up to $500
million which fee declines at intervals above $500 million. For the
period from the start of business, December 8, 1994, to December 31, 1994,
the Portfolio paid Eaton Vance administration fees equivalent to 0.25% of
the Portfolio's average daily net assets for such period. The combined
advisory and administration fees payable by the Portfolio are higher than
similar fees charged by most other investment companies.
The Portfolio will be responsible for all of its costs and
expenses not expressly stated to be payable by the Adviser under the
investment advisory agreement, by Eaton Vance under the administration
agreement, or by EVD under the distribution agreement. Such costs and
expenses to be borne by the Portfolio include, without limitation custody
fees and expenses, including those incurred for determining net asset
value and keeping accounting books and records, expenses of pricing and
valuation services; membership dues in investment company organizations;
brokerage commissions and fees; fees and expenses of registering under the
securities laws; expenses of reports to investors; proxy statements, and
other expenses of investors' meetings; insurance premiums, printing and
mailing expenses; interest, taxes and corporate fees; legal and accounting
expenses; compensation and expenses of Trustees not affiliated with Eaton
Vance or the Adviser; and investment advisory and administration fees.
The Portfolio will also bear expenses incurred in connection with
litigation in which the Portfolio is a party and any legal obligation to
indemnify its officers and Trustees with respect thereto.
Item 6. Capital Stock and Other Securities
The Portfolio is organized as a trust under the laws of the State
of New York and intends to be treated as a partnership for Federal tax
purposes. Under the Declaration of Trust, the Trustees are authorized to
issue interests in the Portfolio. Each investor is entitled to a vote in
proportion to the amount of its investment in the Portfolio. Investments
in the Portfolio may not be transferred, but an investor may withdraw all
or any portion of its investment at any time at net asset value.
Investors in the Portfolio will each be liable for all obligations of the
Portfolio. However, the risk of an investor in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in
which both adequate insurance exists and the Portfolio itself is unable
to meet its obligations.
The Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of any investor in the
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Portfolio unless either the remaining investors, by unanimous vote at a
meeting of such investors, or a majority of the Trustees of the Portfolio,
by written instrument consented to by all investors, agree to continue the
business of the Portfolio. This provision is consistent with the
treatment of the Portfolio as a partnership for Federal income tax
purposes.
Investments in the Portfolio have no preemptive or conversion
rights and are fully paid and nonassessable, except as set forth above.
The Portfolio is not required and has no current intention to hold annual
meetings of investors, but the Portfolio may hold special meetings of
investors when in the judgment of the Trustees it is necessary or
desirable to submit matters for an investor vote. Changes in fundamental
policies or restrictions will be submitted to investors for approval. The
investment objective and all nonfundamental investment policies of the
Portfolio may be changed by the Trustees of the Portfolio without
obtaining the approval of the investors in the Portfolio. Investors have
under certain circumstances (e.g., upon application and submission of
certain specified documents to the Trustees by a specified number of
investors) the right to communicate with other investors in connection
with requesting a meeting of investors for the purpose of removing one or
more Trustees. Any Trustee may be removed by the affirmative vote of
holders of two-thirds of the interests in the Portfolio. Upon liquidation
of the Portfolio, investors would be entitled to share pro rata in the net
assets of the Portfolio available for distribution to investors.
Information regarding pooled investment entities or funds which
invest in the Portfolio may be obtained by contacting Eaton Vance
Distributors, Inc., 24 Federal Street, Boston, MA 02110, (617) 482-8260.
Smaller investors in the Portfolio may be adversely affected by the
actions of larger investors in the Portfolio. For example, if a large
investor withdraws from the Portfolio, the remaining investors may
experience higher pro rata operating expenses, thereby producing lower
returns. Additionally, the Portfolio may become less diverse, resulting
in increased portfolio risk, and experience decreasing economies of scale.
As of March 31, 1995, EV Traditional Emerging Markets Fund and EV
Marathon Emerging Markets Fund controlled the Portfolio by virtue of
owning 55.6% and 38.7%, respectively, of the outstanding voting securities
of the Portfolio.
The net asset value of the Portfolio is determined each day on
which the New York Stock Exchange (the "Exchange") is open for trading
("Portfolio Business Day"). This determination is made each Portfolio
Business Day as of the close of regular trading on the Exchange (currently
4:00 p.m., New York time) (the "Portfolio Valuation Time").
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Each investor in the Portfolio may add to or reduce its invest-
ment in the Portfolio on each Portfolio Business Day as of the Portfolio
Valuation Time. The value of each investor's interest in the Portfolio
will be determined by multiplying the net asset value of the Portfolio by
the percentage, determined on the prior Portfolio Business Day, which
represents that investor's share of the aggregate interest in the
Portfolio on such day. Any additions or withdrawals, which are to be
effected on that day, will then be effected. Each investor's percentage
of the aggregate interests in the Portfolio will then be recomputed as the
percentage equal to a fraction (i) the numerator of which is the value of
such investor's investment in the Portfolio as of the close of regular
trading on the Exchange (normally 4:00 p.m., New York time), on such day
plus or minus, as the case may be, that amount of any additions to or
withdrawals from the investor's investment in the Portfolio effected on
such day, and (ii) the denominator of which is the aggregate net asset
value of the Portfolio as of the close of such trading on such day plus or
minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investment in the Portfolio by all
investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio
for the current Portfolio Business Day.
The Portfolio will allocate at least annually among its investors
its net investment income, net realized capital gains, and any other items
of income, gain, loss, deduction or credit. The Portfolio's net
investment income consists of all income accrued on the Portfolio's
assets, less all actual and accrued expenses of the Portfolio, determined
in accordance with generally accepted accounting principles.
Under the anticipated method of operation of the Portfolio, the
Portfolio will not be subject to any Federal income tax (see Part B, Item
20). However, each investor in the Portfolio will take into account its
allocable share of the Portfolio's ordinary income and capital gain in
determining its Federal income tax liability. The determination of each
such share will be made in accordance with the governing instruments of
the Portfolio, which are intended to comply with the requirements of the
Code and the regulations promulgated thereunder.
It is intended that the Portfolio's assets and income will be
managed in such a way that an investor in the Portfolio which seeks to
qualify as a regulated investment company under the Code will be able to
satisfy the requirements for such qualification.
Item 7. Purchase of Interests in the Portfolio
Interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning
of Section 4(2) of the 1933 Act. See "General Description of Registrant"
above.
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An investment in the Portfolio will be made without a sales load.
All investments received by the Portfolio will be effected as of the next
Portfolio Valuation Time. The net asset value of the Portfolio is
determined at the Portfolio Valuation Time on each Portfolio Business Day.
The Portfolio will be closed for business and will not determine its net
asset value on the following business holidays: New Year's Day,
Presidents' Day, Good Friday (a New York Stock Exchange holiday), Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The
Portfolio's net asset value is computed in accordance with procedures
established by the Portfolio's Trustees.
The Portfolio's net asset value is determined by Investors Bank &
Trust Company (as custodian and agent for the Portfolio) in the manner
authorized by the Trustees of the Portfolio. The net asset value is
computed by subtracting the liabilities of the Portfolio from the value of
its total assets. The Trustees of the Portfolio have established
procedures for the valuation of the Portfolio's assets; in general, these
valuations are based on market value or fair value, with special
provisions for valuing debt obligations, short-term investments, foreign
securities, direct investments, hedging instruments and assets not having
readily available market quotations, if any. For further information
regarding the valuation of the Portfolio's assets, see Part B.
There is no minimum initial or subsequent investment in the
Portfolio. The Portfolio reserves the right to cease accepting
investments at any time or to reject any investment order.
The placement agent for the Portfolio is Eaton Vance
Distributors, Inc. ("EVD"). The principal business address of EVD is 24
Federal Street, Boston, Massachusetts 02110. EVD receives no compensation
for serving as the placement agent for the Portfolio.
Item 8. Redemption or Decrease of Interest
An investor in the Portfolio may withdraw all (redeem) or any
portion (decrease) of its interest in the Portfolio if a withdrawal
request in proper form is furnished by the investor to the Portfolio. All
withdrawals will be effected as of the next Portfolio Valuation Time. The
proceeds of a withdrawal will be paid by the Portfolio normally on the
Portfolio Business Day the withdrawal is effected, but in any event within
seven days. The Portfolio reserves the right to pay the proceeds of a
withdrawal (whether a redemption or decrease) by a distribution in kind of
portfolio securities (instead of cash). The securities so distributed
would be valued at the same amount as that assigned to them in calculating
the net asset value for the interest (whether complete or partial) being
withdrawn. If an investor received a distribution in kind upon such
withdrawal, the investor could incur brokerage and other charges in
converting the securities to cash. The Portfolio has filed with the
Securities and Exchange Commission (the "Commission") a notification of
election on Form N-18F-1 committing to pay in cash all requests for
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withdrawals by any investor, limited in amount with respect to such
investor during any 90 day period to the lesser of (a) $250,000 or (b) 1%
of the net asset value of the Portfolio at the beginning of such period.
Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds
postponed during any period in which the Exchange is closed (other than
weekends or holidays) or trading on the Exchange is restricted or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists, or
during any other period permitted by order of the Commission for the
protection of investors.
Item 9. Pending Legal Proceedings
Not applicable.
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PART B
Item 10. Cover Page
Not applicable.
Item 11. Table of Contents
Page
General Information and History B-1
Investment Objectives and Policies B-1
Management of the Portfolio B-11
Control Persons and Principal Holder of Securities B-14
Investment Advisory and Other Services B-15
Brokerage Allocation and Other Practices B-18
Capital Stock and Other Securities B-21
Purchase, Redemption and Pricing of Securities B-23
Tax Status B-24
Underwriters B-26
Calculation of Performance Data B-26
Financial Statements B-26
Item 12. General Information and History
Not applicable
Item 13. Investment Objectives and Policies
Part A contains additional information about the investment
objective and policies of the Emerging Markets Portfolio (the
"Portfolio"). This Part B should be read in conjunction with Part A.
Capitalized terms used in this Part B and not otherwise defined have the
meanings given them in Part A.
The investment objective of the Portfolio is to seek long-term
capital appreciation by investing in equity securities of companies in
countries with emerging markets. The Portfolio considers countries with
emerging markets to be all countries that are generally considered to be
developing or emerging countries by the International Bank for
Reconstruction and Development (more commonly referred to as the "World
Bank"), or the International Finance Corporation, as well as countries
that are classified by the United Nations or otherwise regarded by their
own authorities as developing. The following is a description of certain
other investment features of the Portfolio.
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,
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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.
Further, economies of particular countries or areas of the world may
differ favorably or unfavorably from the economy of the United States. It
is anticipated that in most cases the best available market for foreign
securities will be on exchanges or in over-the-counter markets located
outside of the United States. 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 addition, foreign brokerage
commissions are generally higher than commissions on securities traded in
the United States and may be non-negotiable. In general, there is less
overall governmental supervision and regulation of foreign securities
markets, broker-dealers, and issuers than in the United States.
Foreign Currency Transactions
Since investments in companies whose principal business
activities are located outside of the United States will frequently
involve currencies of foreign countries, and since assets of the Portfolio
may temporarily be held in bank deposits in foreign currencies during the
completion of investment programs, the value of the assets of the
Portfolio as measured in U.S. dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange
control regulations. Currency exchange rates can also be affected un-
predictably by intervention by U.S. or foreign governments or central
banks, or the failure to intervene, or by currency controls or political
developments in the U.S. or abroad. The Portfolio may conduct its foreign
currency exchange transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or through
entering into swaps, forward contracts, options or futures on currency.
On spot transactions, foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the
"spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the
Portfolio at one rate, while offering a lesser rate of exchange should the
Portfolio desire to resell that currency to the dealer.
Currency Swaps
Currency swaps require maintenance of a segregated account
described under "Asset Coverage for Derivative Instruments" below. The
Portfolio will not enter into any currency swap unless the credit quality
of the unsecured senior debt or the claims-paying ability of the other
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party thereto is considered to be investment grade by Lloyd George
Investment Management (Bermuda) Limited (the "Adviser"). If there is a
default by the other party to such a transaction, the Portfolio will have
contractual remedies pursuant to the agreements related to the
transaction. The swap market has grown substantially in recent years with
a large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized swap documentation. As a
result, the swap market has become relatively liquid in comparison with
the markets for other similar instruments which are traded in the
interbank market.
Forward Foreign Currency Exchange Transactions
The Portfolio may enter into forward foreign currency exchange
contracts in several circumstances. First, when the Portfolio enters into
a contract for the purchase or sale of a security denominated in a foreign
currency, or when the Portfolio anticipates the receipt in a foreign
currency of dividend or interest payments on such a security which it
holds, the Portfolio may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest
payment, as the case may be. By entering into a forward contract for the
purchase or sale, for a fixed amount of dollars, of the amount of foreign
currency involved in the underlying transactions, the Portfolio will
attempt to protect itself against an adverse change in the relationship
between the U.S. dollar and the subject foreign currency during the period
between the date on which the security is purchased or sold, or on which
the dividend or interest payment is declared, and the date on which such
payments are made or received.
Additionally, when management of the Portfolio believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, it may enter into a forward contract to sell, for
a fixed amount of dollars, the amount of foreign currency approximating
the value of some or all of the securities held by the Portfolio
denominated in such foreign currency. The precise matching of the forward
contract amounts and the value of the securities involved will not
generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the
value of those securities between the date on which the contract is
entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term
hedging provides a means of fixing the dollar value of only a portion of
the Portfolio's foreign assets.
The Portfolio generally will not enter into a forward contract
with a term of greater than one year.
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Special Risks Associated With Currency Transactions.
Transactions in forward contracts, as well as futures and options
on foreign currencies, are subject to the risk of governmental actions
affecting trading in or the prices of currencies underlying such
contracts, which could restrict or eliminate trading and could have a
substantial adverse effect on the value of positions held by the
Portfolio. In addition, the value of such positions could be adversely
affected by a number of other complex political and economic factors
applicable to the countries issuing the underlying currencies.
Furthermore, unlike trading in most other types of instruments,
there is no systematic reporting of last sale information with respect to
the foreign currencies underlying forward contracts, futures contracts and
options. As a result, the available information on which the Portfolio's
trading systems will be based may not be as complete as the comparable
data on which the Portfolio makes investment and trading decisions in
connection with securities and other transactions. Moreover, because the
foreign currency market is a global, twenty-four hour market, events could
occur on that market which will not be reflected in the forward, futures
or options markets until the following day, thereby preventing the
Portfolio from responding to such events in a timely manner.
Settlements of over-the-counter forward contracts or of the
exercise of foreign currency options generally must occur within the
country issuing the underlying currency, which in turn requires parties to
such contracts to accept or make delivery of such currencies in conformity
with any United States or foreign restrictions and regulations regarding
the maintenance of foreign banking relationships, fees, taxes or other
charges.
Unlike currency futures contracts and exchange-traded options,
options on foreign currencies and forward contracts are not traded on
contract markets regulated by the Commodities Futures Trading Commission
("CFTC") or (with the exception of certain foreign currency options) the
Securities and Exchange Commission ("Commission"). To the contrary, such
instruments are traded through financial institutions acting as market-
makers. (Foreign currency options are also traded on the Philadelphia
Stock Exchange subject to Commission regulation). In an over-the-counter
trading environment, many of the protections associated with transactions
on exchanges will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of
an option cannot lose more than the amount of the premium plus related
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transaction costs, this entire amount could be lost. Moreover, an option
writer could lose amounts substantially in excess of its initial
investment due to the margin and collateral requirements associated with
such option positions. Similarly, there is no limit on the amount of
potential losses on forward contracts to which the Portfolio is a party.
In addition, over-the-counter transactions can only be entered
into with a financial institution willing to take the opposite side, as
principal, of the Portfolio's position unless the institution acts as
broker and is able to find another counterparty willing to enter into the
transaction with the Portfolio. Where no such counterparty is available,
it will not be possible to enter into a desired transaction. There also
may be no liquid secondary market in the trading of over-the-counter
contracts, and the Portfolio may be unable to close out options purchased
or written, or forward contracts entered into, until their exercise,
expiration or maturity. This in turn could limit the Portfolio's ability
to realize profits or to reduce losses on open positions and could result
in greater losses.
Furthermore, over-the-counter transactions are not backed by the
guarantee of an exchange's clearing corporation. The Portfolio will
therefore be subject to the risk of default by, or the bankruptcy of, the
financial institution serving as its counterparty. One or more of such
institutions also may decide to discontinue its role as market-maker in a
particular currency, thereby restricting the Portfolio's ability to enter
into desired hedging transactions. The Portfolio will enter into over-
the-counter transactions only with parties whose creditworthiness has been
reviewed and found satisfactory by the Adviser.
The purchase and sale of exchange-traded foreign currency
options, however, are subject to the risks of the availability of a liquid
secondary market described above, as well as the risks regarding adverse
market movements, margining of options written, the nature of the foreign
currency market, possible intervention by governmental authorities and the
effect of other political and economic events. In addition, exchange-
traded options on foreign currencies involve certain risks not presented
by the over-the-counter market. For example, exercise and settlement of
such options must be made exclusively through the Options Clearing
Corporation ("OCC"), which has established banking relationships in
applicable foreign countries for this purpose. As a result, the OCC may,
if it determines that foreign governmental restrictions or taxes would
prevent the orderly settlement of foreign currency option exercises, or
would result in undue burdens on the OCC or its clearing member, impose
special procedures for exercise and settlement, such as technical changes
in the mechanics of delivery of currency, the fixing of dollar settlement
prices of prohibitions on exercise.
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Risks Associated With Derivative Instruments
Entering into a derivative instrument involves a risk that the
applicable market will move against the Portfolio's position and that the
Portfolio will incur a loss. For derivative instruments other than
purchased options, this loss may exceed the amount of the initial
investment made or the premium received by the Portfolio. Derivative
instruments may sometimes increase or leverage the Portfolio's exposure to
a particular market risk. Leverage enhances the Portfolio's exposure to
the price volatility of derivative instruments it holds. The Portfolio's
success in using derivative instruments to hedge portfolio assets depends
on the degree of price correlation between the derivative instruments and
the hedged asset. Imperfect correlation may be caused by several factors,
including temporary price disparities among the trading markets for the
derivative instrument, the assets underlying the derivative instrument and
the Portfolio assets. Over-the-counter ("OTC") derivative instruments
involve an enhanced risk that the issuer or counterparty will fail to
perform its contractual obligations. Some derivative instruments are not
readily marketable or may become illiquid under adverse market conditions.
In addition, during periods of market volatility, a commodity exchange may
suspend or limit trading in an exchange-traded derivative instrument,
which may make the contract temporarily illiquid and difficult to price.
Commodity exchanges may also establish daily limits on the amount that the
price of a futures contract or futures option can vary from the previous
day's settlement price. Once the daily limit is reached, no trades may be
made that day at the price beyond the limit. This may prevent the
Portfolio from closing out positions and limiting its losses. The staff
of the Securities and Exchange Commission ("Commission") takes the
position that purchased OTC options, and assets used as cover for written
OTC options, are subject to the Portfolio's 15% limit on illiquid
investments. The Portfolio's ability to terminate OTC derivative
instruments may depend on the cooperation of the counterparties to such
contracts. The Portfolio expects to purchase and write only exchange-
traded options until such time as the Portfolio's management determines
that the OTC options market is sufficiently developed and the Portfolio
has amended its prospectus so that appropriate disclosure is furnished to
prospective and existing shareholders. For thinly traded derivative
instruments, the only source of price quotations may be the selling dealer
or counterparty. In addition, certain provisions of the Internal Revenue
Code of 1986, as amended ("Code"), limit the extent to which the Portfolio
may purchase and sell derivative instruments. The Portfolio will engage
in transactions in futures contracts and related options only to the
extent such transactions are consistent with the requirements of the Code
for maintaining the qualification of the Fund as a regulated investment
company for Federal income tax purposes. see "Taxes."
Asset Coverage for Derivative Instruments
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Transactions using forward contracts, futures contracts and
options (other than options that the Portfolio has purchased) expose the
Portfolio to an obligation to another party. The Portfolio will not enter
into any such transactions unless it owns either (1) an offsetting
("covered") position in securities, currencies, or other options or
futures contracts or forward contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover
its potential obligations not covered as provided in (1) above. The
Portfolio will comply with Commission guidelines regarding cover for these
instruments and, if the guidelines so require, set aside cash, U.S.
Government securities or other liquid, high-grade debt securities in a
segregated account with its custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be
sold while the position in the corresponding forward contract, futures
contract or option is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of the
Portfolio's assets to cover or segregated accounts could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.
Limitations on Futures Contracts and Options
If the Portfolio has not complied with the 5% CFTC test set forth
in the Fund's prospectus, to evidence its hedging intent, the Portfolio
expects that, on 75% or more of the occasions on which it takes a long
futures or option on futures position, it will have purchased or will be
in the process of purchasing, equivalent amounts of related securities at
the time when the futures or options position is closed out. However, in
particular cases, when it is economically advantageous for the Portfolio
to do so, a long futures or options position may be terminated (or an
option may expire) without a corresponding purchase or securities.
The Portfolio may enter into futures contracts, and options on
futures contracts, traded on an exchange regulated by the CFTC and on
foreign exchanges, but, with respect to foreign exchange-traded futures
contracts an options on such futures contracts, only if the Investment
Adviser determines that trading on each such foreign exchange does not
subject the Portfolio to risks, including credit and liquidity risks, that
are materially greater than the risks associated with training on CFTC-
regulated exchanges.
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In order to hedge its current or anticipated portfolio positions,
the Portfolio may use futures contracts on securities held in its
portfolio or on securities with characteristics similar to those of the
securities held by the Portfolio. If, in the opinion of the Investment
Adviser, there is a sufficient degree of correlation between price trends
for the securities held by the Portfolio and futures contracts based on
other financial instruments, securities indices or other indices, the
Portfolio may also enter into such futures contracts as part of its
hedging strategy.
All call and put options on securities written by the Portfolio
will be covered. This means that, in the case of a call option, the
Portfolio will own the securities subject to the call option or an
offsetting call option so long as the call option is outstanding. In the
case of a put option, the Portfolio will own an offsetting put option or
will have deposited with its custodian cash or liquid, high-grade debt
securities with a value at least equal to the exercise price of the put
option. The Portfolio may only write a put option on a security that it
intends ultimately to acquire for its investment portfolio.
Repurchase Agreements
Under a repurchase agreement the Portfolio buys a security at one
price and simultaneously promises to sell that same security back to the
seller at a higher price. At no time will the Portfolio commit more than
15% of its net assets to repurchase agreements which mature in more than
seven days and other illiquid securities. The Portfolio's repurchase
agreements will provide that the value of the collateral underlying the
repurchase agreement will always be at least equal to the repurchase
price, including any accrued interest earned on the repurchase agreement,
and will be marked to market daily.
Reverse Repurchase Agreements
The Portfolio may enter into reverse repurchase agreements.
Under a reverse repurchase agreement, the Portfolio temporarily transfers
possession of a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash. At the same time, the Portfolio agrees
to repurchase the instrument at an agreed upon time (normally within seven
days) and price, which reflects an interest payment. The Portfolio
expects that it will enter into reverse repurchase agreements when it is
able to invest the cash so acquired at a rate higher than the cost of the
agreement, which would increase the income earned by the Portfolio. The
Portfolio could also enter into reverse repurchase agreements as a means
of raising cash to satisfy redemption requests without the necessity of
selling portfolio assets.
When the Portfolio enters into a reverse repurchase agreement,
any fluctuations in the market value of either the securities transferred
B - 8
<PAGE>
to another party or the securities in which the proceeds may be invested
would affect the market value of the Portfolio's assets. As a result,
such transactions may increase fluctuations in the market value of the
Portfolio's assets. While there is a risk that large fluctuations in the
market value of the Portfolio's assets could affect the Portfolio's net
asset value, this risk is not significantly increased by entering into
reverse repurchase agreements, in the opinion of the Adviser. Because
reverse repurchase agreements may be considered to be the practical
equivalent of borrowing funds, they constitute a form of leverage. If the
Portfolio reinvests the proceeds of a reverse repurchase agreement at a
rate lower than the cost of the agreement, entering into the agreement
will lower the Portfolio's yield.
At all times that a reverse repurchase agreement is outstanding,
the Portfolio will maintain cash or high grade liquid debt securities in a
segregated account at its custodian bank with a value at least equal to
its obligation under the agreement. Securities and other assets held in
the segregated account may not be sold while the reverse repurchase
agreement is outstanding, unless other suitable assets are substituted.
While the Adviser does not consider reverse repurchase agreements to
involve a traditional borrowing of money, reverse repurchase agreements
will be included within the aggregate limitation on "borrowings" contained
in the Portfolio's investment restriction (1) set forth below.
Portfolio Turnover
The Portfolio cannot accurately predict its portfolio turnover
rate, but it is anticipated that the annual turnover rate will generally
not exceed 100% (excluding turnover of securities having a maturity of one
year or less). A 100% annual turnover rate would occur, for example, if
all the securities in the portfolio were replaced once in a period of one
year. A high turnover rate (100% or more) necessarily involves greater
expenses to the Portfolio. The Portfolio engages in portfolio trading
(including short-term trading) if it believes that a transaction including
all costs will help in achieving its investment objective either by
increasing income or by enhancing the Portfolio's net asset value. High
portfolio turnover may also result in the realization of substantial net
short-term capital gains.
Lending Portfolio Securities
If the Adviser decides to make securities loans, the Portfolio
may seek to increase its income by lending portfolio securities to
broker-dealers or other institutional borrowers. Under present regulatory
policies of the Commission, such loans are required to be secured
continuously by collateral in cash, cash equivalents or U.S. Government
securities held by the Portfolio's custodian and maintained on a current
basis at an amount at least equal to market value of the securities
B - 9
<PAGE>
loaned, which will be marked to market daily. Cash equivalents include
certificates of deposit, commercial paper and other short-term money
market instruments. The financial condition of the borrower will be
monitored by the Adviser on an ongoing basis. The Portfolio would
continue to receive the equivalent of the interest or dividends paid by
the issuer on the securities loaned and would also receive a fee, or all
or a portion of the interest on investment of the collateral. The
Portfolio would have the right to call a loan and obtain the securities
loaned at any time on up to five business days' notice. The Portfolio
would not have the right to vote any securities having voting rights
during the existence of a loan, but could call the loan in anticipation of
an important vote to be taken among holders of the securities or the
giving or withholding of their consent on a material matter affecting the
investment. If the Adviser decides to make securities loans, it is
intended that the value of the securities loaned would not exceed 1/3 of
the Portfolio's total assets.
Investment Restrictions
Whenever an investment policy or investment restriction set forth
in Part A or this Part B states a maximum percentage of assets that may be
invested in any security or other asset or describes a policy regarding
quality standards, such percentage limitation or standard shall be
determined immediately after and as a result of the Portfolio's
acquisition of such security or other asset. Accordingly, any later
increase or decrease resulting from a change in values, assets or other
circumstances, other than a subsequent rating change below investment
grade made by a rating service, will not compel the Portfolio to dispose
of such security or other asset.
The Portfolio has adopted the following investment restrictions
which may not be changed without the approval of the holders of a majority
of the outstanding voting securities of the Portfolio which as used in
this Part B means the lesser of (a) 67% or more of the outstanding voting
securities of the Portfolio present or represented by proxy at a meeting
if the holders of more than 50% of the outstanding voting securities of
the Portfolio are present or represented at the meeting or (b) more than
50% of the outstanding voting securities of the Portfolio. The Portfolio
may not:
(1) Borrow money or issue senior securities except as permitted
by the Investment Company Act of 1940.
(2) Purchase any securities on margin (but the Portfolio may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities).
(3) Underwrite securities of other issuers.
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<PAGE>
(4) Invest in real estate including interests in real estate
limited partnerships (although it may purchase and sell securities which
are secured by real estate and securities of companies which invest or
deal in real estate) or in commodities or commodity contracts for the
purchase or sale of physical commodities.
(5) Make loans to any person except by (a) the acquisition of
debt securities and making portfolio investments, (b) entering into
repurchase agreements and (c) lending portfolio securities.
(6) With respect to 75% of its total assets, invest more than 5%
of its total assets (taken at current value) in the securities of any one
issuer, or invest in more than 10% of the outstanding voting securities of
any one issuer, except obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and except securities of
other investment companies.
(7) Concentrate its investments in any particular industry, but,
if deemed appropriate for the Portfolio's objective, up to 25% of the
value of its assets may be invested in securities of companies in any one
industry (although more than 25% may be invested in securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities).
Notwithstanding the investment policies and restrictions of the
Portfolio, the Portfolio may invest part of its assets in another
investment company consistent with the Investment Company Act of 1940 (the
"1940 Act").
The Portfolio has adopted the following investment policies which
may be changed without investor approval. The Portfolio may not invest
more than 15% of its net assets in investments which are not readily
marketable, including restricted securities and repurchase agreements with
a maturity longer than seven days. Restricted securities for the purposes
of this limitation do not include securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933 that the Board of Trustees
of the Portfolio, or its delegate, determines to be liquid. Factors taken
into account in reaching liquidity decisions include, but are not limited
to: (i) the frequency of trading in the security; (ii) the number of
dealers who provide quotes for the security; (iii) the number of dealers
who have undertaken to make a market in the security; (iv) the number of
other potential purchasers; and (v) the nature of the security and how
trading is effected (e.g., the time needed to sell the security, how
offers are solicited, and the mechanics of transfer). The Adviser will
monitor the liquidity of the Portfolio's securities and report
periodically on such decisions to the Board of Trustees of the Portfolio.
B - 11
<PAGE>
The Portfolio does not intend to make short sales of securities
during the coming year. Except for obligations issued or guaranteed by
the U.S. Government or any of its agencies or instrumentalities, the
Portfolio will not knowingly purchase a security issued by a company
(including predecessors) with less than three years operating history
(unless such security is rated at least B or a comparable rating at the
time of purchase by at least one nationally recognized rating service) if,
as a result of such purchase, more than 5% of the Portfolio's total assets
(taken at current value) would be invested in such securities. The
Portfolio will not purchase warrants if, as a result of such purchase,
more than 5% of the Portfolio's net assets (taken at current value) would
be invested in warrants, and the value of such warrants which are not
listed on the New York or American Stock Exchange may not exceed 2% of the
Portfolio's net assets; this policy does not apply to or restrict warrants
acquired by the Portfolio in units or attached to securities, inasmuch as
such warrants are deemed to be without value. The Portfolio will not
purchase any securities if at the time of such purchase, permitted borrow-
ings under investment restriction (1) above exceed 5% of the value of the
Portfolio's total assets.
The Portfolio will not purchase oil, gas or other mineral leases
or purchase partnership interests in oil, gas or other mineral exploration
or development programs. The Portfolio will not purchase or retain in its
portfolio any securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the
Trust or is a member, officer, director or trustee of any investment
adviser of the Portfolio if after the purchase of the securities of such
issuer by the Portfolio one or more of such persons owns beneficially more
than 1/2 of 1% of the shares or securities or both (all taken at market
value) of such issuer and such persons owning more than 1/2 of 1% of such
shares or securities together own beneficially more than 5% of such shares
of securities or both (all taken at market value).
In order to permit the sale in certain states of shares of
certain open-end investment companies which are investors in the
Portfolio, the Portfolio may adopt policies more restrictive than the
fundamental policies described above. Should the Portfolio determine that
any such policy is no longer in the best interests of the Portfolio and
its investors, it will revoke such policy.
Item 14. Management of the Portfolio
The Portfolio's Trustees and officers are listed below. Except
as indicated, each individual has held the office shown or other offices
in the same company for the last five years. The business address of the
Adviser is 3808 One Exchange Square, Central, Hong Kong. Those Trustees
who are "interested persons" of the Portfolio, the Adviser, Eaton Vance
Management ("Eaton Vance"), Eaton Vance's wholly-owned subsidiary, Boston
Management and Research ("BMR"), Eaton Vance's parent, Eaton Vance Corp.
("EVC"), and Eaton Vance's trustee, Eaton Vance, Inc. ("EV") as defined in
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<PAGE>
the 1940 Act by virtue of their affiliation with any one or more of the
Portfolio, the Adviser, Eaton Vance, BMR, EVC or EV, are indicated by an
asterisk (*).
Trustees
HON. ROBERT LLOYD GEORGE (42), President and Trustee*
Chairman and Chief Executive of Lloyd George Management (B.V.I.) Limited.
Chairman and Chief Executive Officer of the Adviser. Managing
Director of Indosuez Asia Investment Services, Ltd. from 1984 to
1991.
Address: 3808 One Exchange Square, Central, Hong Kong
JAMES B. HAWKES (53), Vice President and Trustee*
Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director
of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
SAMUEL L. HAYES, III (60), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University
Graduate School of Business Administration, Director or Trustee
of various investment companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
STUART HAMILTON LECKIE (49), Trustee
Managing Director and Actuary of The Wyatt Company. Member of the Hong
Kong Government's Advisory Committee on Insurance.
Address: The Wyatt Company (HK) Ltd., Sun Hung Kai Centre, 27th Floor, 30
Harbour Road, Hong Kong
HON. EDWARD K.Y. CHEN (50), Trustee
Professor and Director of the Centre of Asian Studies, University of Hong
Kong. Director of First Pacific Bancshares Holdings Ltd. and a
non-executive Director of the Securities and Futures Commission.
Vice-Chairman and Consultant of ACL Consultants Ltd. from 1983 to
1989. Director of First Pacific Bank Ltd. from 1986 to 1990.
Director of Inc -- Asia from 1988 to 1991.
Address: University of Hong Kong, Centre of Asian Studies, Pokfulam Road,
Hong Kong
B - 13
<PAGE>
Officers
SCOBIE DICKINSON WARD (29), Vice President, Assistant Secretary and
Assistant Treasurer
Director of Lloyd George Management (B.V.I.) Limited. Director of the
Adviser. Investment Manager of Indosuez Asia Investment
Services, Ltd. from 1984 to 1991.
Address: 3808 One Exchange Square, Central, Hong Kong
WILLIAM WALTER RALEIGH KERR (44), Vice President, Secretary and Assistant
Treasurer
Director, Finance Director and Chief Operating Officer of the Adviser.
Director of Lloyd George Management (B.V.I.) Limited.
Address: 3808 One Exchange Square, Central, Hong Kong
JAMES L. O'CONNOR (50), Vice President and Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
THOMAS OTIS (63), Vice President and Assistant Secretary
Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of
various investment companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
JANET E. SANDERS (59), Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
WILLIAM J. AUSTIN, JR. (43), Assistant Treasurer
Assistant Vice President of Eaton Vance, BMR and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
The fees and expenses of those Trustees who are not members of
the Eaton Vance organization (the noninterested Trustees) are paid by the
Portfolio. (The Trustees who are members of the Eaton Vance organization
B - 14
<PAGE>
receive no compensation from the Portfolio.) During the fiscal year ended
December 31, 1994, the noninterested Trustees of the Portfolio earned the
following compensation in their capacities as Trustees of the Portfolio,
and during the first quarter ended March 31, 1995, earned the following
compensation in their capacities as Trustees of the other funds in the
Eaton Vance fund complex:
B - 15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Aggregate Retirement Total Compensation
Compensation Benefit Accrued from Trust and
Name from Portfolio from Fund Complex Fund Complex(1)
Donald R.
Dwight -0- $8,750 $33,750
Samuel L.
Hayes, III -0- 24,885 33,750
Norton H.
Reamer -0- -0- 33,750
John L.
Thorndike -0- -0- 35,000
Jack L.
Treynor -0- -0- 35,000
</TABLE>
(1) The Eaton Vance fund complex consists of 201 registered
investment companies or series thereof.
Trustees of the Portfolio who are not affiliated with BMR may
elect to defer receipt of all or a percentage of their annual fees in
accordance with the terms of a Trustees Deferred Compensation Plan (the
"Plan"). Under the Plan, an eligible Trustee may elect to have his
deferred fees invested by the Portfolio in the shares of one or more funds
in the Eaton Vance Family of Funds, and the amount paid to the Trustees
under the Plan will be determined based upon the performance of such
investments. Deferral of Trustees' fees in accordance with the Plan will
have a negligible effect on the Portfolio's assets, liabilities, and net
income per share, and will not obligate the Portfolio to retain the
services of any Trustee or obligate the Portfolio to pay any particular
level of compensation to the Trustee.
The Adviser is a subsidiary of Lloyd George Management (B.V.I.)
Limited, which is ultimately controlled by the Hon. Robert J.D. Lloyd
George, President and Trustee of the Portfolio and Chairman and Chief
Executive Officer of the Adviser. Mr. Hawkes is an officer of the
Portfolio's administrator.
While the Portfolio is a New York trust, the Adviser, together
with Messrs. Lloyd George, Leckie, Chen, Ward and Kerr, are not residents
of the United States, and substantially all of their respective assets may
be located outside of the United States. It may be difficult for
investors to effect service of process within the United States upon the
B - 16
<PAGE>
individuals identified above, or to realize judgments of courts of the
United States predicated upon civil liabilities of the Adviser and such
individuals under the Federal securities laws of the United States. The
Portfolio has been advised that there is substantial doubt as to the
enforceability in the countries in which the Adviser and such individuals
reside of such civil remedies and criminal penalties as are afforded by
the Federal securities laws of the United States.
The Portfolio's Declaration of Trust provides that it will
indemnify its Trustees and officers against liabilities and expenses
incurred in connection with litigation in which they may be involved
because of their offices with the Portfolio, unless, as to liability to
the Portfolio or its investors, it is finally adjudicated that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect
to any other matter it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best
interests of the Portfolio. In the case of settlement, such
indemnification will not be provided unless it has been determined by a
court or other body approving the settlement, such indemnification will
not be provided unless it has been determined by a court or other body
approving the settlement or other disposition, or by a reasonable
determination, based upon a review of readily available facts, by vote of
a majority of noninterested Trustees or in a written opinion of
independent counsel, that such officers or Trustees have not engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
Item 15. Control Persons and Principle Holders of Securities
As of March 31, 1995, EV Marathon Emerging Markets Fund (the
"Marathon Fund") and EV Traditional Emerging Markets Fund (the
"Traditional Fund") controlled the Portfolio by virtue of owning 38.7% and
55.6%, respectively, of the outstanding voting securities of the
Portfolio. Because the Marathon and Traditional Funds control the
Portfolio, the Traditional Fund may take actions without the approval of
any other investor. The Marathon and Traditional Funds have informed the
Portfolio that whenever they are requested to vote on matters pertaining
to the fundamental policies of the Portfolio, they will hold a meeting of
shareholders and will cast their vote as instructed by its shareholders.
It is anticipated that any other investor in the Portfolio which is an
investment company registered under the 1940 Act would follow the same or
a similar practice. The Marathon and Traditional Funds are series of
Eaton Vance Special Investment Trust, a Massachusetts business trust.
Eaton Vance Special Investment Trust is a mutual fund - an open-end
management investment company.
Item 16. Investment Advisory and Other Services
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<PAGE>
The Adviser. The Portfolio engages Lloyd George Investment
Management (Bermuda) Limited (the "Adviser") as investment adviser
pursuant to an Investment Advisory Agreement dated March 24, 1994. As
investment adviser to the Portfolio, the Adviser manages the Portfolio's
investments, subject to the supervision of the Board of Trustees of the
Portfolio. The Adviser is also responsible for effecting all security
transactions on behalf of the Portfolio, including the allocation of
principal transactions and portfolio brokerage and the negotiation of com-
missions. See "Brokerage Allocation and Other Practices." Under the
investment advisory agreement, the Adviser receives a monthly advisory fee
computed by applying the annual asset rate applicable to that portion of
the average daily net assets of the Portfolio throughout the month in each
Category as indicated below:
<TABLE>
<CAPTION>
<S> <C> <C>
Annual
Category Average Daily Net Assets Asset Rate
1 less than $500 million 0.75%
2 $500 million but less than $1 billion 0.70
3 $1 billion but less than $1.5 billion 0.65
4 $1.5 billion but less than $2 billion 0.60
5 $2 billion but less than $3 billion 0.55
6 $3 billion and over 0.50
</TABLE>
As of December 31, 1994, the Portfolio had net assets of
$1,195,270. For the period from the start of business, November 30, 1994,
to December 31, 1994, the Adviser earned advisory fees of $318 (equivalent
to 0.75% annualized) of the Portfolio's average daily net assets for such
period. To enhance the net income of the Portfolio, the Adviser made a
reduction of its fee in the amount of $318.
The directors of the Adviser are the Honorable Robert Lloyd
George, William Walter Raleigh Kerr, M.F. Tang and Scobie Dickinson Ward.
The Hon. Robert J.D. Lloyd George is Chairman and Chief Executive Officer
of the Adviser and Mr. Kerr is an officer of the Adviser. The business
address of these individuals is 3808 One Exchange Square, Central, Hong
Kong.
The Portfolio's investment advisory agreement with the Adviser
remains in effect until February 28, 1996; it may be continued
indefinitely thereafter so long as such continuance after February 28,
1996 is approved at least annually (i) by the vote of a majority of the
Trustees of the Portfolio who are not interested persons of the Portfolio
cast in person at a meeting specifically called for the purpose of voting
B - 18
<PAGE>
on such approval and (ii) by the Board of Trustees of the Portfolio or by
vote of a majority of the outstanding voting securities of the Portfolio.
The agreement may be terminated at any time without penalty on sixty days'
written notice by the Board of Trustees of either party or by vote of the
majority of the outstanding voting securities of the Portfolio, and the
agreement will terminate automatically in the event of its assignment.
The agreement provides that the Adviser may render services to others.
The agreement also provides that, in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
under the agreement on the part of the Adviser, the Adviser shall not be
liable to the Portfolio or to any shareholder for any act or omission in
the course of or connected with rendering services or for any losses sus-
tained in the purchase, holding or sale of any security.
The Administrator. See Part A for a description of the services
Eaton Vance performs as administrator of the Portfolio. Under Eaton
Vance's administration agreement with the Portfolio, Eaton Vance receives
a monthly administration fee from the Portfolio. This fee is computed by
applying the annual asset rate applicable to that portion of the average
daily net assets of the Portfolio throughout the month in each Category as
indicated below:
<TABLE>
<CAPTION>
<S> <C> <C>
Annual
Category Average Daily Net Assets Asset Rate
1 less than $500 million 0.25%
2 $500 million but less than $1 billion 0.23333
3 $1 billion but less than $1.5 billion 0.21667
4 $1.5 billion but less than $2 billion 0.20
5 $2 billion but less than $3 billion 0.18333
6 $3 billion and over 0.16667
</TABLE>
As of December 31, 1994, the Portfolio had net assets of
$1,195,270. For the period from the start of business, November 30, 1994,
to December 31, 1994, Eaton Vance earned administration fees of $106
(equivalent to 0.25% annualized) of the Portfolio's average daily net
assets for such period. To enhance the net income of the Portfolio, the
Administrator made a reduction of its fee and was allocated expenses in
the amount of $106 and $631, respectively.
Eaton Vance's administration agreement with the Portfolio will
remain in effect until February 28, 1996. The administration agreement
may be continued from year to year after such date so long as such
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<PAGE>
continuance is approved annually by the vote of a majority of the Trustees
of the Portfolio. The administration agreement may be terminated at any
time without penalty on sixty days' written notice by the Board of
Trustees of either party thereto, or by a vote of a majority of the
outstanding voting securities of the Portfolio. The administration
agreement will terminate automatically in the event of its assignment.
The administration agreement provides that, in the absence of Eaton
Vance's willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations or duties to the Portfolio under such
agreement, Eaton Vance will not be liable to the Portfolio for any loss
incurred. The agreement was initially approved by the Trustees, including
the non-interested Trustees, of the Portfolio at a meeting held on
February 23, 1994 of the Portfolio.
The Portfolio will be responsible for all of its costs and
expenses not expressly stated to be payable by the Adviser under the
Investment Advisory Agreement or Eaton Vance under the administration
agreement. Such costs and expenses to be borne by the Portfolio include,
without limitation: custody fees and expenses, including those incurred
for determining net asset value and keeping accounting books and records;
expenses of pricing and valuation services; membership dues in investment
company organizations; brokerage commissions and fees; fees and expenses
of registering under the securities laws; expenses of reports to
investors; proxy statements, and other expenses of investors' meetings;
insurance premiums, printing and mailing expenses; interest, taxes and
corporate fees; legal and accounting expenses; compensation and expenses
of Trustees not affiliated with the Adviser or Eaton Vance; and investment
advisory and administration fees. The Portfolio will also bear expenses
incurred in connection with litigation in which the Portfolio is a party
and any legal obligation to indemnify its officers and Trustees with
respect thereto.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are
both Massachusetts business trusts, and EV is the trustee of Eaton Vance
and BMR. The Directors of EV are Landon T. Clay, H. Day Brigham, Jr., M.
Dozier Gardner, James B. Hawkes and Benjamin A. Rowland, Jr. The
Directors of EVC consist of the same persons and John G.L. Cabot and Ralph
Z. Sorenson. Mr. Clay is chairman and Mr. Gardner is president and chief
executive officer of EVC, Eaton Vance, BMR and EV. All of the issued and
outstanding shares of Eaton Vance and of EV are owned by EVC. All of the
issued and outstanding shares of BMR are owned by Eaton Vance. All shares
of the outstanding Voting Common Stock of EVC are deposited in a Voting
Trust which expires December 31, 1996, the Voting Trustees of which are
Messrs. Brigham, Clay, Gardner, Hawkes and Rowland. The Voting Trustees
have unrestricted voting rights for the election of Directors of EVC. All
of the outstanding voting trust receipts issued under said Voting Trust
are owned by certain of the officers of Eaton Vance and BMR who are also
officers and Directors of EVC and EV. As of March 31, 1995, Messrs.
B - 20
<PAGE>
Clay, Gardner and Hawkes each owned 24% and Messrs. Rowland and Brigham
owned 15% and 13%, respectively, of such voting trust receipts. Messrs.
Clay, Gardner, Hawkes and Otis are members of the EVC, Eaton Vance, BMR
and EV organizations. Mr. Hawkes is a Vice President and Trustee and Mr.
Otis is Vice President and Assistant Secretary of the Portfolio. Messrs.
O'Connor and Austin and Ms. Sanders are officers of the Portfolio and are
also members of the Eaton Vance, BMR and EV organizations. Eaton Vance
will receive the fees paid under the administration agreement.
Eaton Vance owns all of the stock of Energex Corporation, which
is engaged in oil and gas operations. EVC owns all of the stock of
Marblehead Energy Corp. (which is engaged in oil and gas operations) and
77.3% of the stock of Investors Bank & Trust Company, the custodian of the
Portfolio, which provides custodial, trustee and other fiduciary services
to investors, including individuals, employee benefit plans, corporations,
investment companies, savings banks and other institutions. In addition,
Eaton Vance owns all the stock of Northeast Properties, Inc., which is
engaged in real estate investment, consulting and management. EVC owns
all the stock of Fulcrum Management, Inc. and MinVen, Inc., which are
engaged in the development of precious metal properties. EVC also owns 2%
of the A shares and 20% of the Preferred Shares issued by the parent of
the Adviser. EVC, Eaton Vance, BMR and EV may also enter into other
businesses.
EVC and its affiliates and its officers and employees from time
to time have transactions with various banks, including the custodian of
the Portfolio, Investors Bank & Trust Company. It is Eaton Vance's
opinion that the terms and conditions of such transactions will not be
influenced by existing or potential custodial or other relationships
between the Portfolio and such banks.
Custodian. Investors Bank & Trust Company ("IBT"), 24 Federal
Street, Boston, Massachusetts (a 77.3% owned subsidiary of EVC), acts as
custodian for the Portfolio. IBT has the custody of all cash and
securities of the Portfolio purchased in the United States, maintains the
Portfolio's general ledger and computes the Portfolio's daily net asset
value. In such capacities IBT attends to details in connection with the
sale, exchange, substitution, transfer or other dealings with the
Portfolio's investments, receives and disburses all funds, and performs
various other ministerial duties upon receipt of proper instructions from
the Portfolio.
Portfolio securities, if any, purchased by the Portfolio in the
U.S. are maintained in the custody of IBT or of other domestic banks or
depositories. Portfolio securities purchased outside of the U.S. are
B - 21
<PAGE>
maintained in the custody of foreign banks and trust companies that are
members of IBT's Global Custody Network, or foreign depositories used by
such foreign banks and trust companies. Each of the domestic and foreign
custodial institutions holding portfolio securities has been approved by
the Board of Trustees of the Portfolio in accordance with regulations
under the 1940 Act.
IBT charges fees which are competitive within the industry. These fees
for the Portfolio relate to (1) custody services based upon a percentage
of the market values of Portfolio securities; (2) bookkeeping and
valuation services provided at an annual rate; (3) activity charges,
primarily the result of the number of portfolio transactions; and (4)
reimbursement of out-of-pocket expenses. These fees are then reduced by a
credit for cash balances of the Portfolio at the custodian equal to 75% of
the 91-day U.S. Treasury Bill auction rate applied to the Portfolio's
average daily collected balances. In view of the ownership of EVC in IBT,
the Portfolio is treated as a self-custodian pursuant to Rule 17f-2 under
the 1940 Act, and the Portfolio's investments held by IBT as custodian are
thus subject to the additional examinations by the Portfolio's independent
certified public accountants as called for by such Rule.
Independent Certified Public Accountants. Deloitte & Touche LLP, 125
Summer Street, Boston, Massachusetts, are the independent certified public
accountants of the Portfolio, providing audit services, tax return
preparation, and assistance and consultation with respect to the
preparation of filings with the Securities and Exchange Commission.
Item 17. Brokerage Allocation and Other Practices
Decisions concerning the execution of portfolio security
transactions by the Portfolio, including the selection of the market and
the broker-dealer firm, are made by the Adviser.
The Adviser places the portfolio security transactions of the
Portfolio and of certain other accounts managed by the Adviser for
execution with many broker-dealer firms. The Adviser uses its best
efforts to obtain execution of portfolio transactions at prices which are
advantageous to the Portfolio and (when a disclosed commission is being
charged) at reasonably competitive commission rates. In seeking such
execution, the Adviser will use its best judgment in evaluating the terms
of a transaction, and will give consideration to various relevant factors,
including without limitation the size and type of the transaction, the
general execution and operational capabilities of the broker-dealer, the
nature and character of the market for the security, the confidentiality,
speed and certainty of effective execution required for the transaction,
the reputation, reliability, experience and financial condition of the
broker-dealer, the value and quality of services rendered by the broker-
dealer in other transactions, and the reasonableness of the commission, if
B - 22
<PAGE>
any. Transactions on stock exchanges and other agency transactions
involve the payment by the Portfolio of negotiated brokerage commissions.
Such commissions vary among different broker-dealer firms, and a
particular broker-dealer may charge different commissions according to
such factors as the difficulty and size of the transaction and the volume
of business done with such broker-dealer. Transactions in foreign
securities usually involve the payment of fixed brokerage commissions,
which are generally higher than those in the United States. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid or received by the Portfolio
usually includes an undisclosed dealer markup or markdown. In an
underwritten offering the price paid by the Portfolio includes a disclosed
fixed commission or discount retained by the underwriter or dealer.
Although commissions paid on portfolio transactions will, in the judgment
of the Adviser, be reasonable in relation to the value of the services
provided, commissions exceeding those which another firm might charge may
be paid to broker-dealers who were selected to execute transactions on
behalf of the Portfolio and the Adviser's other clients in part for
providing brokerage and research services to the Adviser.
As authorized in Section 28(e) of the 1934 Act, a broker or
dealer who executes a portfolio transaction on behalf of the Portfolio may
receive a commission which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if the Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that
particular transaction or on the basis of the overall responsibilities
which the Adviser and its affiliates have for accounts over which they
exercise investment discretion. In making any such determination, the
Adviser will not attempt to place a specific dollar value on the brokerage
and research services provided or to determine what portion of the
commission should be related to such services. Brokerage and research
services may include advice as to the value of securities, the
advisability of investing in, purchasing, or selling securities, and the
availability of securities or purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the
performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and
settlement); and the "Research Services" referred to in the next
paragraph.
It is a common practice in the investment advisory industry for
the advisers of investment companies, institutions and other investors to
receive research, statistical and quotation services, data, information
and other services, products and materials which assist such advisers in
the performance of their investment responsibilities ("Research Services")
from broker-dealers which execute portfolio transactions for the clients
of such advisers and from third parties with which such broker-dealers
have arrangements. Consistent with this practice, the Adviser may receive
Research Services from broker-dealer firms with which the Adviser places
B - 23
<PAGE>
the portfolio transactions of the Portfolio and from third parties with
which these broker-dealers have arrangements. These Research Services may
include such matters as general economic and market reviews, industry and
company reviews, evaluations of securities and portfolio strategies and
transactions, recommendations as to the purchase and sale of securities
and other portfolio transactions, financial, industry and trade
publications, news and information services, pricing and quotation
equipment and services, and research oriented computer hardware, software,
data bases and services. Any particular Research Service obtained through
a broker-dealer may be used by the Adviser in connection with client ac-
counts other than those accounts which pay commissions to such broker-
dealer. Any such Research Service may be broadly useful and of value to
the Adviser in rendering investment advisory services to all or a
significant portion of its clients, or may be relevant and useful for the
management of only one client's account or of a few clients' accounts, or
may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid
commissions to the broker-dealer through which such Research Service was
obtained. The advisory fee paid by the Portfolio is not reduced because
the Adviser receives such Research Services. The Adviser evaluates the
nature and quality of the various Research Services obtained through
broker-dealer firms and attempts to allocate sufficient commissions to
such firms to ensure the continued receipt of Research Services which the
Adviser believes are useful or of value to it in rendering investment
advisory services to its clients.
Subject to the requirement that the Adviser shall use its best
efforts to seek to execute portfolio security transactions of the
Portfolio at advantageous prices and at reasonably competitive commission
rates or spreads, the Adviser is authorized to consider as a factor in the
selection of any broker-dealer firm with whom Portfolio orders may be
placed the fact that such firm has sold or is selling shares of investment
companies sponsored by Eaton Vance. This policy is not inconsistent with
a rule of the National Association of Securities Dealers, Inc., which rule
provides that no firm which is a member of the Association shall favor or
disfavor the distribution of shares of any particular investment company
or group of investment companies on the basis of brokerage commissions
received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also
be appropriate for other investment accounts managed by the Adviser or its
affiliates. The Adviser will attempt to allocate equitably portfolio
transactions among the Portfolio and the portfolios of its other
investment accounts whenever decisions are made to purchase or sell
securities by the Portfolio and one or more of such other accounts
simultaneously. In making such allocations, the main factors to be
considered are the respective investment objectives of the Portfolio and
such other accounts, the relative size of portfolio holdings of the same
or comparable securities, the availability of cash for investment by the
Portfolio and such accounts, the size of investment commitments generally
held by the Portfolio and such accounts and the opinions of the persons
B - 24
<PAGE>
responsible for recommending investments to the Portfolio and such
accounts. While this procedure could have a detrimental effect on the
price or amount of the securities available to the Portfolio from time to
time, it is the opinion of the Trustees of the Portfolio that the benefits
available from the Adviser's organization outweigh any disadvantage that
may arise from exposure to simultaneous transactions. For the period from
the start of business, November 30, 1994, to December 31, 1994, the
Portfolio paid brokerage commissions of $2,170 with respect to portfolio
securities transactions all of which was paid in respect of portfolio
security transactions aggregating approximately $405,241 to firms which
provided some Research Services to the Adviser's organization (although
many such firms may have been selected in any particular transaction
primarily because of their execution capabilities).
Item 18. Capital Stock and Other Securities
Under the Portfolio's Declaration of Trust, the Trustees are authorized
to issue interests in the Portfolio. Investors are entitled to
participate pro rata in distributions of taxable income, loss, gain and
credit of the Portfolio. Upon dissolution of the Portfolio, the Trustees
shall liquidate the assets of the Portfolio and apply and distribute the
proceeds thereof as follows: (a) first, to the payment of all debts and
obligations of the Portfolio to third parties including, without
limitation, the retirement of outstanding debt, including any debt owned
to holders of record of interests in the Portfolio ("Holders") or their
affiliates, and the expenses of liquidation, and to the setting up of any
reserves for contingencies which may be necessary; and (b) second, in
accordance with the Holders' positive Book Capital Account balances after
adjusting Book Capital Accounts for certain allocations provided in the
Declaration of Trust and in accordance with the requirements described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(2). Notwithstanding the
foregoing, if the Trustees shall determine that an immediate sale of part
or all of the assets of the Portfolio would cause undue loss to the
Holders, the Trustees, in order to avoid such loss, may, after having
given notification to all the Holders, to the extent not then prohibited
by the law of any jurisdiction in which the Portfolio is then formed or
qualified and applicable in the circumstances, either defer liquidation of
and withhold from distribution for a reasonable time any assets of the
Portfolio except those necessary to satisfy the Portfolio's debts and
obligations or distribute the Portfolio's assets to the Holders in
liquidation. Interests in the Portfolio have no preference, preemptive,
conversion or similar rights and are fully paid and nonassessable, except
as set forth below. Interests in the Portfolio may not be transferred.
Certificates representing an investor's interest in the Portfolio are
issued only upon the written request of a Holder.
Each Holder is entitled to vote in proportion to the amount of its
interest in the Portfolio. Holders do not have cumulative voting rights.
The Portfolio is not required and has no current intention to hold annual
B - 25
<PAGE>
meetings of Holders but the Portfolio will hold meetings of Holders when
in the judgment of the Portfolio's Trustees it is necessary or desirable
to submit matters to a vote of Holders at a meeting. any action which may
be taken by Holders may be taken without a meeting if Holders holding more
than 50% of all interests entitled to vote (or such larger proportion
thereof as shall be required by any express provision of the Declaration
of Trust of the Portfolio) consent to the action in writing and the
consents are filed with the records of meetings of Holders.
The Portfolio's Declaration of Trust may be amended by vote of Holders
of more than 50% of all interests in the Portfolio at any meeting of
Holders or by an instrument in writing without a meeting, executed by a
majority of the Trustees and consented to by the Holders of more than 50%
of all interests. The Trustees may also amend the Declaration of Trust
(without the vote or consent of Holders) to change the Portfolio's name or
the state or other jurisdiction whose law shall be the governing law, to
supply any omission or to cure, correct or supplement any ambiguous,
defective or inconsistent provision, to conform the Declaration of Trust
to applicable Federal law or regulations or to the requirements of the
Internal Revenue Code, or to change, modify or rescind any provision,
provided that such change, modification or rescission is determined by the
Trustees to be necessary or appropriate and not to have a materially
adverse effect on the financial interests of the Holders. No amendment of
the Declaration of Trust which would change any rights with respect to any
Holder's interest in the Portfolio by reducing the amount payable thereon
upon liquidation of the Portfolio may be made, except with the vote or
consent of the Holders of two-thirds of all interests. References in the
Declaration of Trust and in Part A or this Part B to a specified
percentage of, or fraction of, interests in the Portfolio, means Holders
whose combined Book Capital Account balances represent such specified
percentage or fraction of the combined Book Capital Account balance of
all, or a specified group of, Holders.
The Portfolio may merge or consolidate with any other corporation,
association, trust or other organization or may sell or exchange all or
substantially all of its assets upon such terms and conditions and for
such consideration when and as authorized by the Holders of (a) 67% or
more of the interests in the Portfolio present or represented at the
meeting of Holders, if Holders of more than 50% of all interests are
present or represented by proxy, or (b) more than 50% of all interests,
whichever is less. The Portfolio may be terminated (i) by the affirmative
vote of Holders of not less than two-thirds of all interests at any
meeting of Holders or by an instrument in writing without a meeting,
executed by a majority of the Trustees and consented to by Holders of not
less than two-thirds of all interests, or (ii) by the Trustees by written
notice to the Holders.
The Portfolio is organized as a trust under the laws of the State of
New York. Investors in the Portfolio will be held personally liable for
B - 26
<PAGE>
its obligations and liabilities, subject, however, to indemnification by
the Portfolio in the event that there is imposed upon an investor a
greater portion of the liabilities and obligations of the Portfolio than
its proportionate interest in the Portfolio. The Portfolio intends to
maintain fidelity and errors and omissions insurance deemed adequate by
the Trustees. Therefore, the risk of an investor incurring financial loss
on account of investor liability is limited to circumstances in which both
inadequate insurance exists and the Portfolio itself is unable to meet its
obligations.
The Declaration of Trust further provides that obligations of the
Portfolio are not binding upon the Trustees individually but only upon the
property of the Portfolio and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects
a Trustee against any liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Item 19. Purchase, Redemption and Pricing of Securities
Interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning
of Section 4(2) of the Securities Act of 1933. See "Purchase of Interests
in the Portfolio" and "Redemption or Decrease of Interest" in Part A. See
Part A, Item 7 regarding the pricing of interests in the Portfolio.
The Trustees of the Portfolio have established the following procedures
for the valuation of the Portfolio's assets. Marketable securities listed
on foreign or U.S. securities exchanges or in the NASDAQ National Market
System are valued at closing sale prices or, if there were no sales, at
the mean between the closing bid and asked prices therefor on the exchange
where such securities are principally traded or such System. Unlisted or
listed securities for which closing sale prices are not available are
valued at the mean between the latest bid and asked prices. An option is
valued at the last sale price as quoted on the principal exchange or board
of trade on which such option or contract is traded, or in the absence of
a sale, the mean between the last bid and asked price. Futures positions
on securities or currencies are generally valued at closing settlement
prices. All other securities are valued at fair value as determined in
good faith by or pursuant to procedures established by the Trustees.
Short-term debt securities with a remaining maturity of 60 days or less
are valued at amortized cost. If securities were acquired with a
remaining maturity of more than 60 days, their amortized cost value will
be based on their value on the sixty-first day prior to maturity. 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.
B - 27
<PAGE>
Generally, trading in the foreign securities owned by the
Portfolio is substantially completed each day at various times prior to
the close of the Exchange. The values of these securities used in
determining the net asset value of the Portfolio's shares are computed as
of such times. Occasionally, events affecting the value of foreign
securities may occur between such times and the close of the Exchange
which will not be reflected in the computation of the Portfolio's net
asset value (unless the Portfolio deems that such events would materially
affect its net asset value, in which case an adjustment would be made and
reflected in such computation). Foreign securities and currency held by
the Portfolio will be valued in U.S. dollars; such values will be
computed by the custodian based on foreign currency exchange rate
quotations supplied by Reuters Information Service.
Item 20. Tax Status
The Portfolio has been advised by tax counsel that, provided the
Portfolio is operated at all times during its existence in accordance with
certain organizational and operational documents, the Portfolio should be
classified as a partnership under the Internal Revenue Code of 1986, as
amended (the "Code"), and it should not be a "publicly traded partnership"
within the meaning of Section 7704 of the Code. Consequently, the
Portfolio does not expect that it will be required to pay any Federal
income tax.
Under Subchapter K of the Code, a partnership is considered to be
either an aggregate of its members or a separate entity depending upon the
factual and legal context in which the question arises. Under the
aggregate approach, each partner is treated as an owner of an undivided
interest in partnership assets and operations. Under the entity approach,
the partnership is treated as a separate entity in which partners have no
direct interest in partnership assets and operations. The Portfolio has
been advised by tax counsel that, in the case of a Holder that seeks to
qualify as a RIC, the aggregate approach should apply, and each such
Holder should accordingly be deemed to own a proportionate share of each
of the assets of the Portfolio and to be entitled to the gross income of
the Portfolio attributable to that share for purposes of all requirements
of Sections 851(b) and 852(b)(5) of the Code. Further, the Portfolio has
been advised by tax counsel that each Holder that seeks to qualify as a
RIC should be deemed to hold its proportionate share of the Portfolio's
assets for the period the Portfolio has held the assets or for the period
the Holder has been an investor in the Portfolio, whichever is shorter.
Investors should consult their tax advisers regarding whether the entity
or the aggregate approach applies to their investment in the Portfolio in
light of their particular tax status and any special tax rules applicable
to them.
B - 28
<PAGE>
In order to enable a Holder that is otherwise eligible to qualify as a
RIC, the Portfolio intends to satisfy the requirements of Subchapter M of
the Code relating to sources of income and diversification of assets as if
they were applicable to the Portfolio and to allocate and permit
withdrawals in a manner that will enable a Holder which is a RIC to comply
with those requirements. The Portfolio will allocate at least annually to
each Holder it'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 in a manner intended to comply with the Code and
applicable Treasury regulations. Tax counsel has advised the Portfolio
that the Portfolio's allocations of taxable income and loss should have
"economic effect" under applicable Treasury regulations.
To the extent the cash proceeds of any withdrawal (or, under certain
circumstances, such proceeds plus the value of any marketable securities
distributed to an investor) ("liquid proceeds") exceed a Holder's adjusted
basis of his interest in the Portfolio, the Holder will generally realize
a gain for Federal income tax purposes. If, upon a complete withdrawal
(redemption of the entire interest), the Holder's adjusted basis of his
interest exceeds the liquid proceeds of such withdrawal, the Holder will
generally realize a loss for Federal income tax purposes. The tax
consequences of a withdrawal of property (instead of or in addition to
liquid proceeds) will be different and will depend on the specific factual
circumstances. A Holder's adjusted basis of an interest in the Portfolio
will generally be the aggregate prices paid therefor (including the
adjusted basis of contributed property and any gain recognized on such
contribution), increased by the amounts of the Holder's distributive share
of items of income (including interest income exempt from Federal income
tax) and realized net gain of the Portfolio, and reduced, but not below
zero, by (i) the amounts of the Holder's distributive share of items of
Portfolio loss, and (ii) the amount of any cash distributions (including
distributions of interest income exempt from Federal income tax and cash
distributions on withdrawals from the Portfolio) and the basis to the
Holder of any property received by such Holder other than in liquidation,
and (iii) the Holder's distributive share of the Portfolio's nondeductible
expenditures not properly chargeable to capital account. Increases or
decreases in a Holder's share of the Portfolio's liabilities may also
result in corresponding increases or decreases in such adjusted basis.
Distributions of liquid proceeds in excess of a Holder's adjusted basis in
its interest in the Portfolio immediately prior thereto generally will
result in the recognition of gain to the Holder in the amount of such
excess.
The Portfolio's transactions in options and futures contracts will be
subject to special tax rules that may affect the amount, timing and
character of distributions. For example, certain positions held by the
Portfolio that substantially diminish the Portfolio's risk of loss with
respect to other positions in its portfolio may constitute straddles,
which are subject to tax rules that may cause deferral of Portfolio
B - 29
<PAGE>
losses, adjustments in the holding period of Portfolio securities and
conversion of short-term into long-term capital losses.
Income from transactions in options and futures contracts derived by
the Portfolio with respect to its business of investing in securities will
qualify as permissible income for its Holders that are RICs under the
requirement that at least 90% of a RIC's gross income each taxable year
consist of specified types of income. However, income from the dispo-
sition by the Portfolio of options and futures contracts held for less
than three months will be subject to the requirement applicable to those
Holders that less than 30% of a RIC's gross income each taxable year
consist of certain short-term gains ("Short-Short Limitation").
If the Portfolio satisfies certain requirements, any increase in value
of a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether the Holders that are RICs satisfy the Short-Short Limitation.
Thus, only the net gain (if any) from the designated hedge will be
included in gross income for purposes of that limitation. The Portfolio
will consider whether it should seek to qualify for this treatment for its
hedging transactions. To the extent the Portfolio does not so qualify, it
may be forced to defer the closing out of options and futures contracts
beyond the time when it otherwise would be advantageous to do so, in order
for Holders that are RICs to continue to qualify as such.
The Portfolio anticipates that it will be subject to foreign
withholding taxes with respect to income on certain foreign securities.
These taxes may be reduced or eliminated under the terms of an applicable
U.S. income tax treaty. Certain foreign exchange gains and losses
realized by the Portfolio and allocated to the RIC will be treated as
ordinary income and losses. Certain uses of foreign currency and
investment by the Portfolio in certain "passive foreign investment
companies" may be limited or a tax election may be made, if available, in
order to enable an investor that is a RIC to preserve its qualification as
a RIC or to avoid imposition of a tax on such an investor.
An entity that is treated as a partnership under the Code, such as the
Portfolio, is generally treated as a partnership under state and local tax
laws, but certain states may have difference entity classification
criteria and may therefore reach a different conclusion. Entities that
are classified as partnerships are not treated as separate taxable
entities under most state and local tax laws, and the income of a
partnership is considered to be income of partners both in timing and in
character. The exemption of interest income for Federal income tax
purposes does not necessarily result in exemption under the income or tax
laws of any state or local taxing authority. The laws of the various
B - 30
<PAGE>
states and local taxing authorities vary with respect to the taxation of
such interest income, as well as to the status of a partnership interest
under state and local tax laws, and each Holder of an interest in the
Portfolio is advised to consult his own tax adviser.
The foregoing discussion does not address the special tax rules
applicable to certain classes of investors, such as tax-exempt entities,
insurance companies and financial institutions. Investors should consult
their own tax advisers with respect to special tax rules that may apply in
their particular situations, as well as the state, local or foreign tax
consequences of investing in the Portfolio.
Item 21. Underwriters
The placement agent for the Portfolio is Eaton Vance Distributors,
Inc., which receives no compensation for serving in this capacity.
Investment companies, common and commingled trust funds and similar
organizations and entities may continuously invest in the Portfolio.
Item 22. Calculation of Performance Data
Not applicable.
Item 23. Financial Statements
The following financial statements included herein have been included
in reliance upon the report of Deloitte and Touche LLP, independent
certified public accountants, as experts in accounting and auditing.
Portfolio of Investment as at December 31, 1994
Statement of Assets and Liabilities as at December 31, 1994
Statement of Operations for the period from the start of business,
November 30, 1994, to December 31, 1994
Statement of Changes in Net Assets for the period from the start of
business, November 30, 1994, to December 31, 1994
Supplementary Data for the period from the start of business, November
30, 1994, to December 31, 1994
Notes to Financial Statements
Independent Auditors' Report
B - 31
<PAGE>
Emerging Markets Portfolio
Annual Report - December 31, 1994
- --------------------------------------------------------------------------------
COMMON STOCKS--35.2%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
ARGENTINA -2.1%
Cia Naviera Perez Companc B 3,600 $ 14,832
YPF Sociedad Anonima ADR 460 9,832
----------
$ 24,664
----------
BRAZIL -1.6%
Usiminas Siderurg Minas ADR 1,425 $ 19,594
----------
CHILE -0.8%
Banco Osorno Y LA Union ADR 860 $ 9,245
----------
HONG KONG -11.6%
HSBC Holdings PLC 4,000 $ 43,169
Hutchison Whampoa 10,000 40,455
Jardine Matheson HK Registry 4,000 28,564
National Mutual Limited 40,000 26,368
----------
$ 138,556
----------
INDONESIA -3.0%
PT Indonesia Satellite ADR 1,000 $ 35,750
----------
MAYLASIA -3.5%
Land & General Behard 10,000 $ 41,512
----------
MEXICO -3.3%
Grupo Tribasa SA ADR 510 $ 8,479
Telefonos de Mexico ADR 750 30,750
----------
$ 39,229
----------
PHILIPPINES -6.9%
Bacnotan Consolidated Industries 4,000 $ 43,647
Philippine Long Distance Telephone 700 38,945
----------
$ 82,592
----------
THAILAND -2.4%
Krung Thai Bank Ltd. (Local) 9,000 $ 29,754
----------
TOTAL COMMON STOCKS
(identified cost, $427,558) $ 420,896
OTHER ASSETS, LESS LIABLITIES -64.8% 774,374
----------
NET ASSETS - 100% $1,195,270
==========
ADR-AMERICAN DEPOSITARY RECEIPT
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (Identified cost, $427,558) $ 420,896
Cash 1,005,510
Deferred organization expenses (Note 1C) 37,446
Receivable from Administrator 631
--------------
Total assets $ 1,464,483
LIABILITIES:
Payable for investments purchased $ 231,136
Accrued expenses and other liabilities 38,077
--------------
Total liabilities 269,213
--------------
NET ASSETS applicable to investors' interest in Portfolio $ 1,195,270
==============
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $ 1,201,975
Net unrealized appreciation of investments (computed on the
basis of identified cost) (6,662)
Net unrealized depreciation of foreign currencies (43)
--------------
TOTAL $ 1,195,270
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the period from the start of business, November 30, 1994,
to December 31, 1994
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Income -
Dividends $ -
Interest -
-------------
Total income $ -
Expenses -
Investment adviser fee (Note 2) $ 318
Administration fee (Note 2) 106
Amortization of organization expense (Note 1C) 504
Miscellaneous 127
-------------
Total expenses 1,055
Deduct:
Reduction of investment adviser fee $318
Reduction of administration fee 106
Allocation of expenses to administrator 631
------------
Total deducted 1,055
-------------
Net expenses -
-------------
Net investment income $ -
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on foreign currency transactions $ 1,132
-------------
Change in unrealized appreciation
Investments $ (6,662)
Foreign currency (43)
-------------
Net unrealized depreciation (6,705)
-------------
Net realized and unrealized loss on investments $ (5,573)
-------------
Net decrease in net assets from operations $ (5,573)
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period from the start of business November 30, 1994 to December 31, 1994
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
From operations:
Net (loss) investment income $ -
Net realized gain on foreign currency transactions 1,132
Net increase in unrealized depreciation of investments (6,705)
----------
Decrease in net assets from operations (5,573)
----------
Capital transactions:
Contributions $1,107,223
Withdrawals (6,400)
----------
Increase in net assets resulting from capital transactions $1,100,823
----------
Net increase in net assets $1,095,250
NET ASSETS:
At beginning of period 100,020
----------
At end of period $1,195,270
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
For the period
from the start of business
November 30, 1994 to
December 31, 1994
--------------------------
<S> <C>
RATIOS (As a percentage of average net assets):
Expenses 0%
Net investment income 0%
PORTFOLIO TURNOVER 0%
</TABLE>
The operating expenses of the Portfolio reflect a reduction of the Investment
Adviser and Administrator fees as well as an allocation of expenses to the
Administrator. Had such action not been taken, the annualized ratios would have
been as follows:
<TABLE>
<S> <C>
Expenses 2.21%
Net Investment loss (2.21%)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Emerging Markets Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940 as a diversified, open end investment company which was
organized as a trust under the laws of the State of New York. 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.
21
<PAGE>
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 realized and 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.
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Lloyd George Management (Bermuda)Limited
(the Adviser) as compensation for management and investment advisory services
rendered to the Portfolio. Under the advisory agreement, the Adviser receives a
monthly fee of 0.0625% (0.75% annually) of the average daily net assets of the
Portfolio up to $500 million, and at reduced rates as daily net assets exceed
that level. For the year ended December 31, 1994 the adviser fee was 0.75%
(annualized) of average net assets. To enhance the net income of the portfolio,
the adviser made a reduction of its fee in the amount of $318. In addition, an
administration fee is earned by Eaton Vance Management (EVM) for managing and
administering the business affairs of the Portfolio. Under the administration
agreement, EVM earns a monthly fee in the amount of 1/48th of 1% (equal to 0.25%
annually) of the average daily net assets of the Portfolio up to $500 million,
and at reduced rates as daily net assets exceed that level. For the year ended
December 31, 1994, the administration fee was 0.25% (annualized) of average net
assets. To enhance the net income of the Portfolio, the administrator made a
reduction of its fee and was allocated expenses in the amount of $106 and $631,
respectively. 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.
22
<PAGE>
(3) INVESTMENT TRANSACTIONS
Purchases of investments, other than short-term obligations, aggregated
$427,558. There were no sales of investments during the period.
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation (depreciation) in value of the investments
owned at December 31, 1994, as computed on a federal income tax basis, are as
follows:
<TABLE>
<S> <C>
Aggregate cost $ 427,558
==============
Gross unrealized depreciation $ 9,610
Gross unrealized appreciation 2,948
--------------
Net unrealized depreciation $ 6,662
==============
</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.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
(6) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a $120 million unsecured line of credit agreement with a bank.
The line of credit consists of a $20 million committed facility and a $100
million discretionary facility. Borrowings will be made by the Portfolio solely
to facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each portfolio 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.
24
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of
Emerging Markets Portfolio:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Emerging Markets Portfolio as of December 31,
1994, and the related statement of operations, the statement of changes in net
assets and the supplementary data for the period from the start of business,
November 30, 1994, to December 31, 1994. 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 upon our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and supplementary data are free
of material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned at December 31, 1994,
by correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. 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 audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of Emerging Markets Portfolio
at December 31, 1994, the results of its operations, the changes in its net
assets and its supplementary data for the period from the start of business,
November 30, 1994, to December 31, 1994, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 8, 1995
25
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The Financial statements called for by this Item are included in Part B
and listed in Item 23 hereof.
(b) Exhibits
1. Declaration of Trust dated January 18, 1994 filed as
Exhibit No. 1 to original Registration Statement on
February 3, 1994 and incorporated herein by reference.
2. By-Laws of the Registrant dated January 18, 1994 filed as
Exhibit No. 2 to original Registration Statement on
February 3, 1994 and incorporated herein by reference.
5. Form of Investment Advisory Agreement between the
Registrant and Lloyd George Investment Management
(Bermuda) Limited filed as Exhibit No. 5 to original
Registration Statement on February 3, 1994 and
incorporated herein by reference.
6. Form of Placement Agent Agreement with Eaton Vance
Distributors, Inc. filed as Exhibit No. 6 to original
Registration Statement on February 3, 1994 and
incorporated herein by reference.
8. Form of Custodian Agreement with Investors Bank & Trust
Company filed as Exhibit No. 8 to original Registration
Statement on February 3, 1994 and incorporated herein by
reference.
9. Form of Administration Agreement between the Registrant
and Eaton Vance Management filed as Exhibit No. 9 to
original Registration Statement on February 3, 1994 and
incorporated herein by reference.
13. Investment representation letter of Eaton Vance
Management dated January 18, 1994 filed as Exhibit No. 13
to original Registration Statement on February 3, 1994
and incorporated herein by reference.
C - 1
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of
Title of Class Record Holders as of
-------------- March 31, 1995
---------------------
Interests 3
Item 27. Indemnification
No change from the information set forth in Item 27 of Form N-1A in the
original Registration Statement under the Investment Company Act of 1940,
which information is incorporated herein by reference.
The Trustees and officers of the Registrant and the personnel of the
Registrant's investment adviser are insured under an errors and omissions
liability insurance policy. The Registrant and its officers are also
insured under the fidelity bond required by Rule 17g-1 under the
Investment Company Act of 1940.
Item 28. Business and Other Connections
To the knowledge of the Portfolio, none of the trustees or officers of
the Portfolio's investment adviser, except as set forth on its Form ADV as
filed with the Securities and Exchange Commission, is engaged in any other
business, profession, vocation or employment of a substantial nature,
except that certain trustees and officers also hold various positions with
and engage in business for affiliates of the investment adviser.
Item 29. Principal Underwriters
Not applicable.
Item 30. Location of Accounts and Records
All applicable accounts, books and documents required to be maintained
by the Registrant by Section 31(a) of the Investment Company Act of 1940
and the Rules promulgated thereunder are in the possession and custody of
the Registrant's custodian, Investors Bank & Trust Company, 24 Federal
Street, Boston, MA 02110 and 89 South Street, Boston, MA 02104, with the
exception of certain corporate documents and portfolio trading documents
which are in the possession and custody of the Registrant's investment
adviser at 24 Federal Street, Boston, MA 02110. The Registrant is
informed that all applicable accounts, books and documents required to be
maintained by registered investment advisers are in the custody and
possession of the Registrant's investment adviser.
C - 2
<PAGE>
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
C - 3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized in the
City of Boston and Commonwealth of Massachusetts on the 27th of April,
1995.
EMERGING MARKETS PORTFOLIO
By: /s/ Thomas Otis
----------------
Thomas Otis
Vice President and Treasurer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
1. Declaration of Trust dated January 18, 1994 filed as
Exhibit No. 1 to original Registration Statement on
February 3, 1994 and incorporated herein by reference.
2. By-Laws of the Registrant dated January 18, 1994 filed as
Exhibit No. 2 to original Registration Statement on
February 3, 1994 and incorporated herein by reference.
5. Form of Investment Advisory Agreement between the
Registrant and Lloyd George Investment Management
(Bermuda) Limited filed as Exhibit No. 5 to original
Registration Statement on February 3, 1994 and
incorporated herein by reference.
6. Form of Placement Agent Agreement with Eaton Vance
Distributors, Inc. filed as Exhibit No. 6 to original
Registration Statement on February 3, 1994 and
incorporated herein by reference.
8. Form of Custodian Agreement with Investors Bank & Trust
Company filed as Exhibit No. 8 to original Registration
Statement on February 3, 1994 and incorporated herein by
reference.
9. Form of Administration Agreement between the Registrant
and Eaton Vance Management filed as Exhibit No. 9 to
original Registration Statement on February 3, 1994 and
incorporated herein by reference.
13. Investment representation letter of Eaton Vance
Management dated January 18, 1994 filed as Exhibit No. 13
to original Registration Statement on February 3, 1994
and incorporated herein by reference.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000918685
<NAME> EMERGING MARKETS PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 427,558
<INVESTMENTS-AT-VALUE> 420,896
<RECEIVABLES> 631
<ASSETS-OTHER> 37,446
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,464,483
<PAYABLE-FOR-SECURITIES> 231,136
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,077
<TOTAL-LIABILITIES> 269,213
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,201,975
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (6,705)
<NET-ASSETS> 1,195,270
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 1,132
<APPREC-INCREASE-CURRENT> (6,705)
<NET-CHANGE-FROM-OPS> (5,573)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,095,250
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 318
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,055
<AVERAGE-NET-ASSETS> 551,520
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
