Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-08340
Greater India Portfolio
(Formerly known as South Asia Portfolio)
(Exact Name of registrant as Specified in Charter)
Two International Place, Boston, Massachusetts 02110
(Address of Principal Executive Offices)
(Address of Principal Executive Offices)
Maureen A. Gemma
Two International Place, Boston, Massachusetts 02110
(Name and Address of Agent for Services)
Two International Place, Boston, Massachusetts 02110
(Name and Address of Agent for Services)
(617) 482-8260
(registrant’s Telephone Number)
(registrant’s Telephone Number)
December 31
Date of Fiscal Year End
Date of Fiscal Year End
June 30, 2009
Date of Reporting Period
Date of Reporting Period
TABLE OF CONTENTS
Table of Contents
Item 1. Reports to Stockholders
Table of Contents
Greater India Portfolio as of June 30, 2009
PORTFOLIO OF INVESTMENTS (Unaudited)
| Common Stocks — 89.7% | ||||||||||
| Security | Shares | Value | ||||||||
| India — 88.3% | ||||||||||
| Automobiles — 3.3% | ||||||||||
| Hero Honda Motors, Ltd. | 405,000 | $ | 11,809,125 | |||||||
| Mahindra & Mahindra, Ltd. | 526,810 | 7,572,285 | ||||||||
| $ | 19,381,410 | |||||||||
| Beverages — 0.6% | ||||||||||
| United Spirits, Ltd. | 176,119 | $ | 3,194,367 | |||||||
| $ | 3,194,367 | |||||||||
| Capital Markets — 0.8% | ||||||||||
| India Infoline, Ltd. | 1,821,880 | $ | 4,608,056 | |||||||
| $ | 4,608,056 | |||||||||
| Commercial Banks — 12.7% | ||||||||||
Canara Bank, Ltd.(1) | 1,618,024 | $ | 8,849,989 | |||||||
| HDFC Bank, Ltd. | 609,069 | 18,984,060 | ||||||||
| ICICI Bank, Ltd. | 1,071,199 | 16,061,208 | ||||||||
| State Bank of India | 544,088 | 19,774,032 | ||||||||
| Union Bank of India, Ltd. | 2,099,714 | 10,574,846 | ||||||||
| $ | 74,244,135 | |||||||||
| Construction & Engineering — 6.1% | ||||||||||
| IVRCL Infrastructures & Projects, Ltd. | 742,205 | $ | 5,274,391 | |||||||
| Larsen & Toubro, Ltd. | 640,613 | 20,923,397 | ||||||||
| Nagarjuna Construction Co., Ltd. | 1,344,735 | 3,757,200 | ||||||||
| Punj Lloyd, Ltd. | 1,243,554 | 5,418,829 | ||||||||
| $ | 35,373,817 | |||||||||
| Diversified Financial Services — 4.4% | ||||||||||
| Infrastructure Development Finance Co., Ltd. | 4,683,840 | $ | 13,212,151 | |||||||
| Power Finance Corporation, Ltd. | 3,133,339 | 12,645,956 | ||||||||
| $ | 25,858,107 | |||||||||
| Diversified Telecommunication Services — 0.3% | ||||||||||
| Tata Communications, Ltd. | 185,981 | $ | 1,844,113 | |||||||
| $ | 1,844,113 | |||||||||
| Electric Utilities — 4.3% | ||||||||||
| Reliance Infrastructure, Ltd. | 420,329 | $ | 10,451,252 | |||||||
| Tata Power Co., Ltd. | 618,856 | 14,805,356 | ||||||||
| $ | 25,256,608 | |||||||||
| Electrical Equipment — 6.5% | ||||||||||
| Areva T&D India, Ltd. | 1,014,900 | $ | 7,111,598 | |||||||
| ABB, Ltd. | 113,023 | 1,830,326 | ||||||||
| Bharat Heavy Electricals, Ltd. | 513,450 | 23,567,309 | ||||||||
| Crompton Greaves, Ltd. | 924,545 | 5,631,615 | ||||||||
| $ | 38,140,848 | |||||||||
| Gas Utilities — 2.3% | ||||||||||
| Gail India, Ltd. | 2,263,967 | $ | 13,604,673 | |||||||
| $ | 13,604,673 | |||||||||
| Household Products — 1.4% | ||||||||||
| Hindustan Unilever, Ltd. | 1,433,411 | $ | 7,977,988 | |||||||
| $ | 7,977,988 | |||||||||
| Industrial Conglomerates — 3.1% | ||||||||||
| Jaiprakash Associates, Ltd. | 4,276,655 | $ | 18,167,782 | |||||||
| $ | 18,167,782 | |||||||||
| IT Services — 6.8% | ||||||||||
| Infosys Technologies, Ltd. | 633,635 | $ | 23,431,784 | |||||||
| Mphasis, Ltd. | 942,631 | 7,597,219 | ||||||||
| Tata Consultancy Services, Ltd. | 1,072,820 | 8,714,577 | ||||||||
| $ | 39,743,580 | |||||||||
| Machinery — 3.7% | ||||||||||
| Ashok Leyland, Ltd. | 9,310,709 | $ | 5,785,536 | |||||||
| BEML, Ltd. | 616,301 | 13,725,147 | ||||||||
Tata Motors, Ltd.(1) | 341,888 | 2,073,482 | ||||||||
| $ | 21,584,165 | |||||||||
| Metals & Mining — 7.0% | ||||||||||
| Hindalco Industries, Ltd. | 3,955,850 | $ | 7,116,492 | |||||||
| Jindal Steel & Power, Ltd. | 240,669 | 12,474,252 | ||||||||
| Steel Authority of India, Ltd. | 877,373 | 2,758,236 | ||||||||
| Sterlite Industries (India), Ltd. | 279,090 | 3,524,382 | ||||||||
| Tata Steel, Ltd. | 1,816,178 | 14,752,296 | ||||||||
| $ | 40,625,658 | |||||||||
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Greater India Portfolio as of June 30, 2009
PORTFOLIO OF INVESTMENTS (Unaudited) CONT’D
| Security | Shares | Value | ||||||||
| Oil, Gas & Consumable Fuels — 9.1% | ||||||||||
Cairn India, Ltd.(1) | 1,222,907 | $ | 5,926,618 | |||||||
| Great Eastern Shipping Co., Ltd. | 941,097 | 4,909,954 | ||||||||
| Oil & Natural Gas Corp., Ltd. | 431,784 | 9,601,995 | ||||||||
Reliance Industries, Ltd.(1) | 781,028 | 32,878,296 | ||||||||
| $ | 53,316,863 | |||||||||
| Pharmaceuticals — 2.6% | ||||||||||
Glenmark Pharmaceuticals, Ltd.(1) | 1,068,232 | $ | 4,816,399 | |||||||
| Sun Pharmaceuticals Industries, Ltd. | 459,126 | 10,418,644 | ||||||||
| $ | 15,235,043 | |||||||||
| Real Estate Management & Development — 2.6% | ||||||||||
| DLF, Ltd. | 1,546,880 | $ | 9,994,483 | |||||||
| Indiabulls Real Estate, Ltd. | 623,068 | 2,527,937 | ||||||||
| Sobha Developers, Ltd. | 651,615 | 2,821,304 | ||||||||
| $ | 15,343,724 | |||||||||
| Thrifts & Mortgage Finance — 3.2% | ||||||||||
Housing Development Finance Corp.(1) | 381,307 | $ | 18,613,034 | |||||||
| $ | 18,613,034 | |||||||||
| Tobacco — 1.9% | ||||||||||
| ITC, Ltd. | 2,850,880 | $ | 11,333,389 | |||||||
| $ | 11,333,389 | |||||||||
| Transportation Infrastructure — 0.4% | ||||||||||
| Mundra Port & Special Economic Zone, Ltd. | 195,156 | $ | 2,458,731 | |||||||
| $ | 2,458,731 | |||||||||
| Wireless Telecommunication Services — 5.2% | ||||||||||
Bharti Airtel, Ltd.(1) | 1,325,298 | $ | 22,154,168 | |||||||
| Reliance Communications, Ltd. | 1,320,304 | 7,945,220 | ||||||||
| $ | 30,099,388 | |||||||||
| Total India | ||||||||||
| (identified cost $512,187,738) | $ | 516,005,479 | ||||||||
| Sri Lanka — 1.4% | ||||||||||
| Security | Shares | Value | ||||||||
| Industrial Conglomerates — 1.2% | ||||||||||
| John Keells Holdings PLC | 5,694,226 | $ | 6,775,891 | |||||||
| $ | 6,775,891 | |||||||||
| Wireless Telecommunication Services — 0.2% | ||||||||||
Dialog Telekom, Ltd.(1) | 30,080,680 | $ | 1,371,820 | |||||||
| $ | 1,371,820 | |||||||||
| Total Sri Lanka | ||||||||||
| (identified cost $14,466,425) | $ | 8,147,711 | ||||||||
| Total Common Stocks | ||||||||||
| (identified cost $526,654,163) | $ | 524,153,190 | ||||||||
| Index Funds — 2.5% | ||||||||||
| Security | Shares | Value | ||||||||
| India — 2.5% | ||||||||||
| Banking Index Benchmark Exchange Traded Scheme - Bank BeES | 950,000 | $ | 14,767,488 | |||||||
| Total India | ||||||||||
| (identified cost $16,358,894) | $ | 14,767,488 | ||||||||
| Total Index Funds | ||||||||||
| (identified cost $16,358,894) | $ | 14,767,488 | ||||||||
| Short-Term Investments — 3.4% | ||||||||||
| Principal | ||||||||||
| Amount | ||||||||||
| Description | (000’s omitted) | Value | ||||||||
| State Street Bank and Trust Euro Time Deposit, 0.01%, 7/1/09 | $ | 19,743 | $ | 19,743,087 | ||||||
| Total Short-Term Investments | ||||||||||
| (identified cost $19,743,087) | $ | 19,743,087 | ||||||||
| Total Investments — 95.6% | ||||||||||
| (identified cost $562,756,144) | $ | 558,663,765 | ||||||||
| Other Assets, Less Liabilities — 4.4% | $ | 25,468,391 | ||||||||
| Net Assets — 100.0% | ||||||||||
| $ | 584,132,156 | |||||||||
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
| (1) | Non-income producing security. |
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Greater India Portfolio as of June 30, 2009
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
| As of June 30, 2009 | ||||||
| Assets | ||||||
| Investments, at value (identified cost, $562,756,144) | $ | 558,663,765 | ||||
| Foreign currency, at value (identified cost, $25,335,698) | 25,419,665 | |||||
| Dividends and interest receivable | 889,416 | |||||
| Receivable for investments sold | 109,492 | |||||
| Receivable for foreign taxes | 880,868 | |||||
| Tax claims receivable (Note 7) | 809,672 | |||||
Total assets | $ | 586,772,878 | ||||
| Liabilities | ||||||
| Payable for investments purchased | $ | 1,937,767 | ||||
| Payable to affiliates: | ||||||
| Investment adviser fee | 365,934 | |||||
| Administration fee | 120,307 | |||||
| Trustees’ fees | 4,704 | |||||
| Accrued expenses | 212,010 | |||||
Total liabilities | $ | 2,640,722 | ||||
Net Assets applicable to investors interest in Portfolio | $ | 584,132,156 | ||||
| Sources of Net Assets | ||||||
| Net proceeds from capital contributions and withdrawals | $ | 588,290,860 | ||||
| Net unrealized depreciation | (4,158,704 | ) | ||||
Total | $ | 584,132,156 | ||||
| For the Six Months Ended | ||||||
| June 30, 2009 | ||||||
| Investment Income | ||||||
| Dividends | $ | 2,297,188 | ||||
| Interest | 1,099 | |||||
Total investment income | $ | 2,298,287 | ||||
| Expenses | ||||||
| Investment adviser fee | $ | 1,593,883 | ||||
| Administration fee | 527,240 | |||||
| Custodian fee | 455,503 | |||||
| Legal and accounting services | 46,372 | |||||
| Miscellaneous | 12,394 | |||||
Total expenses | $ | 2,635,392 | ||||
Net investment loss | $ | (337,105 | ) | |||
| Realized and Unrealized Gain (Loss) | ||||||
| Net realized gain (loss) — | ||||||
| Investment transactions (net of foreign capital gains taxes of $12,374) | $ | (143,387,044 | ) | |||
| Foreign currency transactions | (588,658 | ) | ||||
Net realized loss | $ | (143,975,702 | ) | |||
| Change in unrealized appreciation (depreciation) — | ||||||
| Investments | $ | 339,303,121 | ||||
| Foreign currency | 346,270 | |||||
Net change in unrealized appreciation (depreciation) | $ | 339,649,391 | ||||
Net realized and unrealized gain | $ | 195,673,689 | ||||
Net increase in net assets from operations | $ | 195,336,584 | ||||
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Greater India Portfolio as of June 30, 2009
FINANCIAL STATEMENTS CONT’D
| Six Months Ended | ||||||||||
| Increase (Decrease) | June 30, 2009 | Year Ended | ||||||||
| in Net Assets | (Unaudited) | December 31, 2008 | ||||||||
| From operations — | ||||||||||
| Net investment loss | $ | (337,105 | ) | $ | (1,618,956 | ) | ||||
| Net realized loss from investment and foreign currency transactions | (143,975,702 | ) | (67,056,983 | ) | ||||||
| Net change in unrealized appreciation (depreciation) from investments and foreign currency | 339,649,391 | (941,968,632 | ) | |||||||
Net increase (decrease) in net assets from operations | $ | 195,336,584 | $ | (1,010,644,571 | ) | |||||
| Capital transactions — | ||||||||||
| Contributions | $ | 38,704,926 | $ | 274,905,759 | ||||||
| Withdrawals | (60,268,710 | ) | (543,387,422 | ) | ||||||
Net decrease in net assets from capital transactions | $ | (21,563,784 | ) | $ | (268,481,663 | ) | ||||
Net increase (decrease) in net assets | $ | 173,772,800 | $ | (1,279,126,234 | ) | |||||
| Net Assets | ||||||||||
| At beginning of period | $ | 410,359,356 | $ | 1,689,485,590 | ||||||
At end of period | $ | 584,132,156 | $ | 410,359,356 | ||||||
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Greater India Portfolio as of June 30, 2009
FINANCIAL STATEMENTS CONT’D
Supplementary Data
| Six Months Ended | Year Ended December 31, | |||||||||||||||||||||||||
| June 30, 2009 | ||||||||||||||||||||||||||
| (Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||
| Ratios/Supplemental Data | ||||||||||||||||||||||||||
| Ratios (as a percentage of average daily net assets): | ||||||||||||||||||||||||||
Expenses(1) | 1.24 | %(2) | 1.19 | % | 1.14 | % | 1.22 | % | 1.37 | % | 1.56 | % | ||||||||||||||
| Net investment income (loss) | (0.16 | )%(2) | (0.17 | )% | (0.27 | )% | 0.07 | % | (0.18 | )% | 0.31 | % | ||||||||||||||
| Portfolio Turnover | 38 | %(3) | 38 | % | 63 | % | 67 | % | 29 | % | 73 | % | ||||||||||||||
Total Return | 53.32 | %(3) | (64.87 | )% | 56.32 | % | 37.53 | % | 46.82 | % | 19.07 | % | ||||||||||||||
Net assets, end of period (000’s omitted) | $ | 584,132 | $ | 410,359 | $ | 1,689,486 | $ | 1,028,290 | $ | 335,409 | $ | 94,006 | ||||||||||||||
| (1) | Excludes the effect of custody fee credits, if any, of less than 0.005%. | |
| (2) | Annualized. | |
| (3) | Not annualized. |
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Greater India Portfolio as of June 30, 2009
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
Greater India Portfolio (the Portfolio) is a New York trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Portfolio’s investment objective is to seek long-term capital appreciation. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At June 30, 2009, Eaton Vance Greater India Fund held a 99.9% interest in the Portfolio.
The following is a summary of significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America.
A Investment Valuation — Equity securities (including common shares of closed-end investment companies) listed on a U.S. securities exchange generally are valued at the last sale price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by a third party pricing service that will use various techniques that consider factors including, but not limited to, prices or yields of securities with similar characteristics, benchmark yields, broker/dealer quotes, quotes of underlying common stock, issuer spreads, as well as industry and economic events. Short-term debt securities with a remaining maturity of sixty days or less are generally valued at amortized cost, which approximates market value. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. When valuing foreign equity securities that meet certain criteria, the Trustees have approved the use of a fair value service that values such securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Portfolio in a manner that most fairly reflects the security’s value, or the amount that the Portfolio might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies, quotations or relevant information obtained from broker-dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. 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. 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. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.
D Federal Taxes — The Portfolio has elected to be treated as a partnership for federal tax purposes. No provision is made by the Portfolio for federal or state taxes on any taxable income of the Portfolio because each investor in the Portfolio is ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the Portfolio’s investors is a regulated investment company that invests all or substantially all of its assets in the Portfolio, the Portfolio normally must satisfy the applicable source of income and diversification requirements (under the Internal Revenue Code) in order for its investors to satisfy them. The Portfolio will allocate, at least annually among its investors, each investor’s distributive share of the Portfolio’s net investment income, net realized capital gains and any other items of income, gain, loss, deduction or credit.
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Greater India Portfolio as of June 30, 2009
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT’D
In addition to the requirements of the Internal Revenue Code, the Portfolio may also be subject to capital gains tax in India on gains realized upon disposition of Indian securities, payable prior to repatriation of sales proceeds. The tax is computed on net realized gains; any realized losses in excess of gains may be carried forward to offset future gains.
As of June 30, 2009, the Portfolio had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each of the Portfolio’s federal tax returns filed in the 3-year period ended December 31, 2008 remains subject to examination by the Internal Revenue Service.
E Expense Reduction — State Street Bank and Trust Company (SSBT) serves as custodian of the Portfolio. Pursuant to the custodian agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance the Portfolio maintains with SSBT. All credit balances, if any, used to reduce the Portfolio’s custodian fees are reported as a reduction of expenses in the Statement of Operations.
F Foreign Currency Translation — Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect 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.
G Use of Estimates — The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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.
H Indemnifications — Under the Portfolio’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Interestholders in the Portfolio are jointly and severally liable for the liabilities and obligations of the Portfolio in the event that the Portfolio fails to satisfy such liabilities and obligations; provided, however, that, to the extent assets are available in the Portfolio, the Portfolio may, under certain circumstances, indemnify interestholders from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in the Portfolio. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred.
I Interim Financial Statements — The interim financial statements relating to June 30, 2009 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Portfolio’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by Lloyd George Investment Management (Bermuda) Limited (Lloyd George), an affiliate of Eaton Vance Management (EVM), as compensation for management and investment advisory services rendered to the Portfolio. The fee is computed at an annual rate of 0.75% of the Portfolio’s average daily net assets up to $500 million, 0.70% from $500 million up to $1 billion, and at reduced rates as daily net assets exceed that level, and is payable monthly. For the six months ended June 30, 2009, the investment adviser fee was 0.75% (annualized) of the Portfolio’s average daily net assets and amounted to $1,593,883. In addition, an administration fee is earned by EVM for administering the business affairs of the Portfolio and is computed at an annual rate of 0.25% of the Portfolio’s average daily net assets up to $500 million, 0.233% of average daily net assets from $500 million up to $1 billion, and at reduced rates as daily net assets exceed that level. For the six months ended June 30, 2009, the administration fee was 0.25% (annualized) of the Portfolio’s average daily net assets and amounted to $527,240.
Except for Trustees of the Portfolio who are not members of EVM’s or Lloyd George’s organizations, officers and Trustees receive remuneration for their services to the Portfolio out of the investment adviser and administration fees. Certain officers and Trustees of the Portfolio are officers of the above organizations.
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Greater India Portfolio as of June 30, 2009
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT’D
3 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $152,244,772 and $200,355,564, respectively, for the six months ended June 30, 2009.
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Portfolio at June 30, 2009, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 562,921,609 | ||||
| Gross unrealized appreciation | $ | 99,354,088 | ||||
| Gross unrealized depreciation | (103,611,932 | ) | ||||
Net unrealized depreciation | $ | (4,257,844 | ) | |||
5 Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $450 million unsecured line of credit agreement with a group of banks. Borrowings are made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Portfolio based on its borrowings at an amount above either the Eurodollar rate or Federal Funds rate. In addition, a fee computed at an annual rate of 0.10% on the daily unused portion of the line of credit is allocated among the participating portfolios and funds at the end of each quarter. The Portfolio did not have any significant borrowings or allocated fees during the six months ended June 30, 2009.
6 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. Certain 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 securities 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 sub-continent 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.
7 India Tax Claims Receivable
The Portfolio is subject to certain Indian income taxes in connection with transactions in Indian securities. The Indian tax authority has conducted a review of the Portfolio’s tax returns filed for the years ended March 31, 2002 and 2001. In March 2004, the Indian tax authority assessed the Portfolio additional taxes for the 2000-2001 tax year and reduced the refund owed to the Portfolio for the 2001-2002 tax year, a net assessment of approximately $865,000. While the outcome of an appeal cannot be predicted, the Portfolio has appealed the assessment and has been advised by Indian legal counsel that it has a strong case for appeal with ultimate success. The appeal process may be lengthy and will involve expense to the Portfolio. The Indian tax authority has required the Portfolio to pay the assessed amount pending the appeal. The Portfolio has paid such amount to the tax authority. Such amount is reflected as a tax claim receivable on the Statement of Assets and Liabilities. As of June 30, 2009, the value of the tax claim receivable was $809,672 based on current exchange rates.
8 Fair Value Measurements
Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157 (FAS 157), “Fair Value Measurements”, established a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
| • | Level 1 – quoted prices in active markets for identical investments | |
| • | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) | |
| • | Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments) |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
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Greater India Portfolio as of June 30, 2009
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT’D
At June 30, 2009, the inputs used in valuing the Portfolio’s investments, which are carried at value, were as follows:
| Quoted | ||||||||||||||||
| Prices | ||||||||||||||||
| in Active | Significant | |||||||||||||||
| Markets for | Other | Significant | ||||||||||||||
| Identical | Observable | Unobservable | ||||||||||||||
| Assets | Inputs | Inputs | ||||||||||||||
| Asset Description | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
| Common Stocks | ||||||||||||||||
| Commercial Banks | $ | 18,984,060 | $ | 55,260,075 | $ | — | $ | 74,244,135 | ||||||||
| Industrial Conglomerates | 6,775,891 | 18,167,782 | — | 24,943,673 | ||||||||||||
| Others | — | 424,965,382 | — | 424,965,382 | ||||||||||||
| Total Common Stocks | $ | 25,759,951 | $ | 498,393,239 | * | $ | — | $ | 524,153,190 | |||||||
| Index Funds | $ | 14,767,488 | $ | — | $ | — | 14,767,488 | |||||||||
| Short-Term Investments | — | 19,743,087 | — | 19,743,087 | ||||||||||||
Total Investments | $ | 40,527,439 | $ | 518,136,326 | $ | — | $ | 558,663,765 | ||||||||
| * | Includes foreign equity securities whose values were adjusted to reflect market trading that occurred after the close of trading in their applicable foreign markets. |
The level classification by major category of investments (other than for categories presented above) is the same as the category presentation in the Portfolio of Investments.
The Portfolio held no investments or other financial instruments as of December 31, 2008 whose fair value was determined using Level 3 inputs.
9 Review for Subsequent Events
In connection with the preparation of the financial statements of the Portfolio as of and for the six months ended June 30, 2009, events and transactions subsequent to June 30, 2009 through August 17, 2009, the date the financial statements were issued, have been evaluated by the Portfolio’s management for possible adjustment and/or disclosure. Management has not identified any subsequent events requiring financial statement disclosure as of the date these financial statements were issued.
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Eaton Vance Greater India Fund
BOARD OF TRUSTEES’ ANNUAL APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuance is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a “Board”) of the Eaton Vance group of mutual funds (the “Eaton Vance Funds”) held on April 27, 2009, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of the Contract Review Committee of the Board (formerly the Special Committee), which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished for a series of meetings of the Contract Review Committee held in February, March and April 2009. Such information included, among other things, the following:
Information about Fees, Performance and Expenses
| • | An independent report comparing the advisory and related fees paid by each fund with fees paid by comparable funds; | |
| • | An independent report comparing each fund’s total expense ratio and its components to comparable funds; | |
| • | An independent report comparing the investment performance of each fund to the investment performance of comparable funds over various time periods; | |
| • | Data regarding investment performance in comparison to relevant peer groups of funds and appropriate indices; | |
| • | Comparative information concerning fees charged by each adviser for managing other mutual funds and institutional accounts using investment strategies and techniques similar to those used in managing the fund; | |
| • | Profitability analyses for each adviser with respect to each fund; |
Information about Portfolio Management
| • | Descriptions of the investment management services provided to each fund, including the investment strategies and processes employed, and any changes in portfolio management processes and personnel; | |
| • | Information concerning the allocation of brokerage and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through “soft dollar” benefits received in connection with the funds’ brokerage, and the implementation of a soft dollar reimbursement program established with respect to the funds; | |
| • | Data relating to portfolio turnover rates of each fund; | |
| • | The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes; |
Information about each Adviser
| • | Reports detailing the financial results and condition of each adviser; | |
| • | Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts; | |
| • | Copies of the Codes of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes; | |
| • | Copies of or descriptions of each adviser’s proxy voting policies and procedures; | |
| • | Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates on behalf of the funds (including descriptions of various compliance programs) and their record of compliance with investment policies and restrictions, including policies with respect to market-timing, late trading and selective portfolio disclosure, and with policies on personal securities transactions; | |
| • | Descriptions of the business continuity and disaster recovery plans of each adviser and its affiliates; |
Other Relevant Information
| • | Information concerning the nature, cost and character of the administrative and other non-investment management services provided by Eaton Vance Management and its affiliates; | |
| • | Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and | |
| • | The terms of each advisory agreement. |
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Eaton Vance Greater India Fund
BOARD OF TRUSTEES’ ANNUAL APPROVAL OF INVESTMENT ADVISORY AGREEMENTS CONT’D
In addition to the information identified above, the Contract Review Committee considered information provided from time to time by each adviser throughout the year at meetings of the Board and its committees. Over the course of the twelve-month period ended April 30, 2009, the Board met eighteen times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, five, six, six and six times, respectively. At such meetings, the Trustees received, among other things, presentations by the portfolio managers and other investment professionals of each adviser relating to the investment performance of each fund and the investment strategies used in pursuing the fund’s investment objective.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each advisory and sub-advisory agreement.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuance of the investment advisory agreement of Greater India Portfolio (the “Portfolio”), the portfolio in which Eaton Vance Greater India Fund (the “Fund”) invests, with Lloyd George Investment Management (Bermuda) Limited (the “Adviser”), as well as the administration agreement of the Portfolio with Eaton Vance Management (“EVM” or the “Administrator”) and the management contract of the Fund with the Administrator, including their fee structures, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the agreements. The Board accepted the recommendation of the Contract Review Committee as well as the factors considered and conclusions reached by the Contract Review Committee with respect to the agreements. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Portfolio, the administration agreement for the Portfolio and the management contract for the Fund.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement of the Portfolio, the administration agreement of the Portfolio and the management contract of the Fund, the Board evaluated the nature, extent and quality of services provided to the Portfolio by the Adviser and to the Fund and Portfolio by the Administrator.
The Board considered the Adviser’s and Administrator’s management capabilities and the Adviser’s investment process with respect to the types of investments held by the Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Portfolio. The Board evaluated the abilities and experience of such investment personnel in analyzing factors such as special considerations relevant to investing in emerging markets, including Asia. The Board noted the Adviser’s experience in managing equity funds that invest in Asian securities. The Board noted that the Adviser maintains offices in London, Hong Kong, Singapore and Tokyo, providing its investment team with first hand knowledge of country and market factors affecting securities in which the Portfolio invests. The Board evaluated the level of skill and expertise required to manage the Portfolio and concluded that the human resources available at the Adviser were appropriate to fulfill effectively its duties on behalf of the Portfolio. The Board also took into account the resources dedicated to portfolio management and other services, including the compensation paid to recruit and retain investment personnel, and the time and attention devoted to the Portfolio by senior management.
The Board also reviewed the compliance programs of the Adviser, the Administrator and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment personnel, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also evaluated the responses of the Administrator and its affiliates to requests from the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
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Eaton Vance Greater India Fund
BOARD OF TRUSTEES’ ANNUAL APPROVAL OF INVESTMENT ADVISORY AGREEMENTS CONT’D
The Board considered EVM’s recommendations for Board action and other steps taken in response to the unprecedented dislocations experienced in the capital markets over recent periods, including sustained periods of high volatility, credit disruption and government intervention. In particular, the Board considered EVM’s efforts and expertise with respect to each of the following matters as they relate to the Fund and/or other funds within the Eaton Vance family of funds: (i) negotiating and maintaining the availability of bank loan facilities and other sources of credit used for investment purposes or to satisfy liquidity needs; (ii) establishing the fair value of securities and other instruments held in investment portfolios during periods of market volatility and issuer-specific disruptions; and (iii) the ongoing monitoring of investment management processes and risk controls.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser and the Administrator, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement, the administration agreement and the management contract, respectively.
Fund Performance
The Board compared the Fund’s investment performance to a relevant universe of similarly managed funds identified by an independent data provider and appropriate benchmark indices. The Board reviewed comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2008 for the Fund. On the basis of the foregoing and other relevant information, the Board concluded that, under the circumstances, the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board reviewed contractual management fee rates, including any administrative fee rates, payable by the Portfolio and the Fund (referred to collectively as “management fees”). As part of its review, the Board considered the management fees and the Fund’s total expense ratio for the year ended September 30, 2008, as compared to a group of similarly managed funds selected by an independent data provider. The Board considered the fact that the Adviser and the Administrator had undertaken to waive fees and/or pay expenses of the Fund permanently in an agreed-upon amount.
After reviewing the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services and the Fund’s total expense ratio are reasonable.
Profitability
The Board reviewed the level of profits realized by the Adviser and the Administrator in providing investment advisory and administrative services to the Fund and the Portfolio and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to revenue sharing or other payments to third parties in respect of distribution services. The Board also considered other direct or indirect benefits received by the Adviser in connection with its relationship with the Portfolio, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Portfolio and other investment advisory clients.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and the Administrator are reasonable.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser, on the one hand, and the Portfolio and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and the Portfolio increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from the economies of scale with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the Adviser’s and Administrator’s profitability may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the benefits from economies of scale are currently being shared equitably by the Adviser and the Administrator, on the one hand, and the Fund on the other hand. The Board also concluded that the structure of the management fees, which include breakpoints at several asset levels, can be expected to cause such benefits to continue to be shared equitably.
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Eaton Vance Greater India Fund
OFFICERS AND TRUSTEES
Eaton Vance Greater India Fund
Officers Thomas E. Faust Jr. President and Trustee Michael A. Allison Vice President J. Scott Craig Vice President Gregory R. Greene Vice President Duke E. Laflamme Vice President Thomas H. Luster Vice President Michael R. Mach Vice President Robert J. Milmore Vice President J. Bradley Ohlmuller Vice President Judith A. Saryan Vice President Duncan W. Richardson Vice President Walter A. Row, III Vice President Michael W. Weilheimer Vice President Barbara E. Campbell Treasurer Maureen A. Gemma Secretary and Chief Legal Officer Paul M. O’Neil Chief Compliance Officer | Trustees Ralph F. Verni Chairman Benjamin C. Esty Allen R. Freedman William H. Park Ronald A. Pearlman Helen Frame Peters Heidi L. Steiger Lynn A. Stout |
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Eaton Vance Greater India Fund
OFFICERS AND TRUSTEES CONT’D
Greater India Portfolio
Officers Hon. Robert Lloyd George President Christopher Darling Vice President William Walter Raleigh Kerr Vice President Barbara E. Campbell Treasurer Maureen A. Gemma Secretary and Chief Legal Officer Paul M. O’Neil Chief Compliance Officer | Trustees Ralph F. Verni Chairman Benjamin C. Esty Thomas E. Faust Jr. Allen R. Freedman William H. Park Ronald A. Pearlman Helen Frame Peters Heidi L. Steiger Lynn A. Stout |
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Investment Adviser of Greater India Portfolio
Lloyd George Investment Management
(Bermuda) Limited
Suite 3808, One Exchange Square
Central, Hong Kong
and Administrator of Greater India Portfolio
Eaton Vance Management
Two International Place
Boston, MA 02110
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
(617) 482-8260
State Street Bank and Trust Company
200 Clarendon Street
Boston, MA 02116
PNC Global Investment Servicing
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Eaton Vance Greater India Fund
Two International Place
Boston, MA 02110
This report must be preceded or accompanied by a current prospectus. Before investing, investors should consider carefully the Fund’s investment objective(s), risks, and charges and expenses. The Fund’s current prospectus contains this and other information about the Fund and is available through your financial advisor. Please read the prospectus carefully before you invest or send money. For further information please call 1-800-262-1122.
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| 142-8/09 | GISRC |
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Item 2. Code of Ethics
The registrant has adopted a code of ethics applicable to its Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-262-1122.
Item 3. Audit Committee Financial Expert
The registrant’s Board has designated William H. Park, an independent trustee, as its audit committee financial expert. Mr. Park is a certified public accountant who is the Vice Chairman of Commercial Industrial Finance Corp (specialty finance company). Previously, he served as President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm) and as Executive Vice President and Chief Financial Officer of United Asset Management Corporation (“UAM”) (a holding company owning institutional investment management firms).
Item 4. Principal Accountant Fees and Services
Not required in this filing
Item 5. Audit Committee of Listed registrants
Not required in this filing.
Item 6. Schedule of Investments
Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not required in this filing.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not required in this filing.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not required in this filing.
Item 10. Submission of Matters to a Vote of Security Holders.
No Material Changes.
Item 11. Controls and Procedures
(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to
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the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.
(b) There have been no changes in the registrant’s internal controls over financial reporting during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
| (a)(1) | Registrant’s Code of Ethics – Not applicable (please see Item 2). | |
| (a)(2)(i) | Treasurer’s Section 302 certification. | |
| (a)(2)(ii) | President’s Section 302 certification. | |
| (b) | Combined Section 906 certification. |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Greater India Portfolio
| By: | /s/ Hon. Robert Lloyd George | |||
| President | ||||
Date: August 13, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Barbara E. Campbell | |||
| Treasurer | ||||
Date: August 13, 2009
| By: | /s/ Hon. Robert Lloyd George | |||
| President | ||||
Date: August 13, 2009