<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 93.7%
INDIA -- 93.7%
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Agricultural Equipment -- 3.2%
- ----------------------------------------------------------------------
Punjab Tractors Ltd. 65,050 $ 1,554,766
The most efficient tractor manufacturer
in India.
- ----------------------------------------------------------------------
$ 1,554,766
- ----------------------------------------------------------------------
Apparel -- 0.0%
- ----------------------------------------------------------------------
Bata India Ltd.(1) 25 $ 79
The dominiate branded shoemaker of
India.
- ----------------------------------------------------------------------
$ 79
- ----------------------------------------------------------------------
Auto and Parts -- 7.3%
- ----------------------------------------------------------------------
Hero Honda Motors Ltd. 55,700 $ 1,446,470
Hero Honda Motors Ltd. 16,800 436,278
Honda's motorcycle manufacturer and
distributor in India.
IFB Industries Ltd.(2) 50 9
Manufacturer of high precision
engineering tools and domestic
appliances.
Motor Industries 14,150 1,627,372
A subsidiary of Robert Bosch of Germany
with a presence in the auto components
industry, with products such as spark
plugs and fuel injection pumps.
- ----------------------------------------------------------------------
$ 3,510,129
- ----------------------------------------------------------------------
Banking and Finance -- 2.6%
- ----------------------------------------------------------------------
HDFC Bank Ltd. 336,966 $ 1,251,754
One of the fastest growing private
sector banks in India.
- ----------------------------------------------------------------------
$ 1,251,754
- ----------------------------------------------------------------------
Banks and Money Services -- 0.0%
- ----------------------------------------------------------------------
Kotak Mahindra Finance Ltd.(1) 300 $ 1,428
Bill discounting and consumer financing.
Oriental Bank of Commerce(1) 100 106
Public sector retail bank.
State Bank of India(1) 100 517
The largest public sector commercial
bank in India, with over 8000 branches.
Engaged in retail banking and a range of
non-fund based activities.
- ----------------------------------------------------------------------
$ 2,051
- ----------------------------------------------------------------------
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Beverages -- 0.0%
- ----------------------------------------------------------------------
Tata Tea Ltd.(1) 100 $ 1,208
Integrated tea company with substantial
presence in plantation as well as direct
marketing of branded tea.
- ----------------------------------------------------------------------
$ 1,208
- ----------------------------------------------------------------------
Broadcasting and Cable -- 8.3%
- ----------------------------------------------------------------------
Zee Telefilms Ltd. 160,000 $ 4,021,806
Dominant television broadcaster in
India.
- ----------------------------------------------------------------------
$ 4,021,806
- ----------------------------------------------------------------------
Chemicals -- 4.7%
- ----------------------------------------------------------------------
Hindustan Lever Chemicals Ltd. 145,400 $ 1,657,844
Lever's fertilizer company in India.
Indian Petrochemicals Corp. Ltd. 240,000 601,725
An intergrated public sector company in
the petrochemical industry with major
products being polymers and chemical
intermediates.
Reliance Industries Ltd.(1) 1,794 9,644
Integrated petrochemical company with
world class capacities and major
presence in polyesters and polymers.
Tata Chemicals(1) 1,200 1,587
A diversified company with a major
presence in soda ash, caustic soda and
fertilizers.
Thermax Ltd.(1) 1,742 5,495
Niche supplier of boilers and pollution
control equipment.
- ----------------------------------------------------------------------
$ 2,276,295
- ----------------------------------------------------------------------
Computer Equipment -- 0.3%
- ----------------------------------------------------------------------
Fujitsu ICIM Ltd.(1)(2) 8,850 $ 135,178
A multinational vendor of software
services.
- ----------------------------------------------------------------------
$ 135,178
- ----------------------------------------------------------------------
Computer Software -- 25.3%
- ----------------------------------------------------------------------
Digital Equipments (India) Ltd.(1) 96,200 $ 2,478,298
Indian subsidiary of Digital USA
involved solely in software development.
Hughes Software Systems(2) 5,300 506,734
A computer software developer
specializing in telecommunication
software.
Infosys Technologies Ltd. 18,400 6,143,738
India's dominant software services
provider.
NIIT Ltd. 40,000 3,050,535
Largest company providing software
education and services in India.
Onward Technologies Ltd.(1)(2) 500 9,722
Software unit of Novell India.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Computer Software (continued)
- ----------------------------------------------------------------------
Tata Infotech Ltd. 25 $ 509
One of the largest information
technology service and solution
providers in India with interest in
software development, distribution,
networking, maintenance, support and
training.
- ----------------------------------------------------------------------
$12,189,536
- ----------------------------------------------------------------------
Conglomerates -- 0.0%
- ----------------------------------------------------------------------
Indian Rayon & Industries Ltd. 5 $ 13
Diversified company with interests in
cement, textiles, rayon and carbon
black.
- ----------------------------------------------------------------------
$ 13
- ----------------------------------------------------------------------
Diversified Industry -- 0.0%
- ----------------------------------------------------------------------
Enkay Texofood Industries Ltd.(1)(2) 546 $ 241
Has business interests in the
manufacturing of synthetic yarns and the
export of processed foods.
Thiru Arooran Sugars(1) 100 120
A manufacturer of sugar and industrial
alcohol. Has also made foray into
cogeneration of power through bagasse.
- ----------------------------------------------------------------------
$ 361
- ----------------------------------------------------------------------
Electric Utilities -- 0.0%
- ----------------------------------------------------------------------
BSES Ltd.(1) 50 $ 220
A monopoly distributor of power in
suburban Bombay.
- ----------------------------------------------------------------------
$ 220
- ----------------------------------------------------------------------
Engineering -- 4.8%
- ----------------------------------------------------------------------
Cummins India Ltd.(1) 100,898 $ 1,327,514
A 51% subsidiary of Cummins US, is a
leading manufacturer of IC engines for
industrial and power generation
industries.
Siemens India Ltd.(1)(2) 85,000 998,689
A 51% subsidiary of Siemens, Germany, is
a leading player in power generation and
distribution equipment, industrial
projects, transportation systems,
communication and healthcare products.
- ----------------------------------------------------------------------
$ 2,326,203
- ----------------------------------------------------------------------
Foods -- 2.1%
- ----------------------------------------------------------------------
Smithkline Beecham Consumer Healthcare
Ltd. 83,885 $ 998,516
Unit of Smithkline UK selling milk
additives and biscuits.
- ----------------------------------------------------------------------
$ 998,516
- ----------------------------------------------------------------------
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Health and Personal Care -- 7.0%
- ----------------------------------------------------------------------
Cipla Ltd. 41,000 $ 1,310,868
Market leader in anti-bacterial,
anti-asthmatic, and anti-cancer entering
into segments of cardiovascular and
dermatology.
Wockhardt Ltd.(1) 94,000 2,075,892
The 5th largest pharmaceutical company
in India, with focus on research based
pharmaceutical business. Has several key
brands in anti-infective and pain killer
segments.
- ----------------------------------------------------------------------
$ 3,386,760
- ----------------------------------------------------------------------
Household Products -- 6.5%
- ----------------------------------------------------------------------
Hindustan Lever Ltd.(1) 60,400 $ 3,125,934
A diversified multinational of the
Unilever group and a market leader in
soap and detergents, personal care &
food processing industries.
Reckitt and Colman of India Ltd.(1) 50 368
Manufacturer of household products such
as mosquito repellent, surface cleaning
agents and antiseptic lotions.
- ----------------------------------------------------------------------
$ 3,126,302
- ----------------------------------------------------------------------
Information Technology -- 10.4%
- ----------------------------------------------------------------------
DSQ Software Ltd. 100,000 $ 1,916,044
One of the top software exporting
companies in India and has achieved the
SEI CMM Level 4 certification, with
strong presence in CAD/ CAM segment.
Global Telesystems Ltd. 65,000 1,432,317
Operates in three distinct areas:
telecommunication networks and
infrastructure, software and internet
solutions and consumer telecommunication
products.
VisualSoft (India) Ltd.(1) 9,300 1,673,455
Has a revenue mix unique in Indian
information technology services, with
software services and products
constituting over 90% of revenues. The
company has developed expertise in
Internet and e-commerce segments.
- ----------------------------------------------------------------------
$ 5,021,816
- ----------------------------------------------------------------------
Investment Services -- 0.0%
- ----------------------------------------------------------------------
ICICI Ltd.(1) 150 $ 317
Development finance company supporting
infrastructure projects.
- ----------------------------------------------------------------------
$ 317
- ----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Lodging and Gaming -- 0.0%
- ----------------------------------------------------------------------
Hotel Leela Venture Ltd.(1) 550 $ 394
Operates business hotels and a beach
resort in Bombay and Goa, respectively.
- ----------------------------------------------------------------------
$ 394
- ----------------------------------------------------------------------
Manufacturing -- 2.5%
- ----------------------------------------------------------------------
Gujarat Natural Gas Co. Ltd.(1) 95,500 $ 1,229,913
Subsidiary of British Gas involved in
gas distribution in India.
- ----------------------------------------------------------------------
$ 1,229,913
- ----------------------------------------------------------------------
Medical Products -- 0.0%
- ----------------------------------------------------------------------
Ranbaxy Laboratories Ltd.(1) 514 $ 10,913
Presence in anti-bacterial and
antibiotics segments, and a major
exporter of bulk drugs
and formulations.
- ----------------------------------------------------------------------
$ 10,913
- ----------------------------------------------------------------------
Metals - Industrial -- 0.0%
- ----------------------------------------------------------------------
Tata Iron and Steel Co. Ltd.(1) 56 $ 182
India's most profitable steel company.
- ----------------------------------------------------------------------
$ 182
- ----------------------------------------------------------------------
Miscellaneous Materials and Commodities -- 0.0%
- ----------------------------------------------------------------------
Flex Industries Ltd.(2) 4,274 $ 2,261
An intergrated player in the packaging
industry, manufacturing flexible
packaging materials.
- ----------------------------------------------------------------------
$ 2,261
- ----------------------------------------------------------------------
Multi-Industry -- 5.9%
- ----------------------------------------------------------------------
Grasim Industries Ltd. 1 $ 9
A diversified conglomerate with interest
in viscose staple fibre (India's largest
producer), caustic soda, cement (third
largest producer in India) and gas based
sponge iron (third largest producer in
India).
Larsen and Toubro Ltd.(1) 223,300 2,855,261
A diversified conglomerate with presence
in cement, engineering and construction
and information technology segments. It
is India's largest private sector
company in the engineering and
construction segment and the second
largest cement manufacturer with over
12mtpa capacity.
- ----------------------------------------------------------------------
$ 2,855,270
- ----------------------------------------------------------------------
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Oil and Gas - Integrated -- 0.0%
- ----------------------------------------------------------------------
Hindustan Petroleum(1) 300 $ 1,263
One of the top three oil refining and
marketing companies in India.
- ----------------------------------------------------------------------
$ 1,263
- ----------------------------------------------------------------------
Personal Products and Chemicals -- 2.8%
- ----------------------------------------------------------------------
Nirma Ltd. 80,000 $ 1,327,200
A major leader in the soap and detergent
market.
- ----------------------------------------------------------------------
$ 1,327,200
- ----------------------------------------------------------------------
Telecommunications -- 0.0%
- ----------------------------------------------------------------------
Mahangar Telephone Nigam Ltd.(1) 1,100 $ 4,883
Government owned monopoly provider of
fixed wire telephone services in India's
major cities of Bombay and Delhi.
- ----------------------------------------------------------------------
$ 4,883
- ----------------------------------------------------------------------
Transportation -- 0.0%
- ----------------------------------------------------------------------
Great Eastern Shipping Co.(1) 700 $ 318
Diversified company with interests in
shipping and property development.
- ----------------------------------------------------------------------
$ 318
- ----------------------------------------------------------------------
Total Common Stocks
(identified cost $23,163,355) $45,235,907
- ----------------------------------------------------------------------
Total Investments -- 93.7%
(identified cost $23,163,355) $45,235,907
- ----------------------------------------------------------------------
Other Assets, Less Liabilities -- 6.3% $ 3,042,261
- ----------------------------------------------------------------------
Net Assets -- 100.0% $48,278,168
- ----------------------------------------------------------------------
</TABLE>
Company descriptions are unaudited.
(1) The above securities held by the Portfolio, on December 31, 1999 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, 1999, the aggregate
value of these securities amounted to $2,874,476 representing 5.95% of
the Portfolio's net assets. (Note 5)
(2) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
TOP TEN HOLDINGS
<TABLE>
<CAPTION>
PERCENTAGE
COMPANY INDUSTRY SECTOR OF NET ASSETS VALUE
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
Infosys Technologies Ltd. Computer Software 12.7% $6,143,738
Zee Telefilms Ltd. Broadcasting and Cable 8.3 4,021,806
Hindustan Lever Ltd. Household Products 6.5 3,125,934
NIIT Ltd. Computer Software 6.3 3,050,535
Larsen and Toubro Ltd. Multi-Industry 5.9 2,855,261
Digital Equipments (India) Computer Software
Ltd. 5.1 2,478,298
Wockhardt Ltd. Health and Personal Care 4.3 2,075,892
DSQ Software Ltd. Information Technology 4.0 1,916,044
Hero Honda Motors Ltd. Auto and Parts 3.9 1,882,748
VisualSoft (India) Ltd. Information Technology 3.5 1,673,455
</TABLE>
INDUSTRY CONCENTRATION -- BELOW ARE THE TOP
TEN INDUSTRY SECTORS REPRESENTED IN THE
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
PERCENTAGE
INDUSTRY SECTOR OF NET ASSETS VALUE
<S> <C> <C>
- --------------------------------------------------------------------
Computer Software 25.3% $12,189,536
Information Technology 10.4 5,021,816
Broadcasting and Cable 8.3 4,021,806
Auto and Parts 7.3 3,510,129
Health and Personal Care 7.0 3,386,760
Household Products 6.5 3,126,302
Multi-Industry 5.9 2,855,270
Engineering 4.8 2,326,203
Chemicals 4.7 2,276,295
Agricultural Equipment 3.2 1,554,766
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
<S> <C>
Assets
- -----------------------------------------------------
Investments, at value
(identified cost, $23,163,355) $45,235,907
Cash 866,619
Foreign currency, at value
(identified cost, $2,229,189) 2,229,870
Receivable for investments sold 20,328
Interest and dividends receivable 30,739
- -----------------------------------------------------
TOTAL ASSETS $48,383,463
- -----------------------------------------------------
Liabilities
- -----------------------------------------------------
Payable to affiliate for Trustees' fees $ 893
Accrued expenses 104,402
- -----------------------------------------------------
TOTAL LIABILITIES $ 105,295
- -----------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $48,278,168
- -----------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------
Net proceeds from capital contributions
and withdrawals $26,204,750
Net unrealized appreciation (computed on
the basis of identified cost) 22,073,418
- -----------------------------------------------------
TOTAL $48,278,168
- -----------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1999
<S> <C>
Investment Income
- -----------------------------------------------------
Dividends (net of foreign taxes, $1,856) $ 490,461
Interest (net of foreign taxes, $762) 2,724
- -----------------------------------------------------
TOTAL INVESTMENT INCOME $ 493,185
- -----------------------------------------------------
Expenses
- -----------------------------------------------------
Investment adviser fee $ 327,790
Administration fee 109,371
Trustees fees and expenses 9,602
Custodian fee 308,511
Legal and accounting services 82,622
Interest expense 68,046
Amortization of organization expenses 5,445
Miscellaneous 1,101
- -----------------------------------------------------
TOTAL EXPENSES $ 912,488
- -----------------------------------------------------
Deduct --
Reduction of custodian fee $ 7,396
- -----------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 7,396
- -----------------------------------------------------
NET EXPENSES $ 905,092
- -----------------------------------------------------
NET INVESTMENT LOSS $ (411,907)
- -----------------------------------------------------
Realized and Unrealized Gain (Loss)
- -----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) (net of foreign
taxes, $446,642) $21,591,875
Foreign currency transactions (235,086)
- -----------------------------------------------------
NET REALIZED GAIN $21,356,789
- -----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $13,124,168
Foreign currency (17,498)
- -----------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $13,106,670
- -----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $34,463,459
- -----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $34,051,552
- -----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Increase (Decrease) YEAR ENDED YEAR ENDED
IN NET ASSETS DECEMBER 31, 1999 DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
From operations --
Net investment loss $ (411,907) $ (103,792)
Net realized gain (loss) 21,356,789 (12,728,099)
Net change in unrealized appreciation
(depreciation) 13,106,670 7,726,459
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 34,051,552 $ (5,105,432)
- ------------------------------------------------------------------------------
Capital transactions --
Contributions $ 10,651,675 $ 5,420,705
Withdrawals (49,158,808) (31,756,273)
- ------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ (38,507,133) $ (26,335,568)
- ------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS $ (4,455,581) $ (31,441,000)
- ------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------
At beginning of year $ 52,733,749 $ 84,174,749
- ------------------------------------------------------------------------------
AT END OF YEAR $ 48,278,168 $ 52,733,749
- ------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
Increase (Decrease) in Cash DECEMBER 31, 1999
<S> <C>
- -----------------------------------------------------------
Cash Flows From (For) Operating
Activities --
Purchase of investments $ (33,687,595)
Proceeds from sale of investments 70,856,782
Dividends, interest and tax reclaims
received 498,451
Operating expenses paid (1,000,304)
Foreign taxes paid (446,642)
Foreign currency transactions 2,036,102
- -----------------------------------------------------------
NET CASH FROM OPERATING ACTIVITIES $ 38,256,794
- -----------------------------------------------------------
Cash Flows From (For) Financing
Activities --
Proceeds from capital contributions $ 10,651,675
Payments for capital withdrawals (49,158,808)
- -----------------------------------------------------------
NET CASH USED FOR FINANCING ACTIVITIES $ (38,507,133)
- -----------------------------------------------------------
NET DECREASE IN CASH $ (250,339)
- -----------------------------------------------------------
CASH AT BEGINNING OF YEAR $ 1,116,958
- -----------------------------------------------------------
CASH AT END OF YEAR $ 866,619
- -----------------------------------------------------------
Reconciliation of Net Increase in Net Assets
From Operations to Net Cash From
Operating Activities
- -----------------------------------------------------------
Net increase in net assets from
operations $ 34,051,552
Decrease in receivable for investments
sold 3,937,961
Decrease in foreign currency 2,288,686
Decrease in dividends, interest and
other receivables 5,266
Decrease in deferred organizational
expense 5,445
Decrease in payable for investments
purchased (766,548)
Increase in payable to affiliate 298
Decrease in accrued expenses and other
liabilites (100,955)
Net increase in investment (1,164,911)
- -----------------------------------------------------------
NET CASH FROM OPERATING ACTIVITIES $ 38,256,794
- -----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Ratios to average daily net assets
- ---------------------------------------------------------------------------
Expenses 2.09% 1.97% 1.61% 1.51% 1.76%
Expenses after custodian fee
reduction 2.07% 1.87% 1.58% 1.28% 1.35%
Net investment loss (0.94)% (0.16)% (0.20)% (0.11)% (0.18)%
Portfolio Turnover 80% 60% 48% 46% 38%
- ---------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
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 or are
considered unreliable 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 federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
individually responsible for the payment of any taxes on its share of such
income. Since some of the Portfolio's investors are regulated investment
companies that invest all or substantially all of their assets in the
Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements (under the Internal Revenue Code), in
order for its investors to satisfy them. The Portfolio will allocate, at
least annually among its investors, each investor's distributive share of the
Portfolio's net investment income, net realized capital gains, and any other
items of income, gain, loss, deduction or credit. Withholding taxes on
foreign dividends and capital gains have been provided for in accordance with
the Portfolio's understanding of the applicable countries' tax rules and
rates.
C Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization, including registration costs, have been
amortized on the straight-line basis over five years and are fully amortized
at December 31, 1999.
D Financial Futures Contracts -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit (initial margin) either cash
or securities in an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by the Portfolio (margin maintenance) each day, dependent on
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 changes in foreign currency exchange
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 results from fluctuations in foreign currency exchange rates
is 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. 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.
21
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
G Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Portfolio. Pursuant to the custodian agreement, IBT receives a fee
reduced by credits which are determined based on the average daily cash
balance the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reported as a reduction of
total expenses in the Statement of Operations.
H Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
I 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, 1999, the
adviser fee was 0.75% of average daily net assets and amounted to $327,790.
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 $500,000,000, and at reduced rates as daily net assets exceed
that level. For the year ended December 31, 1999, the administration fee was
0.25% of average net assets and amounted to $109,371. Except as to Trustees
of the Portfolio who are not members of the Adviser or EVM's organization,
officers and Trustees receive remuneration for their services to the
Portfolio out of such investment adviser and administrative fees. Certain
officers and Trustees of the Portfolio are officers of the above
organizations.
3 Investment Transactions
- -------------------------------------------
For the year ended December 31, 1999, purchases and sales of investments,
other than short-term obligations, aggregated $32,921,047 and $66,918,821,
respectively.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at December 31, 1999 as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $23,164,292
-----------------------------------------------------
Gross unrealized appreciation $22,794,603
Gross unrealized depreciation (722,988)
-----------------------------------------------------
NET UNREALIZED APPRECIATION $22,071,615
-----------------------------------------------------
</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.
Settlement of securities transactions in the Indian subcontinent may be
delayed and is generally less frequent
22
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
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 committed $150 million unsecured line of credit agreement
with a group of banks. The Portfolio may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above the Eurodollar rate or Federal Funds rate. In addition, a fee
computed at an annual rate of 0.10% on the daily unused portion of the line
of credit is allocated among the participating portfolios and funds at the
end of each quarter. The average daily loan balance for the year ended
December 31, 1999 was $1,272,962 and the average interest rate was 5.35%. As
of December 31, 1999, there was no loan outstanding.
23
<PAGE>
SOUTH ASIA PORTFOLIO AS OF DECEMBER 31, 1999
INDEPENDENT AUDITORS' REPORT
TO 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, 1999,
and the related statements of operations and cash flows for the year then ended,
the statements of changes in net assets for each of the two years then ended and
the supplementary data for each of the years in the five-year period then ended.
These financial statements and supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other audit 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, 1999, and the results of its operations, its cash flows, the
changes in its net assets and its supplementary data for the respective stated
periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 11, 2000
24
<PAGE>
EATON VANCE GREATER INDIA FUND AS OF DECEMBER 31, 1999
INVESTMENT MANAGEMENT
SOUTH ASIA PORTFOLIO
Officers
Hon. Robert Lloyd George
President and Trustee
James B. Hawkes
Vice President and Trustee
Zaheer Sitabkhan
Vice President
Scobie Dickinson Ward
Vice President, Assistant
Secretary and Assistant Treasurer
William Walter Raleigh Kerr
Vice President and
Assistant Treasurer
James L. O'Connor
Vice President and Treasurer
Alan R. Dynner
Secretary
Trustees
Hon. Edward K. Y. Chen
President of Lingnan College,
University of Hong Kong
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
25
