<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
PORTFOLIO OF INVESTMENTS
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 94.5%
SECURITY SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------
Advertising -- 2.5%
- -------------------------------------------------------------
Lamar Advertising Co.(1) 25,000 $ 1,043,750
Omnicom Group, Inc. 19,000 1,432,125
- -------------------------------------------------------------
$ 2,475,875
- -------------------------------------------------------------
Banks - Regional -- 1.8%
- -------------------------------------------------------------
Fifth Third Bancorp 13,000 $ 861,250
Northern Trust Corp. 10,000 848,125
- -------------------------------------------------------------
$ 1,709,375
- -------------------------------------------------------------
Biotechnology -- 0.8%
- -------------------------------------------------------------
Transkaryotic
Therapies, Inc.(1)(2) 20,000 $ 787,500
- -------------------------------------------------------------
$ 787,500
- -------------------------------------------------------------
Broadcasting and Cable -- 13.9%
- -------------------------------------------------------------
Amfm, Inc.(1) 10,000 $ 492,500
Austar United
Communications(1)(2) 10,000 29,930
Cable and Wireless
Communications(1)(2) 100,000 1,045,265
CD Radio, Inc.(1) 32,000 1,038,000
Clear Channel
Communications, Inc.(1) 12,000 840,750
Comcast Corp., Class A 9,000 293,625
Cox Communications, Inc.,
Class A(1) 5,000 185,938
Fox Entertainment
Group, Inc.(1) 15,000 345,938
Hearst-Argyle Television(1) 35,000 885,938
Infinity Broadcasting
Corp.(1) 10,000 270,625
MediaOne Group, Inc.(1) 3,000 197,250
Mediaset Spa(2) 140,000 1,240,501
Nippon Broadcasting
System(2) 25,000 1,546,627
Sinclair Broadcast Group(1) 55,000 893,750
Television Broadcasts
Ltd.(2) 129,000 574,799
TV Francaise(2) 8,600 2,141,937
Univision
Communications, Inc.(1) 4,000 295,000
Young Broadcasting Corp.(1) 20,000 1,203,750
- -------------------------------------------------------------
$13,522,123
- -------------------------------------------------------------
Chemicals -- 1.5%
- -------------------------------------------------------------
Shin-Etsu Chemical Co.(2) 35,000 $ 1,422,259
- -------------------------------------------------------------
$ 1,422,259
- -------------------------------------------------------------
SECURITY SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------
Communications Equipment -- 4.5%
- -------------------------------------------------------------
Ciena Corp.(1) 20,000 $ 702,500
Cisco Systems, Inc.(1) 10,000 678,125
Lucent Technologies, Inc. 10,000 640,625
Motorola, Inc. 12,000 1,107,000
Nokia Corp. ADR 10,000 833,750
Qualcom, Inc.(1) 2,000 384,375
- -------------------------------------------------------------
$ 4,346,375
- -------------------------------------------------------------
Communications Services -- 14.8%
- -------------------------------------------------------------
Ameritech Corp. 5,000 $ 315,625
BCE, Inc. 15,000 701,250
British Sky Broadcasting
PLC(2) 110,000 1,042,772
British Telecommunications
PLC(2) 125,000 1,911,628
Cable and Wireless PLC(2) 75,000 863,550
China Telecom(1)(2) 400,000 1,244,020
Energis(1)(2) 40,000 1,025,325
GTE Corp. 12,000 823,500
Nippon Telegraph and
Telephone Corp.(1)(2) 130 1,456,881
Okinawa Cellular Telephone
Co.(2) 500 1,913,351
SBC Communications, Inc. 14,000 672,000
Sprint Corp. 15,000 665,625
Telecom Italia Spa RNC(2) 60,000 342,250
Telecom Italia Spa(2) 144,000 1,454,205
- -------------------------------------------------------------
$14,431,982
- -------------------------------------------------------------
Computer Software -- 5.7%
- -------------------------------------------------------------
DST Systems, Inc.(1) 10,000 $ 665,000
Intuit, Inc.(1) 10,000 895,625
Liberate Technologies(1) 30,000 791,250
Meta4 NV(1) 70,000 1,091,496
Mission Critical Software(1) 2,000 81,250
Misys PLC(2) 105,000 930,366
Perot Systems Corp.(1) 50,000 1,037,500
- -------------------------------------------------------------
$ 5,492,487
- -------------------------------------------------------------
Computers and Business Equipment -- 4.2%
- -------------------------------------------------------------
Electronics for Imaging(1) 8,000 $ 469,000
EMC Corp.(1) 10,000 600,000
Lexmark International
Group, Inc.(1) 15,000 1,181,250
Unisys Corp.(1) 23,000 989,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
SECURITY SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------
Computers and Business Equipment (continued)
- -------------------------------------------------------------
Xerox Corp. 17,000 $ 811,750
- -------------------------------------------------------------
$ 4,051,000
- -------------------------------------------------------------
Electrical Equipment -- 3.6%
- -------------------------------------------------------------
Denki Kogyo(2) 130,000 $ 1,302,902
Hitachi Ltd.(2) 100,000 1,012,255
Sharp Corp.(2) 80,000 1,217,257
- -------------------------------------------------------------
$ 3,532,414
- -------------------------------------------------------------
Electronics -- 1.3%
- -------------------------------------------------------------
Nikon Corp.(2) 75,000 $ 1,268,279
- -------------------------------------------------------------
$ 1,268,279
- -------------------------------------------------------------
Electronics - Instruments -- 2.9%
- -------------------------------------------------------------
Avimo Group Ltd.(2) 400,000 $ 524,863
Memory Corp. PLC - GDR(1) 60,000 1,317,000
Toshiba Corp.(2) 110,000 975,172
- -------------------------------------------------------------
$ 2,817,035
- -------------------------------------------------------------
Electronics - Semiconductors -- 1.7%
- -------------------------------------------------------------
Analog Devices, Inc.(1) 5,000 $ 257,500
Samsung Electronics(2) 1,577 299,236
Tokyo Electron Ltd.(2) 16,000 1,122,500
- -------------------------------------------------------------
$ 1,679,236
- -------------------------------------------------------------
Entertainment -- 3.0%
- -------------------------------------------------------------
Imax Corp.(1) 55,000 $ 1,158,438
Seagrams Co. Ltd. 20,000 1,061,250
Time Warner, Inc. 12,000 711,750
- -------------------------------------------------------------
$ 2,931,438
- -------------------------------------------------------------
Information Services -- 10.2%
- -------------------------------------------------------------
Automatic Data
Processing, Inc. 26,000 $ 1,022,125
Azlan Group PLC(1)(2) 800,000 1,048,481
Cambridge Technology
Partners, Inc.(1) 35,000 479,063
Computer Sciences Corp. 15,000 1,037,813
Fiserv, Inc.(1) 20,000 616,250
Gartner Group, Inc.(1) 42,000 879,375
Getronics NV Andeel(2) 24,000 1,173,971
SECURITY SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------
Information Services (continued)
- -------------------------------------------------------------
Paychex, Inc. 25,000 $ 735,938
Reuters Group PLC(2) 100,000 1,468,999
Reynolds & Reynolds, Inc.,
Class A 30,000 656,250
SunGard Data
Systems, Inc.(1) 31,000 775,000
- -------------------------------------------------------------
$ 9,893,265
- -------------------------------------------------------------
Information Technology Services -- 0.2%
- -------------------------------------------------------------
Verio, Inc.(1) 6,000 $ 223,125
- -------------------------------------------------------------
$ 223,125
- -------------------------------------------------------------
Investment Services -- 1.0%
- -------------------------------------------------------------
Consors
Discount-Broker(1)(2) 15,000 $ 1,006,804
- -------------------------------------------------------------
$ 1,006,804
- -------------------------------------------------------------
Manufacturing - Special -- 1.2%
- -------------------------------------------------------------
Optical Coating Laboratories 15,000 $ 1,151,250
- -------------------------------------------------------------
$ 1,151,250
- -------------------------------------------------------------
Oil and Gas - Equipment and Services -- 1.2%
- -------------------------------------------------------------
Dynegy, Inc. 20,000 $ 470,000
Input/Output, Inc.(1) 100,000 737,500
- -------------------------------------------------------------
$ 1,207,500
- -------------------------------------------------------------
Oil and Gas - Exploration and Production -- 0.4%
- -------------------------------------------------------------
Enron Corp. 10,000 $ 418,750
- -------------------------------------------------------------
$ 418,750
- -------------------------------------------------------------
Printing and Business Products -- 1.4%
- -------------------------------------------------------------
Valassis
Communications, Inc.(1) 30,000 $ 1,312,500
- -------------------------------------------------------------
$ 1,312,500
- -------------------------------------------------------------
Publishing -- 7.0%
- -------------------------------------------------------------
McGraw-Hill Companies, Inc.
(The) 4,000 $ 206,750
Meredith Corp. 10,000 346,875
Mirror Group PLC(2) 400,000 1,633,830
News Corp. Ltd.(2) 150,636 1,098,341
Pearson PLC(2) 105,000 2,157,908
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
SECURITY SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------
Publishing (continued)
- -------------------------------------------------------------
Springer Alex Verlag AG(2) 1,128 $ 1,357,096
- -------------------------------------------------------------
$ 6,800,800
- -------------------------------------------------------------
Retail - Computers -- 0.4%
- -------------------------------------------------------------
Circuit City Stores, Inc. 10,000 $ 430,000
- -------------------------------------------------------------
$ 430,000
- -------------------------------------------------------------
Retail - Specialty -- 2.3%
- -------------------------------------------------------------
Blockbuster, Inc.(1) 25,000 $ 371,875
Hikari Tsushin, Inc.(2) 3,500 1,843,195
- -------------------------------------------------------------
$ 2,215,070
- -------------------------------------------------------------
Retail - Specialty and Apparel -- 0.6%
- -------------------------------------------------------------
Intimate Brands, Inc. 15,000 $ 578,438
- -------------------------------------------------------------
$ 578,438
- -------------------------------------------------------------
Specialty Chemicals and Materials -- 2.4%
- -------------------------------------------------------------
Millipore Corp. 22,000 $ 830,500
Nippon Sheet Glass(2) 325,000 1,510,182
- -------------------------------------------------------------
$ 2,340,682
- -------------------------------------------------------------
Telecommunications - Long Distance -- 0.7%
- -------------------------------------------------------------
Cable and Wireless Optus
Ltd.(1)(2) 300,000 $ 653,357
- -------------------------------------------------------------
$ 653,357
- -------------------------------------------------------------
Telephone Utilities -- 3.3%
- -------------------------------------------------------------
ITC Deltacom, Inc.(1) 10,000 $ 263,750
Korea Telecom Corp.
ADR(1)(2) 54,427 1,768,877
Omnipoint Corp.(1) 8,000 324,000
Vodafone AirTouch PLC ADR(2) 2,500 501,406
Voicestream Wireless
Corp.(1) 8,000 330,000
- -------------------------------------------------------------
$ 3,188,033
- -------------------------------------------------------------
Total Common Stocks
(identified cost $70,756,907) $91,886,952
- -------------------------------------------------------------
COMMERCIAL PAPER -- 5.8%
PRINCIPAL
AMOUNT
(000'S
SECURITY OMITTED) VALUE
<S> <C> <C>
- -------------------------------------------------------------
Federal Home Loan Mortgage,
5.42%, 9/1/99 $ 5,667 $ 5,667,000
- -------------------------------------------------------------
Total Commercial Paper
(identified cost $5,667,000) $ 5,667,000
- -------------------------------------------------------------
Total Investments -- 100.3%
(identified cost $76,423,907) $97,553,952
- -------------------------------------------------------------
Other Assets, Less Liabilities -- (0.3)% $ (292,081)
- -------------------------------------------------------------
Net Assets -- 100% $97,261,871
- -------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
(1) Non-income producing security.
(2) Foreign security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF AUGUST 31, 1999
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C>
Assets
- -----------------------------------------------------------
Investments, at value (identified cost,
$76,423,907) $ 97,553,952
Cash 534,974
Foreign currency, at value (identified
cost, $569) 558
Receivable for investments sold 959,716
Dividends receivable 60,549
Tax reclaim receivable 566
Deferred organization expenses 1,483
- -----------------------------------------------------------
TOTAL ASSETS $ 99,111,798
- -----------------------------------------------------------
Liabilities
- -----------------------------------------------------------
Payable for investments purchased $ 1,842,832
Payable to affiliate for Trustees' fees 1,610
Accrued expenses 5,485
- -----------------------------------------------------------
TOTAL LIABILITIES $ 1,849,927
- -----------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $ 97,261,871
- -----------------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $ 76,131,467
Net unrealized appreciation (computed on
the basis of identified cost) 21,130,404
- -----------------------------------------------------------
TOTAL $ 97,261,871
- -----------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31, 1999
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C>
Investment Income
- -----------------------------------------------------------
Dividends (net of foreign taxes, $62,610) $ 486,872
Interest 207,916
- -----------------------------------------------------------
TOTAL INVESTMENT INCOME $ 694,788
- -----------------------------------------------------------
Expenses
- -----------------------------------------------------------
Investment adviser fee $ 536,139
Administration fee 181,032
Trustees fees and expenses 22,134
Custodian fee 191,719
Legal and accounting services 27,532
Amortization of organization expenses 1,232
Miscellaneous 4,466
- -----------------------------------------------------------
TOTAL EXPENSES $ 964,254
- -----------------------------------------------------------
NET INVESTMENT LOSS $ (269,466)
- -----------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- -----------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost
basis) $ 11,793,945
Foreign currency transactions and
forward foreign currency exchange
contracts (92,171)
- -----------------------------------------------------------
NET REALIZED GAIN $ 11,701,774
- -----------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 18,612,288
Foreign currency 5,063
- -----------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 18,617,351
- -----------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 30,319,125
- -----------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 30,049,659
- -----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
FINANCIAL STATEMENT CONT'D
STATEMENTS OF CHANGES IN NET ASSETS (EXPRESSED IN UNITED DOLLARS)
<TABLE>
<CAPTION>
Increase (Decrease) YEAR ENDED YEAR ENDED
IN NET ASSETS AUGUST 31, 1999 AUGUST 31, 1998
<S> <C> <C>
- -----------------------------------------------------------------
From operations --
Net investment income
(loss) $ (269,466) $ 4,607
Net realized gain 11,701,774 5,870,256
Net change in unrealized
appreciation
(depreciation) 18,617,351 (4,219,530)
- -----------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $30,049,659 $ 1,655,333
- -----------------------------------------------------------------
Capital transactions --
Contributions $32,069,062 $23,294,915
Withdrawals (18,413,197) (22,767,845)
- -----------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM CAPITAL TRANSACTIONS $13,655,865 $ 527,070
- -----------------------------------------------------------------
NET INCREASE IN NET ASSETS $43,705,524 $ 2,182,403
- -----------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------
At beginning of year $53,556,347 $51,373,944
- -----------------------------------------------------------------
AT END OF YEAR $97,261,871 $53,556,347
- -----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------------------------------
1999 1998 1997 1996(1)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Ratios to average daily net assets
- ---------------------------------------------------------------------------------------------------
Expenses 1.36% 1.44% 1.48% 1.52%(2)
Net investment income (loss) (0.38)% 0.01% (0.04)% 0.07%(2)
Portfolio Turnover 131% 157% 160% 115%
- ---------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S
OMITTED) $97,262 $53,556 $51,374 $42,703
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
(1) For the period from the start of business, September 18,
1995, to August 31, 1996.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS
(EXPRESSED IN UNITED STATES DOLLARS)
1 Significant Accounting Policies
- -------------------------------------------
Information Age Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. The Portfolio, which was organized as a trust under the
laws of the State of New York on June 1, 1995, seeks to provide long-term
capital growth by investing in a global and diversified portfolio of
securities of information age companies. The Declaration of Trust ("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 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
ultimately 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 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 in
cash or securities an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by the Portfolio ("margin maintenance") each day, dependent
on the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by the Portfolio.
The Portfolio's investment in financial futures contracts is designed only to
hedge against anticipated future changes in interest or currency exchange
rates. Should interest or currency exchange rates move unexpectedly, the
Portfolio may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss.
E Options on Financial Futures -- Upon the purchase of a put option on foreign
currency by the Portfolio, the premium paid is recorded as an investment, the
value of which is marked-to-market daily. When a purchased option expires,
the Portfolio will realize a loss in the amount of the cost of the option.
When a Portfolio enters into a closing sales transaction, the Portfolio will
realize a gain or loss depending upon whether the sales proceeds from the
closing sales transaction are greater or less than the cost of the option.
When a Portfolio exercises a put option, settlement is made in cash. The risk
associated with purchasing options is limited to the premium originally paid.
F Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency rates are recorded
for financial statement purposes as net realized gains and losses on
investments. That portion of
19
<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
unrealized gains and losses on investments that result from fluctuations in
foreign currency exchange rates are not separately disclosed.
G Forward Foreign Currency Exchange Contracts -- The Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counterparties
to meet the terms of their contracts and from movements in the value of a
foreign currency relative to the U.S. dollar. The Portfolio will enter into
forward contracts for hedging purposes as well as non-hedging purposes. The
forward foreign currency exchange contracts are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are recorded
for financial statement purposes as unrealized until such time as the
contracts have been closed or offset.
H 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 revenue and expense during the reporting period. Actual results could
differ from those estimates.
I Other -- Investment transactions are accounted for on a trade date basis.
Dividend income is recorded on the ex-dividend date. However, if the
ex-dividend date has passed, certain dividends from foreign securities are
recorded as the Portfolio is informed of the ex-dividend date. Interest
income is recorded on the accrual basis.
2 Investment Adviser Fee and Other Transactions with Affiliates
- -------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), and Lloyd George
Investment Management (Bermuda) Limited, an affiliate of EVM (the Advisers),
as compensation for management and investment advisory services rendered to
the Portfolio. Under the advisory agreement, the Advisers receive a monthly
fee, divided equally between them, of 0.0625% (0.75% annually) of the average
daily net assets of the Portfolio up to $500,000,000, and at reduced rates as
daily net assets exceed that level. For the year ended August 31, 1999, the
adviser fee was 0.75% of average net assets for such period and amounted to
$536,139. In addition, an administrative fee is earned by 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 August 31, 1999, the administration fee was 0.25%
of average net assets for such period and amounted to $181,032. Except as to
the Trustees of the Portfolio who are not members of the Advisers, or EVM's
organization, officers and Trustees receive remuneration for their services
to the Portfolio out of such investment adviser and administrative fees.
Trustees of the Portfolio that are not affiliated with the Advisers may elect
to defer receipt of all or a percentage of their annual fees in accordance
with the terms of the Trustees Deferred Compensation Plan. For the year ended
August 31, 1999, no significant amounts have been deferred.
Certain officers and Trustees of the Portfolio are officers of the above
organizations.
3 Investment Transactions
- -------------------------------------------
Purchases and sales of investments, other than short-term obligations
aggregated $102,440,493 and $88,415,134, respectively, for the year ended
August 31, 1999.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investments
owned at August 31, 1999, are as follows:
<TABLE>
<S> <C>
AGGREGATE COST $76,434,319
--------------------------------------------------------
Gross unrealized appreciation $22,113,087
Gross unrealized depreciation (993,454)
--------------------------------------------------------
NET UNREALIZED APPRECIATION $21,119,633
--------------------------------------------------------
</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
20
<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
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.
6 Financial Instruments
- -------------------------------------------
The Portfolio regularly trades in financial instruments with off-balance
sheet risk in the normal course of its investing activities to assist in
managing exposure to various market risks. These financial instruments
include written options, forward foreign currency exchange contracts and
financial futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments
and does not necessarily represent the amounts potentially subject to risk.
The measurement of the risks associated with these instruments is meaningful
only when all related and offsetting transactions are considered.
At August 31, 1999, there were no outstanding obligations under these
financial instruments.
7 Line of Credit
- -------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $130 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 either the Eurodollar rate or federal funds rate. In addition, a
fee computed at an annual rate of 0.10% on the daily unused portion of the
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 year ended August 31, 1999.
21
<PAGE>
INFORMATION AGE PORTFOLIO AS OF AUGUST 31, 1999
INDEPENDENT ACCOUNTANTS' REPORT
TO THE TRUSTEES AND INVESTORS OF
INFORMATION AGE PORTFOLIO:
- ---------------------------------------------
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the supplementary data present fairly, in all material
respects, the financial position of the Information Age Portfolio (the
"Portfolio") at August 31, 1999, and the results of its operations, the changes
in its net assets and the supplementary data for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and supplementary data (hereafter referred to as "financial
statements") are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
August 31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 4, 1999
22
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INFORMATION AGE PORTFOLIO
Officers
James B. Hawkes
President and Trustee
Duncan W. Richardson
Vice President and
Co-Portfolio Manager
Hon. Robert Lloyd George
Vice President and Trustee
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Hon. Edward K.Y. Chen
President of Lingnan College,
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
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
23
