The Eaton Vance Special Investment Trust
For the South Asia Portfolio
[LOGO]
Annual Shareholder Report
December 31, 1994
Investment Adviser of South Asia Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Fund Administrator
Eaton Vance Management
24 Federal Street
Boston, MA 02110
(617) 482-8260
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
Custodian
Investors Bank & Trust Company
89 South Street
P.O. Box 1537
Boston MA 02205-1537
Transfer Agent
First Data Investor Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
Independent Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
<TABLE>
<CAPTION>
South Asia Portfolio
Portfolio of Investments
December 31, 1995
Shares Value
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Common Stocks -- 89.7%
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<S> <C> <C>
BANGLADESH -- 4.5%
Apex Spinning & Knitting 40,000 $ 222,164
Apex Tannery Ltd 20,000 378,449
Eastern Housing Ltd. (1) 90,300 295,586
Monno Fabrics Ltd. (1)(3) 133,000 489,571
Square Pharmaceuticals Ltd. 16,000 315,995
------------
$ 1,701,765
------------
INDIA -- 71.4%
Alacrity Housing Ltd. 321,000 $ 228,210
Asian Paints (India) Ltd. (1)(2) 66,800 613,576
Bajaj Auto Ltd. 53,500 1,084,758
Bellary Steels & Alloys (2) 310,000 204,962
DCL Polyesters 1,000 597
Enkay Synthetics Ltd. (1)(2) 51,800 73,800
Essar Gujarat (2) 5,800 6,466
Flex Industries 4,400 18,299
Flex Industries (wts) (1)(3) 4,274 16,560
Himachal Futuristic Communications (2) 7,800 11,312
Himachal Telematics Ltd (2) 45,700 38,728
Hindalco Industries Ltd. GDR (1) 36,400 1,228,500
Hindustan Petroleum Corp. 50,000 419,451
Hoechst India Ltd. 130,000 916,821
Hoechst Schering Agrevo 20,000 250,249
Hotel Leela Venture Ltd. (2) 2,400 7,729
Hotel Leela Venture (wts) (1) 42,360 63,242
IFB Industries Ltd. (2) 107,800 435,308
Indo Gulf Fertilizers (2) 3,200 4,614
Infosys Technologies Ltd. 85,500 992,009
Innovation Medi Equipment Ltd. (2) 150,000 34,125
I.T.C. Limited GDR (1) 100,000 850,500
Karur Vysya Bank (1)(2) 100,500 671,620
KEC International Ltd. 165,200 488,577
Kotak Mahindra Finance Ltd (2) 224,000 758,026
Larsen & Toubro (2) 105,850 792,107
Larsen & Toubro Ltd. GDR (1) 50,700 899,925
Madras Refinery Ltd. 187,950 305,723
Mahindra & Mahindra 216,667 1,281,577
Mahindra & Mahindra GDR (1) 40,000 510,000
Motor Industries 3,850 649,239
Murudeshwar Ceramics Ltd. (2) 187,200 436,525
Murudeshwar Ceramics (rts) (1) 131,040 7,452
Nagarjuna Construction (2) 50,000 224,655
Nicholas Piramel Ltd. 27,950 182,810
Orchid Chemicals & Pharma (2) 251,700 486,723
Paper Products Ltd. (1)(2) 50,000 163,515
Paper Products (rts) (1) 12,500 35,547
Punjab Wireless Systems (2) 100,000 480,592
Ranbaxy Laboratories Ltd. GDR 53,700 1,342,500
Raymond Woolen Mills GDR (1) 30,000 510,000
Rubber Products (2) 132,000 69,069
S & S Industries & Enterprise (2) 356,000 177,165
Sakthi Sugars (2) 400 398
Shaan Interwell (India) (2) 112,700 121,786
State Bank of India-New (2) 225,000 1,267,525
Tata Chemicals (2) 92,110 535,267
Tata Engineering & Locomotive (wts) (1) 65,714 336,784
Tata Engineering & Locomotive GDR (1) 130,142 1,691,851
Thermax Limited (2) 90,000 837,040
Thiru Arooran Sugars (2) 100,000 247,405
Triveni Engineering (2) 190,850 346,531
TTG Industries Ltd. (2) 140,300 371,048
T.V.S. Suzuki (2) 228,550 1,411,661
Usha Beltron Ltd. GDR 88,450 210,069
Videsh Sanchar Nigam Ltd. (1)(2) 17,000 406,086
VST Tillers (2) 94,200 144,655
W.S. Industries Ltd. 102,500 113,678
Zuari Agrochemicals (2) 70,000 715,626
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$26,730,573
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Pakistan -- 8.2%
Adamjee Insurance Co. 125,000 $ 378,115
Hub Power Company Ltd. GDR (1) 20,000 353,000
Nishat Chunian Ltd. (1) 306,000 114,026
Pakistan State Oil Co. Ltd. 97,409 754,429
Pakistan Telecommunications GDR (1) 14,750 1,283,250
Searle Pakistan 137,459 184,801
------------
$ 3,067,621
------------
Sri Lanka -- 5.6%
Dev Fin Corp Of Ceylon 35,733 $ 198,333
Hayleys Ltd. 150,933 488,682
John Keells Holdings 86,857 224,977
John Keells Holdings Ltd. GDR 104,000 520,000
Kelani Tyres 480 113
National Development Bank 53,900 219,389
Royal Ceramics 359,000 209,223
Sampath Bank 186,000 156,577
Vanik Incorporation Ltd. 228,750 88,876
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$ 2,106,170
------------
Total Common Stocks (identified cost, $47,184,028) $33,606,129
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- ------------------------------------------------------------------------------------------------------------
Bonds -- 0.1%
- ------------------------------------------------------------------------------------------------------------
Principal
Amount
(000) omitted Value
Flex Industries, 13.5%, 12/31/99 (3) U.S. $836 $ 23,773
Hotel Leela Venture Ltd. NCD 14% 4/8/03 27 639
------------
Total Bonds (at identified cost, $27,768) $ 24,412
------------
Total Investments -- 89.8% (identified cost, $47,211,796) $33,630,541
Other assets, less liabilities -- 10.2% 3,804,796
------------
Net Assets -- 100% $37,435,337
============
GDR--Global depository receipt
(1) Non-income producing security
(2) The above securities held by the Portfolio on December 31, 1995
are unrestricted securities valued at market prices. Because of the
length of the registration process, the Portfolio would temporarily be
unable to sell certain of these securities. At December 31, 1995, the
aggregate value of the securities in registration amounted to
$2,852,506, representing 7.62% of the Portfolio's net assets (Note 5).
(3) Security valued using methods determined in good faith by or at
the direction of the Trustees.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Statements
Statement of Assets and Liabilities
December 31, 1995
<S> <C> <C>
Assets:
Investments, at value (Note 1A) (identified cost, $47,211,796) $ 33,630,541
Cash 2,787,764
Foreign currency, at value (identified cost, $1,638,937) 1,630,860
Receivable for investments sold 494,732
Dividends and interest receivable 148,258
Deferred organization expenses (Note 1C) 57,893
---------------
Total assets $ 38,750,048
Liabilities:
Payable for investments purchased $ 1,245,149
Accrued expenses 69,562
--------------
Total liabilities 1,314,711
---------------
Net Assets applicable to investors' interest in Portfolio $ 37,435,337
==============
Sources of Net Assets:
Net proceeds from capital contributions and withdrawals $ 51,058,489
Net unrealized depreciation of investments and foreign currency
(computed on the basis of identified cost) (13,623,152)
---------------
Total $ 37,435,337
==============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended December 31, 1995
<S> <C> <C>
Investment Income:
Income -
Dividends (net of foreign taxes, $101,627) $ 492,310
Interest 39,496
---------------
Total income 531,806
Expenses -
Investment adviser fee (Note 2) $ 336,088
Administration fee (Note 2) 112,256
Compensation of Trustees not members of the
Investment Adviser's or Administrator's organization 13,750
Custodian fee (Note 2) 260,425
Legal and accounting services 44,624
Amortization of organization expenses (Note 1C) 18,156
Miscellaneous 5,943
--------------
Total expenses $ 791,242
Deduct reduction of custodian fee (Note 2) 180,602
--------------
Net expenses 610,640
---------------
Net investment loss $ (78,834)
---------------
Realized and Unrealized Loss on Investments:
Net realized loss -
Investments (identified cost basis) $ (7,404,454)
Foreign currency transactions (118,293)
--------------
Net realized loss on investments $ (7,522,747)
Change in unrealized depreciation -
Investments (identified cost basis) $ (9,853,267)
Foreign currency (42,122)
--------------
Net unrealized depreciation (9,895,389)
---------------
Net realized and unrealized loss on investments $ (17,418,136)
---------------
Net decrease in net assets from operations $ (17,496,970)
==============
See notes to financial statements
Statements of Changes in Net Assets
Year Ended December 31,
--------------------------------
1995 1994*
---------- ---------
Increase (Decrease) in Net Assets:
From operations -
Net investment income (loss) $ (78,834) $ 1,649
Net realized gain (loss) on investments and foreign currency transactions (7,522,747) 137,750
Change in unrealized depreciation of investments (9,895,389) (3,727,763)
-------------- -------------
Decrease in net assets from operations $ (17,496,970) $ (3,588,364)
-------------- -------------
Capital transactions:
Contributions $ 22,408,418 $ 67,765,119
Withdrawals (24,329,701) (7,423,185)
-------------- -------------
Increase (decrease) in net assets resulting from capital transactions $ (1,921,283) $ 60,341,934
-------------- -------------
Net increase (decrease) in net assets $ (19,418,253) $ 56,753,570
Net Assets:
At beginning of year 56,853,590 100,020
-------------- -------------
At end of year $ 37,435,337 $ 56,853,590
============== -------------
* For the period from the start of business, May 2, 1994, to December 31, 1994.
- -------------------------------------------------------------------------------------------------------------------------
Supplementary Data
- -------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------
1995 1994*
---------- ----------
Ratios (to average daily net assets):
Expenses (1) 1.76% 1.16%+
Net investment loss (0.18%) 0.01%+
Portfolio Turnover 38% 1%
+ Annualized.
* For the period from the start of business, May 2, 1994, to
December 31, 1994.
(1) The expense ratio for the year ended December 31, 1995 has been
adjusted to reflect a change in reporting requirements. The new
reporting quidelines require the Portfolio to increase its expense ratio
by the effect of any expense offset arrangements with its service
providers. The expense ratio for the year ended December 31, 1994 has
not been adjusted to reflect this change.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Cash Flows
For the Year Ended December 31,1995
<S> <C>
Increase (Decrease) in Cash:
Cash Flows From (For) Operating Activities -
Purchase of investments $ (15,872,772)
Proceeds from sale of investments 15,343,973
Dividends and interest received 534,115
Operating expenses paid (668,093)
Foreign currency transactions (1,644,555)
---------------
Net cash used for operating activities $ (2,307,332)
---------------
Cash Flows From (For) Financing Activities -
Proceeds from capital contributions $ 22,408,418
Payments for capital withdrawals (24,329,701)
---------------
Net cash used for financing activities (1,921,283)
---------------
Net decrease in cash $ (4,228,615)
Cash at Beginning of Period 7,016,379
---------------
Cash at End of Period $ 2,787,764
===============
Reconciliation of Net Increase in Net Assets From
Operations to Net Cash From Operating Activities:
Net decrease in net assets from operations $ (17,496,970)
Increase in receivable for investments sold (449,969)
Increase in foreign currency (1,484,140)
Decrease in dividends and interest receivable 2,309
Decrease in deferred organization expenses 18,156
Decrease in payable to affiliates (4,585)
Decrease in accrued expenses and other liabilities (71,024)
Increase in payable for investments purchased 210,355
Net decrease in investments 16,968,536
---------------
Net cash used for operating activities $ (2,307,332)
===============
See notes to financial statements
</TABLE>
Notes to Financial Statements
(1) Significant Accounting Policies
South Asia Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company which was organized as a trust under the laws of the
State of New York on January 18, 1994. The Declaration of Trust permits
the Trustees to issue interests in the Portfolio. The following is a
summary of the significant accounting policies of the Portfolio. The
policies are in conformity with generally accepted accounting
principles.
A. Investment Valuations - Marketable securities, including options,
that are listed on foreign or U.S. securities exchanges or in the NASDAQ
National Market System are valued at closing sale prices or, if there
were no sales, at the mean between the closing bid and asked prices on
the exchange where such securities are principally traded. Futures
positions on securities or currencies are generally valued at closing
settlement prices. Unlisted or listed securities for which closing sale
prices are not available are valued at the mean between the latest bid
and asked prices. Short term debt securities with a remaining maturity
of 60 days or less are valued at amortized cost. Other fixed income and
debt securities, including listed securities and securities for which
price quotations are available, will normally be valued on the basis of
valuations furnished by a pricing service. Investments for which
valuations or market quotations are unavailable are valued at fair value
using methods determined in good faith by or at the direction of the
Trustees.
B. Federal Taxes - The Portfolio is treated as a partnership for U.S.
Federal tax purposes. No provision is made by the Portfolio for federal
or state taxes on any taxable income of the Portfolio because each
investor in the Portfolio is individually responsible for the payment of
any taxes on its share of such income. Since some of the Portfolio's
investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio
normally must satisfy the applicable source of income and
diversification requirements, (under the U.S. Internal Revenue Code), in
order for its investors to satisfy them. The Portfolio will allocate, at
least annually among its investors, each investor's distributive share
of the Portfolio's net investment income, net realized capital gains,
and any other items of income, gain, loss, deduction or credit.
C. Deferred Organization Expenses - Costs incurred by the Portfolio in
connection with its organization, including registration costs, are
being amortized on the straight-line basis over five years.
D. Financial Futures Contracts - Upon the entering of a financial
futures contract, the Portfolio is required to deposit ("initial
margin") either of 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. Should interest or currency
exchange rates move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the financial futures contracts and may realize
a loss. If the Portfolio enters into a closing transaction, the
Portfolio will realize, for book purposes, a gain or loss equal to the
difference between the value of the financial futures contract to sell
and financial futures contract to buy.
E. Foreign Currency Translation - Investment valuations, other assets,
and liabilities initially expressed in foreign currencies are converted
each business day into U.S. dollars based upon current exchange rates.
Purchases and sales of foreign investment securities and income and
expenses are converted into U.S. dollars based upon currency exchange
rates prevailing on the respective dates of such transactions.
Recognized gains or losses on investment transactions attributable to
foreign currency rates are recorded for financial statement purposes as
net realized gains and losses on investments. That portion of unrealized
gains and losses on investments that result from fluctuations in foreign
currency exchange rates are not separately disclosed.
F. Forward Foreign Currency Exchange Contracts - The Portfolio may enter
into forward foreign currency exchange contracts for the 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
securities are purchased or sold. Dividend income is recorded on the ex-
dividend date. However, if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as the Portfolio is
informed of the ex-dividend date. Interest income is recorded on the
accrual basis.
(2) Investment Adviser Fee and Other
Transactions with Affiliates
The investment adviser fee is earned by Lloyd George Investment
Management (Bermuda) Limited (the Adviser) as compensation for
management and investment advisory services rendered to the Portfolio.
Under the advisory agreement, the Adviser receives a monthly fee of
0.0625% (0.75% annually) of the average daily net assets of the
Portfolio up to $500,000,000, and at reduced rates as daily net assets
exceed that level. For the year ended December 31, 1995, the annualized
adviser fee was 0.75% of average net assets and amounted to $336,088. In
addition, an administrative fee is earned by Eaton Vance Management
(EVM) for managing and administering the business affairs of the
Portfolio. Under the administration agreement, EVM earns a monthly fee
in the amount of 1/48th of 1% (equal to 0.25% annually) of the average
daily net assets of the Portfolio up to $500,000,000, and at reduced
rates as daily net assets exceed that level. For the year ended December
31, 1995, the administration fee was 0.25% (annualized) of average net
assets and amounted to $112,256. 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) serves as custodian of the Portfolio. Prior to November
10, 1995, IBT was an affiliate of EVM. Pursuant to the custodian
agreement, IBT receives a fee reduced by credits which are determined
based
on the average daily cash balances the Portfolio maintains with IBT. All
significant credit balances used to reduce the Portfolio's custody fees
are reported as a reduction of expenses in the statement of operations.
Certain of the officers and Trustees of the Portfolio are officers or
trustees of the above organizations.
(3) Investment Transactions
For the year ended December 31, 1995, purchases and sales of
investments, other than short-term obligations, aggregated $16,083,127
and $15,793,942 respectively.
(4) Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) in value of the
investments owned at December 31, 1995, as computed on a federal income
tax basis, are as follows:
Aggregate cost $47,211,796
===========
Gross unrealized depreciation $15,434,171
Gross unrealized appreciation 1,852,916
-----------
Net unrealized depreciation $13,581,255
===========
(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.
Settlement of securities transactions in the Indian subcontinent may be
delayed and is generally less frequent than in the United States, which
could affect the liquidity of the Portfolio's assets. The Portfolio may
be unable to sell securities where the registration process is
incomplete and may experience delays in receipt of dividends.
(6) Line of Credit
The Portfolio participates with other portfolios and funds managed by
EVM and its affiliates in a $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 or fund 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
portfolios and funds at the end of each quarter. The Portfolio did not
have any significant borrowings or allocated fees during the period.
Independent Auditor's Report
The Trustees and Investors of South Asia Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of South Asia Portfolio as of
December 31, 1995, the related statements of operations and cashflows
for the year then ended and the statement of changes in net assets and
the supplementary data for the year ended December 31, 1995 and the
period from the start of business, May 2, 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
supplementary data are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of the securities owned at December 31, 1995, 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 audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and supplementary data present
fairly, in all material respects, the financial position of South Asia
Portfolio at December 31, 1995, the results of its operations, its
cashflows, the changes in its net assets and its supplementary data for
the respective stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 9, 1996
INVESTMENT MANAGEMENT FOR SOUTH ASIA PORTFOLIO
OFFICERS
JAMES B. HAWKES
Vice President, Trustee
HON. ROBERT LLOYD GEORGE
President, Trustee
SCOBIE DICKINSON WARD
Vice President, Assistant
Secretary and Assistant Treasurer
WILLIAM WALTER RALEIGH KERR
Vice President, Secretary and
Assistant Treasurer
JAMES L. O'CONNOR
Treasurer
THOMAS OTIS
Secretary
SAMUEL L. HAYES, III
Jacob H. Schiff Professor of Investment Banking,
Harvard University Graduate School of Business Administration
STUART HAMILTON LECKIE
Managing Director and Actuary,
Wyatt Company, Hong Kong
HON. EDWARD K.Y. CHEN
Professor and Director, Center for
Asian Studies, University of Hong Kong
