Document/Exhibit Description Pages Size
1: 485BPOS Pea 68/41 Growth Trust 275± 1.18M
26: EX-27 ƒ FDS - China Portfolio - 2/97 2 14K
28: EX-27 ƒ FDS - China Portolio - 8/96 2 14K
30: EX-27 ƒ FDS - Growth Portfolio - 2/97 2 14K
32: EX-27 ƒ FDS - Growth Portfolio - 8/96 2 14K
40: EX-27 FDS - Health Sciences Portfolio - 2/97 2 14K
34: EX-27 ƒ FDS - Information Age Portfolio - 2/97 2 14K
36: EX-27 ƒ FDS - Information Age Portfolio - 8/96 2 14K
37: EX-27 FDS - Marathon Developing Resources - 2/97 2 14K
38: EX-27 FDS - Marathon Gold & Natural - 8/96 2 14K
25: EX-27 FDS - Marathon Greater China - 2/97 2 14K
27: EX-27 FDS - Marathon Greater China - 8/96 2 14K
33: EX-27 FDS - Marathon Info Age - 2/97 2 14K
35: EX-27 FDS - Marathon Info Age - 8/96 2 14K
29: EX-27 FDS - Traditional Growth - 2/97 2 14K
31: EX-27 FDS - Traditional Growth - 8/96 2 14K
39: EX-27 FDS - Traditional Health Sciences - 2/97 2 15K
41: EX-27 FDS - Traditional Health Sciences - 8/96 2 14K
2: EX-99.1(C) Dot Amendment 2± 15K
6: EX-99.11(A) Auditors Consent - China 1 13K
7: EX-99.11(B) Auditors Consent - Growth 1 13K
8: EX-99.11(C) Auditors Consent - Information Age 1 13K
9: EX-99.11(D) Auditors Consent - Information Age Portfolio 1 12K
10: EX-99.11(E) Auditors Consent - Developing Resources 1 13K
11: EX-99.11(F) Auditors Consent - Developing Resources Portfolio 1 12K
12: EX-99.11(G) Auditors Consent - Health Sciences 1 13K
13: EX-99.11(H) Auditors Consent - Health Sciences Portfolio 1 12K
14: EX-99.15(A) Class A Service Plan 2 19K
15: EX-99.15(B) Class A Distribution Plan 4± 24K
16: EX-99.15(C) Class B Distribution Plan 5± 30K
17: EX-99.15(D) Class C Distribution Plan 5± 29K
18: EX-99.16 Performance Calculations 13 72K
19: EX-99.17(A) POA - Growth Trust 1 15K
20: EX-99.17(B) POA - Growth Portfolio 1 15K
21: EX-99.17(C) POA - Information Age Portfolio 2± 16K
22: EX-99.17(F) POA - Health Sciences Portfolio 2± 15K
23: EX-99.17(G) POA - Developing Resources Portfolio 2± 15K
24: EX-99.18 Multi Class Plan Dtd. June 23, 1997 4± 24K
3: EX-99.5(A) Management Agreement 4± 25K
4: EX-99.6(A)(1) Distribution Agreement 12± 57K
5: EX-99.9(A)(2) Amendment of Asa Agreement 2 13K
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 25, 1997
1933 ACT FILE NO. 2-22019
1940 ACT FILE NO. 811-1241
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 68 [X]
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 41 [X]
EATON VANCE GROWTH TRUST
-------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
617-482-8260
------------------------
(REGISTRANT'S TELEPHONE NUMBER)
ALAN R. DYNNER
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective pursuant to rule 485
(check appropriate box):
[ ] immediately upon filing [ ] on (date) pursuant
pursuant to paragraph (b) to paragraph (a)(1)
[X] on September 1, 1997 [ ] 75 days after filing
pursuant to paragraph (b) pursuant to paragraph (a)(2)
[ ] 60 days after filing [ ] on (date) pursuant
pursuant to paragraph (a)(1) to paragraph (a)(2).
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.
Greater China Growth Portfolio, Growth Portfolio, Information Age
Portfolio, Worldwide Developing Resources Portfolio and Worldwide Health
Sciences Portfolio have also executed this Registration Statement.
The Registrant has filed a Declaration pursuant to Rule 24f-2 and on
October 24, 1996 filed its "Notice" as required by that Rule for the fiscal
year ended August 31, 1996. Registrant continues its election to register an
indefinite number of shares of beneficial interest pursuant to Rule 24f-2.
================================================================================
This Amendment to the registration statement on Form N-1A consists of the
following documents and papers:
Cross Reference Sheet required by Rule 481(a) under the Securities Act of
1933
Part A -- The Prospectuses of:
Eaton Vance Greater China Growth Fund
Eaton Vance Growth Fund
The combined Prospectus of:
Eaton Vance Information Age Fund
Eaton Vance Worldwide Developing Resources Fund
Eaton Vance Worldwide Health Sciences Fund
Part B -- The Statements of Additional Information of:
Eaton Vance Greater China Growth Fund
Eaton Vance Growth Fund
The combined Statement of Additional Information of:
Eaton Vance Information Age Fund
Eaton Vance Worldwide Developing Resources Fund
Eaton Vance Worldwide Health Sciences Fund
Part C -- Other Information
Signatures
Exhibit Index Required by Rule 483(a) under the Securities Act of 1933
Exhibits
This Amendment is not intended to amend the Prospectuses and Statements of
Additional Information of any Series of the Registrant not identified above.
EATON VANCE GROWTH TRUST
CROSS REFERENCE SHEET FOR
EATON VANCE GREATER CHINA GROWTH FUND EATON VANCE INFORMATION AGE FUND
EATON VANCE GROWTH FUND EATON VANCE WORLDWIDE DEVELOPING
RESOURCES FUND
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
ITEMS REQUIRED BY FORM N-1A
[Enlarge/Download Table]
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
------ -------- -------------------------------------------------------
1. .............. Cover Page Cover Page
2. .............. Synopsis Shareholder and Fund Expenses
3. .............. Condensed Financial Information The Fund's (or Funds') Financial Highlights;
Performance Information
4. .............. General Description of Registrant The Fund's (or Funds') Investment Objective; Investment
Policies and Risks; Investment Opportunities in the
China Region (for Greater China Growth Fund only);
Investment Profiles (for combined prospectus only);
Organization of the Fund and the Portfolio (or
Organization of the Funds and the Portfolios)
5. .............. Management of the Fund Management of the Fund and the Portfolio (or Management
of Funds and the Portfolios)
5A............... Management's Discussion of Fund Not Applicable
Performance
6. .............. Capital Stock and Other Securities Organization of the Fund (or Organization of the Funds
and the Portfolios); Reports to Shareholders; The
Lifetime Investing Account/Distribution Options;
Distributions and Taxes
7. .............. Purchase of Securities Being Offered Valuing Shares; How to Buy Shares; Distribution and
Service Plans; The Lifetime Investing Account/
Distribution Options; The Eaton Vance Exchange
Privilege; Eaton Vance Shareholder Services
8. .............. Redemption or Repurchase How to Redeem Shares
9. .............. Pending Legal Proceedings Not Applicable
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
------ -------- -------------------------------------------------------
10. .............. Cover Page Cover Page
11. .............. Table of Contents Table of Contents
12. .............. General Information and History Other Information
13. .............. Investment Objective and Policies Additional Information about Investment Policies;
Investment Restrictions
14. .............. Management of the Fund Trustees and Officers
15. .............. Control Persons and Principal Holders Control Persons and Principal Holders of Securities
of Securities
16. .............. Investment Advisory and Other Investment Adviser and Administrator (Growth Fund
Services only); Management of the Funds and the Portfolios;
Service Plan -- Class A Shares; Distribution Plans --
Class B and Class C Shares; Custodian; Independent
Accountants (for Growth Fund); Independent Certified
Public Accountants (for Greater China Growth Fund and
combined prospectus); Other Information
17. .............. Brokerage Allocation and Other Portfolio Security Transactions
Practices
18. .............. Capital Stock and Other Securities Other Information
19. .............. Purchase, Redemption and Pricing of Determination of Net Asset Value; Principal
Securities Being Offered Underwriter; Services for Accumulation -- Class A
Shares; Service for Withdrawal; Service Plan -- Class
A Shares; Distribution Plans -- Class B and Class C
Shares
20. .............. Tax Status Taxes
21. .............. Underwriters Principal Underwriter
22. .............. Calculation of Performance Data Investment Performance
23. .............. Financial Statements Financial Statements
Part A
Information Required in a Prospectus
[Graphic Omitted]
EATON VANCE
GREATER CHINA GROWTH FUND
--------------------------------------------------------------------------------
EATON VANCE GREATER CHINA GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING
LONG-TERM CAPITAL APPRECIATION THROUGH INVESTMENT IN EQUITY SECURITIES OF
COMPANIES WHICH, IN THE OPINION OF THE INVESTMENT ADVISER, WILL BENEFIT FROM
THE ECONOMIC DEVELOPMENT AND GROWTH OF THE PEOPLE'S REPUBLIC OF CHINA. THE
FUND INVESTS ITS ASSETS IN GREATER CHINA GROWTH PORTFOLIO (THE "PORTFOLIO"), A
DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE
AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN
PORTFOLIO OF SECURITIES. A SIGNIFICANT PERCENTAGE OF THE PORTFOLIO WILL BE
INVESTED IN THE SECURITIES MARKETS OF COUNTRIES IN THE CHINA REGION, INCLUDING
HONG KONG, CHINA, TAIWAN, SOUTH KOREA, SINGAPORE, MALAYSIA, THAILAND,
INDONESIA AND THE PHILIPPINES. THE FUND IS A SEPARATE SERIES OF EATON VANCE
GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of
some or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information for the Fund, dated September 1, 1997, as
supplemented from time to time, has been filed with the Securities and
Exchange Commission (the "Commission") and is incorporated herein by
reference. The Statement of Additional Information is available without charge
from the Fund's principal underwriter, Eaton Vance Distributors, Inc. (the
"Principal Underwriter"), 24 Federal Street, Boston, MA 02110 (telephone (800)
225-6265). The sponsor and manager of the Fund and the administrator of the
Portfolio is Eaton Vance Management, 24 Federal Street, Boston, MA 02110 (the
"Manager"). The Portfolio's investment adviser is Lloyd George Investment
Management (Bermuda) Limited (the "Adviser"). The principal business address
of the Adviser is 3808 One Exchange Square, Central, Hong Kong.
--------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
[Enlarge/Download Table]
PAGE PAGE
Shareholder and Fund Expenses ......................... 2 How to Buy Shares ................................. 17
The Fund's Financial Highlights ....................... 4 How to Redeem Shares............................... 20
Investment Opportunities in the China Region .......... 6 Reports to Shareholders ........................... 22
The Fund's Investment Objective ....................... 7 The Lifetime Investing Account/Distribution
Investment Policies and Risks ......................... 8 Options ......................................... 22
Organization of the Fund and the Portfolio ............ 12 The Eaton Vance Exchange Privilege ................ 23
Management of the Fund and the Portfolio .............. 13 Eaton Vance Shareholder Services .................. 24
Distribution Plans .................................... 15 Distributions and Taxes ........................... 25
Valuing Shares......................................... 17 Performance Information ........................... 26
--------------------------------------------------------------------------------
PROSPECTUS DATED SEPTEMBER 1, 1997
SHAREHOLDER AND FUND EXPENSES
--------------------------------------------------------------------------------
[Enlarge/Download Table]
SHAREHOLDER TRANSACTION EXPENSES
-----------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
Maximum Sales Charge Imposed on Purchases of Shares
(as a percentage of offering price) 5.75% None None
Sales Charges Imposed on Reinvested Distributions None None None
Fees to Exchange Shares None None None
Maximum Contingent Deferred Sales Charge None 5.00% 1.00%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a
percentage of average daily net assets)
-----------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
Management Fees 1.24% 1.24% 1.24%
Rule 12b-1 Distribution and/or Service Fees 0.50% 0.97% 1.00%
Other Expenses 0.42% 0.42% 0.42%
--- --- ---
Total Operating Expenses 2.16% 2.63% 2.66%
==== ==== ====
EXAMPLES
An investor would pay the following expenses and, in the case of Class A shares, maximum initial sales charge
or, in the case of Class B and Class C shares, the applicable contingent deferred sales charge on a $1,000
investment, assuming (a) 5% annual return and (b) redemption at the end of each period:
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
1 Year $ 78 $ 77 $ 37
3 Years $121 $122 $ 83
5 Years $167 $160 $141
10 Years $292 $296 $299
An investor would pay the following expenses on the same investment, assuming (a) 5% annual return and (b) no
redemptions:
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
1 Year $ 78 $ 27 $ 27
3 Years $121 $ 82 $ 83
5 Years $167 $140 $141
10 Years $292 $296 $299
NOTES:
The table and Examples summarize the aggregate expenses of the Portfolio and
each Class of shares of the Fund and are designed to help investors understand
the costs and expenses they will bear, directly or indirectly, by investing in
the Fund. Information for Class B shares is based on its expenses for the most
recent fiscal year. Information for Class A and Class C shares is estimated
based upon the most recent fiscal year of its predecessor fund adjusted for
the multiple-class structure. Management Fees include management fees paid by
each Class and investment advisory and administration fees paid by the
Portfolio of 0.25%, 0.74% and 0.25%, respectively.
The Fund offers three classes of shares. Class A shares are sold subject to a
sales charge imposed at the time of purchase. No sales charge is payable at
the time of purchase on investments in Class A shares of $1 million or more.
However, a contingent deferred sales charge ("CDSC") of 1% will be imposed on
such investments in the event of certain redemptions within 12 months of
purchase. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase and Class C shares are sold subject to a
1% CDSC if redeemed within one year of purchase. The CDSC does not apply in
certain circumstances. See "How to Buy Shares" and "How to Redeem Shares".
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Examples to assume a 5% annual return, but actual return
will vary. Long-term holders of Class B and Class C shares may pay more than the
economic equivalent of the maximum front-end sales charge permitted by a rule of
the National Association of Securities Dealers, Inc. For further information
regarding the expenses of both the Fund and the Portfolio see "The Fund's
Financial Highlights", "Management of the Fund and the Portfolio", Distribution
Plans" and "How to Redeem Shares."
The Fund invests exclusively in the Portfolio. Other investment companies and
investors with different distribution arrangements are investing in the
Portfolio and others may do so in the future. See "Organization of the Fund
and the Portfolio".
THE FUND'S FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements that appear in the Fund's annual report to shareholders.
The Fund's annual financial statements have been audited by Deloitte & Touche
LLP, independent certified public accountants, as experts in accounting and
auditing. The annual financial statements and the independent auditors' report
are incorporated by reference into the Statement of Additional Information.
Further information regarding the performance of the Fund is contained in its
annual report to shareholders which may be obtained without charge by
contacting the Principal Underwriter. The financial information for each of
the periods presented in the Fund's Financial Highlights are for the Fund
prior to reclassification as Class B shares on September 1, 1997. Information
for Class A and Class C shares are not presented because these classes did not
exist prior to September 1, 1997. The Financial Highlights for Class A and
Class C will differ from the Financial Highlights for Class B shares due to
the different fees borne by each class.
------------------------------------------------------------------------------
[Enlarge/Download Table]
CLASS B SHARES
-----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1997 --------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993*
------------------- ------ ------ ------ ------
Net Asset Value, beginning of year $12.450 $ 11.890 $ 13.160 $ 10.540 $10.000
------- -------- -------- -------- -------
Income (loss) from operations --
Net investment loss $(0.119) $ (0.087) $ (0.038) $ (0.039) $(0.015)
Net realized and unrealized gain (loss)
on investments 2.049 0.647 (1.157) 2.684 0.555
------- -------- -------- -------- -------
Total income (loss) from operations $ 1.930 $ 0.560 $ (1.195) $ 2.645 $ 0.540
Less distributions --
In excess of net investment income(4) $(0.060) $ -- $ (0.065) $ -- $ --
In excess of net realized gain on
investments -- -- (0.010) (0.025) --
------- -------- -------- -------- -------
Total distributions $(0.060) $ -- $ (0.075) $ (0.025) $ --
------- -------- -------- -------- -------
Net Asset Value, end of year $14.320 $ 12.450 $ 11.890 $ 13.160 $10.540
======= ======== ======== ======== =======
Total Return (1) 15.54% 4.71% (9.06)% 25.08% 5.40%
Ratios/Supplemental Data:
Net assets, end of period (000 omitted) $289,696 $284,575 $324,258 $392,479 $63,672
Ratio of net expenses to average daily
net assets(2)(3) 2.65%+ 2.63% 2.47% 2.38% 2.21%+
Ratio of net expenses to average daily net
assets after custodian fee reduction(2)(3) 2.62%+ 2.57% -- -- --
Ratio of net investment loss to average
daily average net assets (1.24)%+ (0.51)% (0.02)% (0.55)% (1.44)%+
*For the period from the start of business, June 7, 1993, to August 31, 1993.
+Computed on an annualized basis.
(1)Total return is calculated assuming a purchase at the net asset value on the first day and a sale at
the net asset value on the last day of each period reported. Distributions, if any, are assumed to be
reinvested at the net asset value on the record date. Total return is computed on a non-annualized
basis.
(2)Includes the Fund's share of the Portfolio's allocated expenses.
(3)The expense ratios for the six months ended February 28, 1997 and the year ended August 31, 1996 have
been adjusted to reflect a change in reporting requirements. The new reporting guidelines require the
Fund, as well as the Portfolio, to increase its expense ratio by the effect of any expense offset
arrangements with its service providers. The expense ratios for each of the periods ended on or before
August 31, 1995 have not been adjusted to reflect this change.
(4)The Fund has followed the Statement of Position (SOP) 93-2: Determination, Disclosure and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital Distribution by Investment
Companies. The SOP requires that differences in the recognition or classification of income between the
financial statements and tax earnings and profits that result in temporary over-distributions for
financial statement purposes, are classified as distributions in excess of net investment income or
accumulated net realized gains.
[GRAPHIC OMITTED]
[MAP PAGE]
INVESTMENT OPPORTUNITIES IN THE CHINA REGION
-------------------------------------------------------------------------------
THE FOLLOWING IS A GENERAL DISCUSSION OF THE ECONOMIES AND SECURITIES MARKETS
IN WHICH THE PORTFOLIO MAY INVEST. There can be no assurance that the
Portfolio will be able to capitalize on the factors described herein. Opinions
expressed herein are the good faith opinions of the Portfolio's Adviser, Lloyd
George Investment Management (Bermuda) Limited. Unless otherwise indicated,
all amounts are expressed in United States dollars.
Over the past twenty years the performance of the major Asian securities
markets has generally been better than that of markets in Europe and the
United States. For over five years, the newly emerging securities markets of
the China Region have demonstrated significant growth in market
capitalization, in numbers of listed securities and in the volume of
transactions. Over the same period, the underlying economies of the region
have grown against a background of the high savings rates characteristic of
many Asian societies and generally moderate inflation. According to the Asian
Development Bank forecasts, the economies of Southeast Asia, excluding Japan,
are forecast to grow by 7.6% in 1997. The following graph shows the average
growth in gross domestic product ("GDP") from 1990 to 1996 for the main
countries in Southeast Asia, compared with the United States.
AVERAGE GROSS DOMESTIC PRODUCT GROWTH (1990-1996)
--------------------------------------------------------------------------------
THAILAND ................................................ 8.81%
CHINA ................................................... 10.13%
MALAYSIA ................................................ 8.77%
SINGAPORE ............................................... 8.41%
SOUTH KOREA ............................................. 7.80%
INDONESIA ............................................... 7.90%
TAIWAN .................................................. 6.47%
HONG KONG ............................................... 5.10%
PHILIPPINES ............................................. 2.79%
UNITED STATES ........................................... 1.95%
--------------------------------------------------------------------------------
SOURCE: LLOYD GEORGE MANAGEMENT (HONG KONG) LIMITED
A PARTICULARLY SIGNIFICANT FACTOR WITHIN THE REGION FOR MORE THAN A DECADE HAS
BEEN THE INCREASING INFLUENCE WHICH CHINA HAS HAD IN THE DETERMINATION OF THE
ECONOMIC DEVELOPMENT OF CERTAIN COUNTRIES. The links between China and Hong
Kong, between China and Taiwan and between China and other countries within
the region, where there is a significant Chinese element of the population,
have by now been strengthened to a degree which makes a reversal unlikely.
Moreover, although these links have been developed to a stage where economic
co-operation in trade operates smoothly, the full potential of the market,
both in terms of domestic consumption and of export growth, has hardly begun
to be realized. This potential presents investment opportunity for the Fund
and the Portfolio.
CHINA'S POPULATION, ESTIMATED AT 1.3 BILLION, IS THE HIGHEST OF ANY COUNTRY IN
THE WORLD. China has had for many centuries a well deserved reputation for
being closed to foreigners, with trade with the outside world being carried on
under terms of extreme restriction and under central control. Such conditions
were maintained in the first thirty years of the Communist regime which began
in 1949; however there have been several stages of evolution, from the
institution of an industrialization program in the 1950s to a modernization
policy commencing in 1978 which combined economic development with the
beginnings of opening the country to foreign investment and commerce. The
economic plans covering the last decade of the century include objectives to
quadruple the country's 1980 industrial and agricultural output by the year
2000, to increase the export element of the economy and to continue to open
the country with further development of the designated special investment
areas.
In order to attract foreign investment China has since 1978 designated certain
areas of the country where overseas investors can receive special investment
incentives and tax concessions. There are five Special Economic Zones
(Shenzhen, Shantou and Zhuhai in Guangdong Province, Xiamen in Fujian Province
and Hainan Island, which itself is a province). Fourteen coastal cities have
been designated as "open cities" and certain Open Economic Zones have been
established in coastal areas. Shanghai has established the Pudong New Area.
Twenty-seven High and New Technology Industrial Development Zones have been
approved where preferential treatment is given to enterprises which are
confirmed as technology intensive. As a result, foreign direct investment in
China has increased substantially in the last decade. The realized value of
foreign investment in China was over $37 billion in 1995.
AS A TRADE ENTREPOT AND FINANCE CENTER, HONG KONG'S VIABILITY HAS BEEN
INEXORABLY LINKED TO MAINLAND CHINA SINCE THE ESTABLISHMENT OF THE COLONY IN
1841. HONG KONG REMAINS CHINA'S LARGEST TRADE PARTNER AND ITS LEADING FOREIGN
INVESTOR. In 1995, visible trade between Hong Kong and China exceeded $980
billion. In recent years large numbers of Hong Kong based companies have set
up factories in the southern Chinese province of Guangdong, where it is
estimated that Hong Kong companies employ more than 2.5 million workers.
There also has been considerable growth in Chinese investment in Hong Kong
over the last decade, particularly in banking property, manufacturing and
infrastructure projects. In view of the growing economic interaction between
Hong Kong and Southern China, it is increasingly meaningful to consider the
concept of a Greater Hong Kong economy consisting of Hong Kong and Guangdong
Province, with a combined population of 72 million. The Basic Law, the outline
for Hong Kong's government post 1997, calls for Hong Kong's capitalist system
to remain intact for an additional fifty years after 1997 and sets out details
for the integration of Hong Kong into China after 1997.
TAIWAN HAS ALSO BENEFITTED FROM CHINA'S ECONOMIC LIBERALIZATION, GIVEN ITS
GEOGRAPHIC PROXIMITY AND ITS CULTURAL AND ETHNIC TIES. Taiwan companies
continue to be attracted by China's low labor costs, inexpensive land and less
rigid environmental rules. It is estimated that accumulated Taiwanese
investment in China exceeds $3 billion. Taiwanese listed companies include a
number which invested indirectly in China, primarily in the textiles, food and
rubber industries.
THE ADVISER BELIEVES THAT OTHER COUNTRIES IN THE CHINA REGION WILL ALSO
BENEFIT FROM THE REGION'S ECONOMIC GROWTH. Listed companies throughout Asia
are becoming increasingly active in China. There has also been considerable
foreign investment by Japanese companies in the Northeastern Provinces of
Liaoning, Jilin, and Heilongiang. As the major trading partner of these
provinces, Japan is primarily manufacturing light industrial products for re-
export. Major Japanese projects have been set up in the electronics and
natural resources sectors in China. While Thailand has been traditionally
known as a recipient of foreign investment, Chinese-managed listed companies
in the banking, textiles and packaging sectors have indicated their intention
of expanding into China. In Singapore, shipping, construction and hotel
companies have been the first sectors to do business in China while several
Malaysian companies in the manufacturing sector have invested in joint
ventures in China. The Adviser believes that growing China exposure will
enhance the earnings growth of such companies, making them attractive for
investment.
See the Statement of Additional Information for further information about the
economic characteristics of and risks associated with investing in China
Region countries.
THE FUND'S INVESTMENT OBJECTIVE
--------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL APPRECIATION. It
currently seeks to meet its investment objective by investing its assets in
the Greater China Growth Portfolio (the "Portfolio"), a separate registered
investment company which invests primarily in equity securities of companies
which, in the opinion of the Adviser, will benefit from the economic
development and growth of the People's Republic of China ("China"). A
significant percentage of the Portfolio's assets will be invested in the
securities markets of countries in the China region, consisting of Hong Kong,
China, Taiwan, South Korea, Singapore, Malaysia, Thailand, Indonesia and the
Philippines (collectively, the "China Region").
Investments in the China Region can involve significant risks that are
generally not involved with investments in U.S. companies. The Fund is
intended for long-term investors who can accept international investment risk
and little or no current income. The Fund is not intended to be a complete
investment program. A prospective investor should take into account personal
objectives and other investments when considering the purchase of Fund shares.
The Fund cannot assure achievement of its investment objective. The investment
objective of the Fund and the Portfolio are nonfundamental. China Region
investments may offer higher potential for gains and losses than investments
in the United States. See "Investment Policies and Risks" for further
information.
INVESTMENT POLICIES AND RISKS
--------------------------------------------------------------------------------
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF COMPANIES WHICH, IN THE OPINION OF THE ADVISER, WILL BENEFIT
FROM THE ECONOMIC DEVELOPMENT AND GROWTH OF CHINA ("CHINA GROWTH COMPANIES").
A significant percentage of the Portfolio's assets will be invested in the
securities markets of countries in the China Region (or Greater China). The
Portfolio will, under normal market conditions, invest at least 65% of its
total assets in equity securities of China growth companies ("Greater China
investments"). However, it is expected that substantially all of the
Portfolio's assets will normally be invested in equity securities, warrants
and equity options. China growth companies consist of companies that (a) are
located in or whose securities are principally traded in a China Region
country, (b)(i) have at least 50% of their assets in one or more China Region
countries or (ii) derive at least 50% of their gross sales revenues or profits
from providing goods or services to or from within one or more China Region
countries and (c)(i) have at least 35% of their assets in China, or (ii)
derive at least 35% of their gross sales revenues or profits from providing
goods or services to or from within China or (iii) have manufacturing or other
operations in China that are significant to such companies. Greater China
investments are typically listed on stock exchanges or traded in the over-the-
counter markets in countries in the China Region. The principal offices of
these companies, however, may be located outside these countries. The
Portfolio may invest 25% or more of its total assets in the securities of
issuers located in any one country in the China Region. The Portfolio has
invested more than 25% of its total assets in issuers located in Hong Kong,
but the Adviser currently expects the Portfolio ordinarily will not invest
more than 15% of its total assets in any other country.
Equity securities, for purposes of the 65% policy, will be limited to common
and preferred stocks; equity interests in trusts, partnerships, joint ventures
and other unincorporated entities or enterprises; special classes of shares
available only to foreign investors in markets that restrict the ownership by
foreign investors to certain classes of equity securities; convertible
preferred stocks; and other convertible investment grade debt instruments. A
debt security is investment grade if it is rated BBB or above by Standard &
Poor's Ratings Group ("S&P") or Baa or above by Moody's Investors Service,
Inc. ("Moody's") or determined to be of comparable quality by the Adviser.
Debt securities rated BBB by S&P or Baa by Moody's have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade debt securities. The Portfolio
will promptly dispose of any convertible debt instrument which is rated or
determined by the Adviser to be below investment grade subsequent to
acquisition by the Portfolio. Direct investments in China growth companies
will not exceed 10% of the Portfolio's total assets.
In addition to its investments in equity securities, the Portfolio may invest
up to 5% of its net assets in options on equity securities and up to 5% of its
net assets in warrants, including options and warrants traded in over-the-
counter markets. The Portfolio will not, under normal market conditions,
invest more than 35% of its total assets in equity securities other than
Greater China investments, warrants, options on securities and indices,
options on currency, futures contracts and options on futures, forward foreign
currency exchange contracts, currency swaps and any other non-equity
investments. The Portfolio will not invest in debt securities, other than
investment grade convertible debt instruments. The Portfolio will not invest
more than 10% of its assets in the securities of issuers in any country
outside the China Region.
The Portfolio may, for temporary defensive purposes, invest some or all of its
total assets in high grade debt securities of foreign and United States
companies, foreign governments and the U.S. Government, and their respective
agencies, instrumentalities, political subdivisions and authorities, as well
as in high quality money market instruments denominated in U.S. dollars or a
foreign currency.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S.
Government and domestic corporations. The values of foreign investments are
affected by changes in currency or exchange control regulations, application
of foreign tax laws, including withholding taxes, changes in governmental
administration or economic or monetary policy (in this country or abroad) or
changed circumstances in dealings between nations. Because investment in China
Region companies will usually involve currencies of foreign countries, the
value of assets of the Portfolio as measured by U.S. dollars may be adversely
affected by changes in currency exchange rates. Such rates may fluctuate
significantly over short periods of time causing the Portfolio's net asset
value to fluctuate as well. Costs are incurred in connection with conversions
between various currencies. In addition, foreign brokerage commissions,
custody fees and other costs of investing are generally higher than in the
United States, and foreign securities markets may be less liquid, more
volatile and less subject to governmental supervision than in the United
States. Investments in foreign issuers could be affected by other factors not
present in the United States, including expropriation, armed conflict,
confiscatory taxation, lack of uniform accounting and auditing standards and
potential difficulties in enforcing contractual obligations. Transactions in
the securities of foreign issuers could be subject to settlement delays and
risk of loss.
More than 25% of the Portfolio's total assets, adjusted to reflect currency
transactions and positions, may be denominated in any single currency.
Concentration in a particular currency will increase the Portfolio's exposure
to adverse developments affecting the value of such currency. An issuer of
securities purchased by the Portfolio may be domiciled in a country other than
the country in whose currency the securities are denominated.
Since the Portfolio will, under normal market conditions, invest at least 65%
of its total assets in Greater China investments, its investment performance
will be especially affected by events affecting China Region companies. The
value and liquidity of Greater China investments may be affected favorably or
unfavorably by political, economic, fiscal, regulatory or other developments
in the China Region or neighboring regions. The extent of economic
development, political stability and market depth of different countries in
the China Region varies widely. Certain China Region countries, including
China, Indonesia, Malaysia, the Philippines and Thailand, are either
comparatively underdeveloped or in the process of becoming developed. Greater
China investments typically involve greater potential for gain or loss than
investments in securities of issuers in developed countries. In comparison to
the United States and other developed countries, developing countries may have
relatively unstable governments and economies based on only a few industries.
Given the Portfolio's investments, the Portfolio will likely be particularly
sensitive to changes in China's economy as the result of any reversals of
economic liberalization, political unrest or changes in China's trading
status.
SECURITIES TRADING MARKETS. The securities markets in the China Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which
may limit the number of shares available for investment by the Portfolio. The
prices at which the Portfolio may acquire investments may be affected by
trading by persons with material non-public information and by securities
transactions by brokers in anticipation of transactions by the Portfolio in
particular securities. Similarly, volume and liquidity in the bond markets in
the China Region are less than in the United States and, at times, price
volatility can be greater than in the United States. The limited liquidity of
securities markets in the China Region may also affect the Portfolio's ability
to acquire or dispose of securities at the price and time it wishes to do so.
In addition, China Region securities markets are susceptible to being
influenced by large investors trading significant blocks of securities.
China Region stock markets are undergoing a period of growth and change which
may result in trading volatility and difficulties in the settlement and
recording of transactions, and in interpreting and applying the relevant law
and regulations. In particular, the securities industry in China is not well
developed. China has no securities laws of nationwide applicability. Municipal
securities regulations governing the Shanghai and Shenzhen securities
exchanges are new. Stockbrokers and other intermediaries in the China Region
may not perform as well as their counterparts in the United States and other
more developed securities markets.
CHINA REGION COUNTRY CONSIDERATIONS. The Portfolio will invest in China
Region countries with emerging economies or securities markets. Political and
economic structures in many of such countries are undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristic of the United States. Certain
of such countries may have, in the past, failed to recognize private property
rights and have at times nationalized or expropriated the assets of private
companies. As a result, the risks described above, including the risks of
nationalization or expropriation of assets, may be heightened. In addition,
unanticipated political or social developments may affect the values of the
Portfolio's investments in those countries and the availability to the
Portfolio of additional investments in those countries.
The laws of countries in the region relating to limited liability of corporate
shareholders, fiduciary duties of officers and directors, and the bankruptcy
of state enterprises are generally less well developed than or different from
such laws in the United States. It may be more difficult to obtain a judgement
in the courts of these countries than it is in the United States. Monsoons and
natural disasters also can affect the value of Portfolio investments.
Economies of countries in the China Region may differ favorably or unfavorably
from the U.S. economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency
and balance of payments position. As export-driven economies, the economies of
countries in the China Region are affected by developments in the economies of
their principal trading partners. For example, revocation by the United States
of China's "Most Favored Nation" trading status, which the U.S. President and
Congress reconsider annually, would adversely affect the trade and economic
development of China and Hong Kong. Political control of Hong Kong transferred
to China in mid-1997, and the actual or perceived success of this process will
affect investments in Hong Kong and elsewhere.
China governmental actions can have a significant effect on the economic
conditions in the China Region, which could adversely affect the value and
liquidity of the Portfolio's investments. Although the Chinese Government has
recently begun to institute legal and economic reform policies, there can be
no assurances that it will continue to pursue such policies or, if it does,
that such policies will succeed. China does not have a comprehensive system of
laws and some laws are not even publicly available.
The Fund and the Portfolio each intend to conduct its respective affairs in
such a manner to avoid taxation. Nevertheless, certain countries may require
withholding on dividends paid on portfolio securities and on realized capital
gains. In the past, these taxes have sometimes been substantial. There can be
no assurance that in the future the Portfolio will be able to repatriate its
income, gains or initial capital from these countries.
DIRECT INVESTMENTS. The Portfolio may invest up to 10% of its total assets in
direct investments in China growth companies. Direct investments include (i)
the private purchase from an enterprise of an equity interest in the
enterprise in the form of shares of common stock or equity interests in
trusts, partnerships, joint ventures or similar enterprises, and (ii) the
purchase of such an equity interest in an enterprise from a principal investor
in the enterprise. In each case, the Portfolio will, at the time of making the
investment, enter into a shareholder or similar agreement with the enterprise
and one or more other holders of equity interests in the enterprise. The
Adviser anticipates that these agreements will, in appropriate circumstances,
provide the Portfolio with the ability to appoint a representative to the
board of directors or similar body of the enterprise and for eventual
disposition of the Portfolio's investment in the enterprise. Such a
representative of the Portfolio will be expected to provide the Portfolio with
the ability to monitor its investment and protect its rights in the investment
and will not be appointed for the purpose of exercising management or control
of the enterprise.
Certain of the Portfolio's direct investments, particularly in China, will
probably include investments in smaller, less seasoned companies. These
companies may have limited product lines, markets or financial resources, or
they may be dependent on a limited management group. The Adviser does not
anticipate making direct investments in start-up operations, although it is
expected that in some cases the Portfolio's direct investments will fund new
operations for an enterprise which itself is engaged in similar operations or
is affiliated with an organization that is engaged in similar operations. Such
direct investments may be made in entities that are reasonably expected in the
foreseeable future to become China growth companies, either by expanding
current operations or establishing significant operations in China. Direct
investments may involve a high degree of business and financial risk that can
result in substantial losses. Because of the absence of any public trading
market for these investments, the Portfolio may take longer to liquidate these
positions at fair value than would be the case for publicly traded securities.
Furthermore, issuers whose securities are not publicly traded may not be
subject to public disclosure and other investor protection requirements
applicable to publicly traded securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return (which may be
considered speculative), to hedge against fluctuations in securities prices,
interest rates or currency exchange rates, or as a substitute for the purchase
or sale of securities or currencies. The Portfolio's transactions in
derivative instruments may be in the U.S. or abroad and may include the
purchase or sale of futures contracts on securities, securities indices, other
indices, other financial instruments or currencies; options on futures
contracts; exchange-traded and over-the-counter options on securities, indices
or currencies; and forward foreign currency exchange contracts. The
Portfolio's transactions in derivative instruments involve a risk of loss or
depreciation due to: unanticipated adverse changes in securities prices,
interest rates, the other financial instruments' prices or currency exchange
rates; the inability to close out a position; default by the counterparty;
imperfect correlation between a position and the desired hedge; tax
constraints on closing out positions; and portfolio management constraints on
securities subject to such transactions. The loss on derivative instruments
(other than purchased options) may substantially exceed the Portfolio's
initial investment in these instruments. In addition, the Portfolio may lose
the entire premium paid for purchased options that expire before they can be
profitably exercised by the Portfolio. The Portfolio incurs transaction costs
in opening and closing positions in derivative instruments. There can be no
assurance that the Adviser's use of derivative instruments will be
advantageous to the Portfolio.
The Portfolio may purchase call and put options on any securities in which the
Portfolio may invest or options on any securities index composed of securities
in which the Portfolio may invest. The Portfolio does not intend to write a
covered option on any security if after such transaction more than 15% of its
net assets, as measured by the aggregate value of the securities underlying
all covered calls and puts written by the Portfolio, would be subject to such
options. The Portfolio does not intend to purchase an option on any security
if, after such transaction, more than 5% of its net assets, as measured by the
aggregate of all premiums paid for all such options held by the Portfolio,
would be so invested.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5%
of the liquidation value of the Portfolio's investments, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
the Adviser determines that there is an established historical pattern of
correlation between the two currencies (or the basket of currencies and the
underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
The Portfolio may enter into currency swaps for both hedging and non-hedging
purposes. Currency swaps involve the exchange of rights to make or receive
payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of
correlation between its portfolio investments and its currency swap positions.
Currency swaps usually involve the delivery of the entire principal value of
one designated currency in exchange for the other designated currency.
Therefore, the entire principal value of a currency swap is subject to the
risk that the other party to the swap will default on its contractual delivery
obligations. The use of currency swaps is a highly specialized activity which
involves special investment techniques and risks. If the Adviser is incorrect
in its forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell) with respect to
its permitted investments, but currently intends to do so only with member
banks of the Federal Reserve System or with primary dealers in U.S. Government
securities. In the event of the bankruptcy of the other party to a repurchase
agreement, the Portfolio might experience delays in recovering its cash. To
the extent that, in the meantime, the value of the securities the Portfolio
purchased may have decreased, the Portfolio could experience a loss. At no
time will the Portfolio commit more than 15% of its net assets to repurchase
agreements which mature in more than seven days and other illiquid securities.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to
10% of its total assets, calculated at the time of purchase, in the securities
of other investment companies unaffiliated with the Adviser or the Manager
that have the characteristics of closed-end investment companies. The
Portfolio will indirectly bear its proportionate share of any management fees
paid by investment companies in which it invests in addition to the advisory
fee paid by the Portfolio. The value of closed-end investment company
securities, which are usually traded on an exchange, is affected by demand for
the securities themselves, independent of the demand for the underlying
portfolio assets and, accordingly, such securities can trade at a discount
from their net asset values.
INVESTMENT LIMITATIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions and policies which are enumerated in
detail in the Statement of Additional Information and which may not be changed
unless authorized by a shareholder vote and an investor vote, respectively.
Among these fundamental restrictions, neither the Fund nor the Portfolio may
(1) borrow money except from banks or through reverse repurchase agreements
and in an amount not exceeding one-third of its total assets; or (2) with
respect to 75% of its total assets, invest more than 5% of its total assets in
the securities of any one issuer, other than U.S. Government securities or, in
the case of the Fund, interests in the Portfolio, or acquire more than 10% of
the outstanding voting securities of any one issuer. Except with respect to
the Portfolio's borrowing limitation, investment restrictions are considered
at the time of acquisition of assets; the sale of portfolio assets generally
is not required in the event of a subsequent change in circumstances. As a
matter of fundamental policy the Portfolio will invest less than 25% of its
total assets in the securities, other than U.S. Government securities, of
issuers in any one industry. However, the Portfolio is permitted to invest 25%
or more of its total assets in (i) the securities of issuers located in any
one country in the China Region and (ii) assets denominated in the currency of
any one country.
Except for the fundamental investment restrictions and policies specifically
identified above and those enumerated in the Statement of Additional
Information, the investment objective and policies of the Fund and the
Portfolio are not fundamental policies and accordingly may be changed by the
Trustees of the Trust and the Portfolio without obtaining the approval of the
shareholders of the Fund or the investors in the Portfolio, as the case may
be. As a matter of nonfundamental policy, neither the Fund nor the Portfolio
(i) intends to borrow for leverage purposes or may purchase any securities if,
at the time of such purchase, permitted borrowings exceed 5% of the value of
the Portfolio's or the Fund's total assets, as the case may be, or (ii) is
permitted to invest more than 15% of its net assets in unmarketable
securities, over-the-counter options, repurchase agreements maturing in more
than seven days and other illiquid securities. Nevertheless, the Portfolio may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions. The Portfolio may lend
portfolio securities and engage in repurchase agreements and reverse
repurchase agreements but the Adviser has no current intention to do so.
Under the Investment Company Act of 1940 (the "1940 Act") and the rules
promulgated thereunder, the Portfolio's investments in the securities of any
company that, in its most recent fiscal year, derived more than 15% of its
gross revenues from securities-related activities is limited to 5% of any
class of the issuer's equity securities and 10% of the outstanding principal
amount of the issuer's debt securities, provided that the Portfolio's
aggregate investments in the securities of any such issuer do not exceed 5% of
the Portfolio's total assets. Some of the companies available for investment
in the China Region, including enterprises being privatized by such countries,
may be financial services businesses that engage in securities-related
activities. The Portfolio's ability to invest in such enterprises may thus be
limited.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST"), A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION
OF TRUST DATED MAY 25, 1989, AS AMENDED. The Trustees of the Trust are
responsible for the overall management and supervision of its affairs. The
Trust may issue an unlimited number of shares of beneficial interest (no par
value per share) in one or more series (such as the Fund). The Trustees of the
Trust have divided the shares of the Fund into multiple classes, including
Class A, Class B and Class C shares. Each class represents an interest in the
Fund, but is subject to different expenses, rights and privileges. See
"Distribution Plans" and "How to Buy Shares". The Trustees have the authority
under the Declaration of Trust to create additional classes of shares with
differing rights and privileges. As a result of a reorganization with separate
series of the Trust, the Fund commenced offering Class A, B and C shares on
September 1, 1997.
When issued and outstanding, the shares are fully paid and nonassessable by
the Trust and redeemable as described under "How to Redeem Shares." There are
no annual meetings of shareholders, but special meetings may be held as
required by law to elect Trustees and consider certain other matters.
Shareholders are entitled to one vote for each full share held. Fractional
shares may be voted proportionately. Shares of the Fund will be voted together
except that only shareholders of a particular class may vote on matters
affecting only that class. Shares have no preemptive or conversion rights and
are freely transferable. In the event of the liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets attributable to
that class available for distribution to shareholders.
The Trustees of the Trust have considered the advantages and disadvantages of
investing the assets of the Fund in the Portfolio, as well as the advantages
and disadvantages of the two-tier format. The Trustees believe that the
structure offers opportunities for growth in the assets of the Portfolio, may
afford the potential for economies of scale for the Fund (at least when the
assets of the Portfolio exceed $500 million) and may over time result in lower
expenses for the Fund.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. In
addition to selling an interest to the Fund, the Portfolio may sell interests
to other affiliated and non-affiliated mutual funds or institutional
investors. Such investors will invest in the Portfolio on the same terms and
conditions and will pay a proportionate share of the Portfolio's expenses.
However, the other investors investing in the Portfolio are not required to
sell their shares at the same public offering price as the Fund due to
variations in sales commissions and other operating expenses. Therefore, these
differences may result in differences in returns experienced by investors in
the various funds that invest in the Portfolio. Such differences in returns
are also present in other mutual fund structures, including funds that only
have multiple classes of shares. Information regarding other pooled investment
entities or funds which invest in the Portfolio may be obtained by contacting
the Principal Underwriter, 24 Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters
received from Fund shareholders. The Fund shall vote shares for which it
receives no voting instructions in the same proportion as the shares for which
it receives voting instructions. Other investors in the Portfolio may alone or
collectively acquire sufficient voting interests in the Portfolio to control
matters relating to the operation of the Portfolio, which may require the Fund
to withdraw its investment in the Portfolio or take other appropriate action.
Any such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution from the Portfolio). If
securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines
that the investment objective of the Portfolio is no longer consistent with
the investment objective of the Fund, such Trustees would consider what action
might be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's
assets in accordance with its investment objective. The Fund's investment
performance may be affected by a withdrawal of all its assets from the
Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE MANAGEMENT (HONG KONG) LIMITED ("LGM-HK") AS ITS INVESTMENT ADVISER.
Pursuant to a service agreement effective on January 1, 1996 between LGM-HK
and its affiliate, Lloyd George Investment Management (Bermuda) Limited
("LGIM-B"), LGIM-B, acting under the general supervision of the Portfolio's
Trustees, manages the Portfolio's investments and affairs. LGM-HK supervises
LGIM-B's performance of this function and retains its contractual obligations
under its investment advisory agreement with the Portfolio. LGM-HK and LGIM-B
are referred to collectively as the Advisers. The Portfolio is managed by
Adaline Mang-Yee Ko.
Each Adviser is registered as an investment adviser with the Commission and is
a subsidiary of Lloyd George Management (B.V.I.) Limited ("LGM"). LGM and its
subsidiaries act as investment adviser to various individual and institutional
clients with total assets under management of approximately $1.5 billion.
Eaton Vance's parent, Eaton Vance Corp., owns 22% of the Class A shares issued
by LGM.
LGM was established in 1991 to provide investment management services with
respect to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages Pacific Basin and
Asian portfolios for both private clients and institutional investors seeking
long-term capital growth. LGM's core investment team consists of nine
experienced investment professionals, based in Hong Kong, who have worked
together over a number of years successfully managing client portfolios in
Pacific Basin and Asian stock markets. LGM also has offices in Bombay, India
and London, England. The team has a unique knowledge of, and experience with,
Pacific Basin and Asian emerging markets. LGM is ultimately controlled by the
Hon. Robert J.D. Lloyd George, President and Trustee of the Portfolio and
Chairman and Chief Executive Officer of the Advisers. LGM's only activity is
portfolio management.
LGM and the Advisers have adopted a disciplined management style, providing a
blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, LGM and the Advisers maintain a network of international
contacts in order to monitor international economic and stock market trends
and offer clients a global management service. Personnel of the Advisers
include the following:
THE HONOURABLE ROBERT LLOYD GEORGE. Chairman. Born in London in 1952 and
educated at Eton College, where he was a King's Scholar, and at Oxford
University. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services Ltd. Previously, he spent four years with
Fiduciary Trust Company of New York researching international securities, in
the United States and Europe, for the United Nations Pension Fund. Mr. Lloyd
George is the author of numerous published articles and three books -- "A
Guide to Asian Stock Markets" (Longmans, Hong Kong, 1989), "The East West
Pendulum" (Woodhead - Faulkner, Cambridge, 1991) and "North South -- an
Emerging Markets Handbook" (Probus, England, 1994).
WILLIAM WALTER RALEIGH KERR. Finance Director and Chief Operating
Officer. Born in 1950 and educated at Ampleforth and Oxford. Mr. Kerr
qualified as a Chartered Accountant at Thomson McLintock & Co. before joining
The Oldham Estate Company plc as Financial Controller. Prior to joining LGM,
Mr. Kerr was a Director of Banque Indosuez's corporate finance subsidiary,
Financiere Indosuez Limited, in London. Prior to that Mr. Kerr worked for
First Chicago Limited.
SCOBIE DICKINSON WARD. Director. Born in 1966 and a cum laude graduate of both
Phillips Academy Andover, and Harvard University. Mr. Ward joined Indosuez
Asia Investment Services in 1989, where he managed the $100 million Himalayan
Fund, and the Indosuez Tasman Fund, investing in Australia and New Zealand.
Messrs. Ward and Lloyd George manage Eaton Vance's Emerging Markets Portfolio
and South Asia Portfolio (which invests in India and the Indian subcontinent).
M. F. TANG. Director. Born in 1946 and educated in Hong Kong. Mr. Tang is a
Fellow of the Chartered Association of Certified Accountants. Mr. Tang joined
LGM having worked for Australian Mutual Provident Society in Sydney where he
was a Portfolio Manager responsible for Asian Equities. Prior thereto Mr. Tang
worked for Barclays Australia Investment Services Ltd. From 1978 to 1986 Mr.
Tang worked for Barings International Investment Management and prior to that
he spent six years with Peat Marwick Mitchell & Co. Mr. Tang is fluent in the
Cantonese and Mandarin dialects of the Chinese language.
PAMELA CHAN. Director. Born in Hong Kong in 1957 and graduated from Mills
College in Oakland, California. She was an investment executive for Jardine
Fleming from 1982-1984 before moving to Australia where she worked as a Fund
Manager for Rothschild and Aetna. She joined Sun Life Assurance Society PLC in
England in 1987 where she was the head of South East Asian Equities and a
Director. She joined LGM in April 1994 where she is a portfolio manager and a
member of the Pension Management Committee.
ADALINE MANG-YEE KO. Director. Born in 1943 and educated at University of
Birmingham, England and at London Business School where she received her MBA.
Ms. Ko has over 13 years experience working with Far East Asian equities. From
1982-1988, she worked at Save & Prosper Group Ltd. as an investment manager.
In 1988, Ms. Ko transferred to Robert Fleming & Co. Ltd. In 1990, she was
promoted to Director of Fleming Investment Management Ltd. In 1992, she was
promoted to Head of the Pacific Region Portfolios Group where she supervised a
team of 5 with responsibility for over $1.5 billion in assets under
management. Ms. Ko joined LGM in 1995.
While the Portfolio is a New York trust, the Advisers, together with certain
Trustees and officers of the Portfolio, are not residents of the United
States, and substantially all of their respective assets may be located
outside of the United States. It may be difficult for investors to effect
service of process within the United States upon the individuals identified
above, or to realize judgments of courts of the United States predicated upon
civil liabilities of the Advisers and such individuals under the federal
securities laws of the United States. The Portfolio has been advised that
there is substantial doubt as to the enforceability in the countries in which
the Adviser and such individuals reside of such civil remedies and criminal
penalties as are afforded by the federal securities laws of the United States.
Since January 1, 1996, LGM-HK pays to LGIM-B the entire amount of the advisory
fee payable by the Portfolio under its investment advisory agreement with LGM-
HK. Under this agreement, LGM-HK is entitled to receive a monthly advisory fee
of 0.0625% (equivalent to 0.75% annually) of the average daily net assets of
the Portfolio up to $500 million, which fee declines at intervals above $500
million. As at August 31, 1996, the Portfolio had net assets of $510,297,559.
For the fiscal year ended August 31, 1996, the Portfolio paid LGM-HK advisory
fees equivalent to 0.74% of the Portfolio's average daily net assets for such
period.
LGIM-B also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. LGIM-B places the portfolio securities
transactions of the Portfolio with many broker-dealer firms and uses its best
efforts to obtain execution of such transactions at prices which are
advantageous to the Portfolio and at reasonably competitive commission rates.
Subject to the foregoing, LGIM-B may consider sales of shares of the Fund as a
factor in the selection of firms to execute portfolio transactions. The Trust,
the Portfolio and the Advisers have adopted Codes of Ethics relating to
personal securities transactions. The Codes permit personnel of the Advisers
to invest in securities (including securities that may be purchased or held by
the Portfolio) for their own accounts, subject to certain reporting and other
restrictions and procedures contained in such Codes.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF APPROXIMATELY $20 BILLION. Eaton Vance is a wholly-owned
subsidiary of Eaton Vance Corp., a publicly-held holding company which through
its subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Eaton Vance, acting under the general supervision of the Boards of Trustees of
the Trust and the Portfolio, manages and administers the business affairs of
the Fund and the Portfolio. Eaton Vance's services include monitoring and
providing reports to the Trustees of the Trust and the Portfolio concerning
the investment performance achieved by the Adviser for the Portfolio,
recordkeeping, preparation and filing of documents required to comply with
federal and state securities laws, supervising the activities of the transfer
agent of the Fund and the custodian of the Portfolio, providing assistance in
connection with Trustees' and shareholders' meetings and other management and
administrative services necessary to conduct the business of the Fund and the
Portfolio. Eaton Vance also furnishes for the use of the Fund and the
Portfolio office space and all necessary office facilities, equipment and
personnel for managing and administering the business affairs of the Fund and
the Portfolio. Eaton Vance does not provide any investment management or
advisory services to the Portfolio or the Fund.
Under its management contract with the Fund, Eaton Vance receives a monthly
fee in the amount of 1/48 of 1% (equal to 0.25% annually) of the average
daily net assets of the Fund up to $500 million, which fee declines at
intervals above $500 million. For the fiscal year ended August 31, 1996, Eaton
Vance earned management fees equivalent to 0.25% of the Fund's average daily
net assets for such period. In addition, under its administration agreement
with the Portfolio, Eaton Vance receives a monthly fee in the amount of 1/48
of 1% (equal to 0.25% annually) of the average daily net assets of the
Portfolio up to $500 million, which fee declines at intervals above $500
million. For the fiscal year ended August 31, 1996, Eaton Vance earned
administration fees from the Portfolio equivalent to 0.25% of the Portfolio's
average daily net assets for such period.
The Fund and the Portfolio, as the case may be, will each be responsible for
all respective costs and expenses not expressly stated to be payable by the
Advisers under the investment advisory agreement and Eaton Vance under the
management contract or the administration agreement or by the Principal
Underwriter under the distribution agreement.
DISTRIBUTION PLANS
--------------------------------------------------------------------------------
The Trust has adopted a Distribution Plan (the "Class A Plan") for the Fund's
Class A shares that is designed to meet the requirements of Rule 12b-1 under
the 1940 Act. THE CLASS A PLAN PROVIDES FOR THE PAYMENT OF A MONTHLY
DISTRIBUTION FEE TO THE PRINCIPAL UNDERWRITER IN AN AMOUNT EQUAL TO THE
AGGREGATE OF (a) .50% OF THAT PORTION OF CLASS A AVERAGE DAILY NET ASSETS FOR
ANY FISCAL YEAR WHICH IS ATTRIBUTABLE TO ITS SHARES WHICH HAVE REMAINED
OUTSTANDING FOR LESS THAN ONE YEAR AND (b) .25% OF THAT PORTION OF CLASS A
AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR WHICH IS ATTRIBUTABLE TO ITS
SHARES WHICH HAVE REMAINED OUTSTANDING FOR MORE THAN ONE YEAR. Aggregate
payments to the Principal Underwriter under the Class A Plan are limited to
those permissible, pursuant to a rule of the National Association of
Securities Dealers, Inc.
The Class A Plan also provides that the Class will pay a quarterly service fee
to the Principal Underwriter in an amount equal on an annual basis to .25% of
that portion of its average daily net assets for any fiscal year which is
attributable to Class A shares which have remained outstanding for more than
one year; from such service fee the Principal Underwriter expects to pay a
quarterly service fee to Authorized Firms, as compensation for providing
personal services and/or the maintenance of shareholder accounts, with respect
to shares sold by such Firms which have remained outstanding for more than one
year. The Trustees of the Trust have implemented the Class A Plan by
authorizing each Class A to make quarterly service fee payments to the
Principal Underwriter not to exceed on an annual basis .25% of that portion of
average daily net assets for any fiscal year which is attributable to Class A
shares which have remained outstanding for more than one year. Service fee
payments to Authorized Firms will be in addition to sales charges on Class A
shares which are reallowed to Authorized Firms. If the Class A Plan is
terminated or not continued in effect, the Class has no obligation to
reimburse the Principal Underwriter for amounts expended by the Principal
Underwriter in distributing Class A shares.
The Trust has also adopted Distribution Plans ("Class B Plan" and "Class C
Plan") pursuant to Rule 12b-1 under the 1940 Act for the Fund's Class B and
Class C shares. Each Plan is designed to permit an investor to purchase shares
through an Authorized Firm without incurring an initial sales charge and at
the same time permit the Principal Underwriter to compensate Authorized Firms
in connection therewith. UNDER SUCH PLANS, CLASS B AND CLASS C EACH PAYS THE
PRINCIPAL UNDERWRITER A FEE, ACCRUED DAILY AND PAID MONTHLY, AT AN ANNUAL RATE
NOT EXCEEDING .75% OF ITS AVERAGE DAILY NET ASSETS TO FINANCE THE DISTRIBUTION
OF ITS SHARES. Such fees compensate the Principal Underwriter for sales
commissions paid by it to Authorized Firms on the sale of Class B and Class C
shares and for interest expenses. Under the Class B Plan, the Principal
Underwriter uses its own funds to pay sales commissions (except on exchange
transactions and reinvestments) to Authorized Firms at the time of sale equal
to 4% of the purchase price of the Class B shares sold by such Firms. Under
the Class C Plan, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) sales commissions (except on exchange transactions and
reinvestments) at the time of sale equal to .75% of the purchase price of the
Class C shares sold by such Firm, and (b) monthly sales commissions
approximately equivalent to 1/12 of .75% of the value of Class C shares sold
by such Firm and remaining outstanding for at least one year. During the first
year after a purchase of Class C shares, the Principal Underwriter will retain
the sales commission as reimbursement for the sales commissions made to
Authorized Firms at the time of sale. CDSCs paid to the Principal Underwriter
will be used to reduce amounts owed to it. Because payments to the Principal
Underwriter under the Plans are limited, uncovered distribution charges (sales
commissions paid by the Principal Underwriter plus interest, less the above
fees and CDSCs received by it) may exist indefinitely. During the fiscal year
ended August 31, 1996, Class B (which was then a separate series fund) paid or
accrued sales commissions equivalent to .75% of average daily net assets. As
at August 31, 1996, the outstanding uncovered distribution charges of the
Principal Underwriter on such day calculated under the Class B Plan amounted
to approximately $10,789,000 (equivalent to 3.8% of net assets on such day).
For more information see the Statement of Additional Information.
THE CLASS B AND CLASS C PLANS ALSO AUTHORIZE EACH SUCH CLASS TO MAKE PAYMENTS
OF SERVICE FEES TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER
PERSONS IN AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR
PERSONAL SERVICES, AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS. Under the
Class B Plan, this fee is paid quarterly in arrears based on the value of
Class B shares sold by such persons and remaining outstanding for at least
twelve months. Under the Class C Plan, the Principal Underwriter currently
expects to pay to an Authorized Firm (a) a service fee (except on exchange
transactions and reinvestments) at the time of sale equal to .25% of the
purchase price of the Class C shares sold by such Firm, and (b) monthly
service fees approximately equivalent to 1/12 of .25% of the value of Class C
shares sold by such Firm and remaining outstanding for at least one year.
During the first year after a purchase of Class C shares, the Principal
Underwriter will retain the service fee as reimbursement for the service fee
payment made to Authorized Firms, at the time of sale. For the fiscal year
ended August 31, 1996, Class B paid or accrued service fees under its Plan
equivalent to .22% of average daily net assets for such year.
Distribution of Class B and Class C shares by the Principal Underwriter will
also be encouraged by the payment by LGIM-B to the Principal Underwriter of
amounts equivalent to .15% and .125%, respectively of Class B and Class C's
annual average daily net assets. Such payments will be made from LGIM-B's own
resources, not Class assets. The aggregate amounts of such payments are a
deduction in calculating the outstanding uncovered distribution charges of the
Principal Underwriter under each Plan and, therefore, will benefit
shareholders when such charges exist. Such payments will be made in
consideration of the Principal Underwriter's distribution efforts.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed
by the Principal Underwriter. In some instances, such additional incentives
may be offered only to certain Authorized Firms whose representatives sell or
are expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
The Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of shares at any time. In determining
whether any such action should be taken, the Trust's management intends to
consider all relevant factors, including without limitation the size of the
Fund or class, the investment climate and market conditions, the volume of
sales and redemptions of shares, and in the case of Class B and Class C
shares, the amount of uncovered distribution charges of the Principal
Underwriter. The Plans may continue in effect and payments may be made under
the Plans following any such suspension, discontinuance or limitation of the
offering of shares; however, there is no contractual obligation to continue
any Plan for any particular period of time. Suspension of the offering of
shares would not, of course, affect a shareholder's ability to redeem shares.
VALUING SHARES
--------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). Each Class's net asset value per
share is determined by the Trust's custodian, Investors Bank & Trust Company
("IBT") (as agent for the Trust) in the manner authorized by the Trustees of
the Trust. The net asset value of each Class is computed by dividing the value
of that Class's pro rata share of the Fund's total assets, less its
liabilities, by the number of shares of that Class outstanding. Because the
Fund invests its assets in an interest in the Portfolio, each Class's net
asset value will reflect the value of its interest in the Portfolio (which, in
turn, reflects the underlying value of the Portfolio's assets and
liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per share and, for Class A shares, the
public offering price based thereon. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio)
based on market or fair value in the manner authorized by the Trustees of the
Portfolio. Exchange listed securities generally are valued at closing sale
prices. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING
THE NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY SHARES
--------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE
FOR ACCEPTABLE SECURITIES. Class A shares are purchased at the effective
public offering price, which price is based on the effective net asset value
per share plus the applicable sales charge. The sales charge is divided
between the Authorized Firm and the Principal Underwriter. Class B and Class C
shares are purchased at the net asset value per share next determined after an
order is effective. An Authorized Firm may charge its customers a fee in
connection with transactions executed by that Firm. The Trust may suspend the
offering of shares at any time and may refuse an order for the purchase of
shares.
An initial investment must be at least $1,000. Once an account has been
established the investor may send investments of $50 or more at any time
directly to the Trust's transfer agent (the "Transfer Agent") as follows:
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123.
The $1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans,
the Fund may accept initial investments from Class B and Class C shares of
less than $1,000 on the part of an individual participant. In the event a
shareholder who is a participant of such a plan terminates participation in
the plan, his or her shares will be transferred to a regular individual
account. However, such account will be subject to the right of redemption by
the Trust as described below under "How to Redeem Shares."
CLASS A SHARES. The sales charge may vary depending on the size of the
purchase and the number of shares of Class A shares of Eaton Vance funds the
investor may already own, any arrangement to purchase additional shares during
a 13-month period or special purchase programs. Complete details of how
investors may purchase shares at reduced sales charges under a Statement of
Intention or Right of Accumulation are available from Authorized Firms or the
Principal Underwriter.
The current sales charges and dealer commissions are:
[Enlarge/Download Table]
SALES CHARGE SALES CHARGE DEALER COMMISSION
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
------------------------------------------------------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75 4.99 4.00
$100,000 but less than $250,000 3.75 3.90 3.00
$250,000 but less than $500,000 3.00 3.10 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more 0.00* 0.00* See Below**
*No sales charge is payable at the time of purchase on investments of $1
million or more. A CDSC of 1% will be imposed on such investments in the
event of certain redemptions within 12 months of purchase.
**A commission on sales of $1 million or more will be paid as follows: 1.00%
on amounts of $1 million or more but less than $3 million; plus 0.50% on
amounts from $3 million but less than $5 million; plus 0.25% on amounts of
$5 million or more. Purchases of $1 million or more will be aggregated over
a 12-month period for purposes of determining the commission to be paid.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in
the Securities Act of 1933.
Class A shares may be sold at net asset value to current and retired Directors
and Trustees of Eaton Vance funds, including the Portfolio; to clients and
current and retired officers and employees of Eaton Vance, its affiliates and
other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company or series thereof with the Fund, (2) to investors making an
investment as part of a fixed fee program whereby an entity unaffiliated with
the Principal Underwriter provides multiple investment services, such as
management, brokerage and custody, and (3) to investment advisors, financial
planners or other intermediaries who place trades for their own accounts or
the accounts of their clients and who charge a management, consulting or other
fee for their services; clients of such investment advisors, financial
planners or other intermediaries who place trades for their own accounts if
the accounts are linked to the master account of such investment advisor,
financial planner or other intermediary on the books and records of the broker
or agent; and retirement and deferred compensation plans and trusts used to
fund those plans, including, but not limited to, those defined in Section
401(a), 403(b) or 457 of the Internal Revenue Code of 1986, as amended (the
"Code") and "rabbi trusts." The Trust's Principal Underwriter may pay
commissions to Authorized Firms who initiate and are responsible for purchases
of Class A shares of the Fund by Eligible Plans of up to 1.00% of the amount
invested in such shares.
No sales charge is payable at the time of purchase where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton
Vance if the redemption occurred no more than 60 days prior to the purchase of
Class A shares and the redeemed shares were potentially subject to a sales
charge. A CDSC of 0.50% will be imposed on such investments in the event of
certain redemptions within 12 months of purchase and the Authorized Firm will
be paid a commission on such sales of 0.50% of the amount invested.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an
application, makes a Statement of Intention to invest a specified amount over
a thirteen-month period in Class A shares, then out of the initial purchase
(or subsequent purchases if necessary) 5% of the dollar amount specified on
the application shall be held in escrow by the escrow agent in the form of
such shares (computed to the nearest full share at the public offering price
applicable to the initial purchase hereunder) registered in the investor's
name. All income dividends and capital gains distributions on escrowed shares
will be paid to the investor or to the investor's order. When the minimum
investment so specified is completed, the escrowed shares will be delivered to
the investor. If the investor has an accumulation account the shares will
remain on deposit under the investor's account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such
difference in sales charge, the escrow agent will redeem an appropriate number
of the escrowed shares in order to realize such difference. Full shares
remaining after any such redemption together with any excess cash proceeds of
the shares so redeemed will be delivered to the investor or to the investor's
order by the escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation an Authorized Firm other than the original Firm is placing the
orders, the adjustment will be made only on those shares purchased through the
Firm then handling the investor's account.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Manager, in exchange for Fund
shares. The minimum value of securities (or securities and cash) accepted for
deposit is $5,000. Securities accepted will be sold on the day of their
receipt or as soon thereafter as possible. The number of Fund shares to be
issued in exchange for securities will be the aggregate proceeds from the sale
of such securities, divided by the applicable public offering price of Class A
shares or net asset value of Class B and Class C shares on the day such
proceeds are received. Eaton Vance will use reasonable efforts to obtain the
then current market price for such securities, but does not guarantee the best
available price. Eaton Vance will absorb any transaction costs, such as
commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
[Enlarge/Download Table]
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance Greater China Growth Fund
Investors Bank & Trust Company (state Class)
For A/C Eaton Vance Greater China Growth Fund Physical Securities Processing Settlement Area
(state Class) 200 Clarendon Street
Boston, MA 02116
Investors who are contemplating an exchange of securities for shares, or their
representatives, must contact Eaton Vance to determine whether the securities
are acceptable before forwarding such securities. Eaton Vance reserves the
right to reject any securities. Exchanging securities for shares may create a
taxable gain or loss. Each investor should consult his or her tax adviser with
respect to the particular federal, state and local tax consequences of
exchanging securities.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM SHARES
--------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123, during its business hours a written request for redemption in good
order, plus any share certificates with executed stock powers. Good order
means that all relevant documents must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed
by a member of either the Securities Transfer Association's STAMP program or
the New York Stock Exchange's Medallion Signature Program, or certain banks,
savings and loan institutions, credit unions, securities dealers, securities
exchanges, clearing agencies and registered securities associations as
required by a Commission regulation and acceptable to the Transfer Agent. In
addition, in some cases, good order may require the furnishing of additional
documents such as where shares are registered in the name of a corporation,
partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Trust, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a
repurchase order with the Authorized Firm, which may charge a fee. The value
of such shares is based upon the net asset value calculated after the
Principal Underwriter, as the Trust's agent, receives the order. It is the
Authorized Firm's responsibility to transmit promptly repurchase orders to the
Principal Underwriter. Throughout this Prospectus, the word "redemption" is
generally meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the Trust will make payment in cash for the net asset value of
the shares as of the date determined above, reduced by the amount of any
applicable CDSC (described below) and any federal income tax required to be
withheld. While normally payments will be made in cash for redeemed shares,
the Trust, subject to compliance with applicable regulations, has reserved the
right to pay the redemption price of shares of the Fund, either totally or
partially, by a distribution in kind of readily marketable securities
withdrawn from the Portfolio. The securities so distributed would be valued
pursuant to the Portfolio's valuation procedures. If a shareholder received a
distribution in kind, the shareholder could incur brokerage or other charges
in converting the securities to cash.
If shares were recently purchased, the proceeds of a redemption will not be
sent until the check (including a certified or cashier's check) received for
the shares purchased has cleared. Payment for shares tendered for redemption
may be delayed up to 15 days from the purchase date when the purchase check
has not yet cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Trust reserves the
right to redeem accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make
additional purchases. However, no such redemptions would be required by the
Trust if the cause of the low account balance was a reduction in the net asset
value of shares. No CDSC will be imposed with respect to such involuntary
redemptions.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A. If Class A shares have been
purchased at net asset value with no initial sales charge by virtue of the
purchase having been in the amount of $1 million or more and are redeemed
within 12 months of purchase, a CDSC of 1% will be imposed on such redemption.
If shares were purchased at net asset value because the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton
Vance (as described under "How to Buy Shares"), and are redeemed within 12
months of purchase, a CDSC of 0.50% will be imposed on such redemption. The
CDSC will be imposed on an amount equal to the lesser of the current market
value or the original purchase price of the shares redeemed. Accordingly, no
CDSC will be imposed on increases in account value above the initial purchase
price, including any distributions that have been reinvested in additional
shares. In determining whether a CDSC is applicable to a redemption, it will
be assumed that redemptions are made first from any shares in the
shareholder's account that are not subject to a CDSC. The CDSC will be
retained by the Principal Underwriter.
The CDSC imposed on Class A shares is waived for redemptions involving certain
liquidation, merger or acquisition transactions involving other investment
companies. If a shareholder reinvests redemption proceeds in accordance with
the conditions set forth under "Eaton Vance Shareholder Services --
Reinvestment Privilege," the shareholder's account will be credited with the
amount of any CDSC paid on such redeemed shares.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B. Class B Shares redeemed within
the first six years of their purchase (except shares acquired through the
reinvestment of distributions) generally will be subject to a CDSC. This CDSC
is imposed on any redemption, the amount of which exceeds the aggregate value
at the time of redemption of (a) all shares in the account purchased more than
six years prior to the redemption, (b) all shares in the account acquired
through reinvestment of distributions, and (c) the increase, if any, in the
value of all other shares in the account (namely those purchased within the
six years preceding the redemption) over the purchase price of such shares.
Redemptions are processed in a manner to maximize the amount of redemption
proceeds which will not be subject to a CDSC. That is, each redemption will be
assumed to have been made first from the exempt amounts referred to in clauses
(a), (b) and (c) above, and second through liquidation of those shares in the
account referred to in clause (c) on a first-in-first-out basis. Any CDSC
which is required to be imposed on Class B share redemptions will be made in
accordance with the following schedule:
YEAR OF REDEMPTION AFTER PURCHASE CDSC
--------------------------------------------------------------------------------
First or Second .......................................................... 5%
Third .................................................................... 4%
Fourth ................................................................... 3%
Fifth .................................................................... 2%
Sixth .................................................................... 1%
Seventh and following .................................................... 0%
In calculating the CDSC upon the redemption of Class B shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," the CDSC schedule applicable to the shares at the time of purchase
will apply and the purchase of shares acquired in the exchange is deemed to
have occurred at the time of the original purchase of the exchanged shares.
No CDSC will be imposed on Class B shares which have been sold to Eaton Vance
or its affiliates, or to their respective employees or clients. The CDSC will
also be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholder Services"), (2) as part of a required distribution
from a tax-sheltered retirement plan, or (3) following the death of all
beneficial owners of such shares, provided the redemption is requested within
one year of death (a death certificate and other applicable documents may be
required). In addition, shares acquired as a result of a merger or liquidation
of another Eaton Vance sponsored fund will have a CDSC imposed at the same
rate as would have been imposed in the prior fund.
CONTINGENT DEFERRED SALES CHARGE -- CLASS C. Class C shares redeemed within
the first year of their purchase (except shares acquired through the
reinvestment of distributions) generally will be subject to a CDSC equal to 1%
of the net asset value of the redeemed shares. This CDSC is imposed on any
redemption the amount of which exceeds the aggregate value at the time of
redemption of (a) all shares in the account purchased more than one year prior
to the redemption, (b) all shares in the account acquired through reinvestment
of distributions, and (c) the increase, if any, of value in the other shares
in the account (namely those purchased within the year preceding the
redemption) over the purchase price of such shares. Redemptions are processed
in a manner to maximize the amount of redemption proceeds which will not be
subject to a CDSC. That is, each redemption will be assumed to have been made
first from the exempt amounts referred to in clauses (a), (b) and (c) above,
and second through liquidation of those shares in the account referred to in
clause (c) on a first-in-first out basis.
In calculating the CDSC upon the redemption of Class C shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," the purchase of shares acquired in the exchange is deemed to have
occurred at the time of the original purchase of the exchanged shares.
No CDSC will be imposed on Class C shares which have been sold to Eaton Vance
or its affiliates, or to their respective employees or clients. The CDSC will
also be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholder Services"), (2) as part of a distribution from a
retirement plan qualified under Section 401, 403(b) or 457 of the Code, or (3)
as part of a minimum required distribution from other tax-sheltered retirement
plans.
REPORTS TO SHAREHOLDERS
-------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual
reports are audited by the Fund's independent certified public accountants.
Shortly after the end of each calendar year, the Fund will furnish its
shareholders with information necessary for preparing federal and state income
tax returns. Consistent with applicable law, duplicate mailings of shareholder
reports and certain other Fund information to shareholders residing at the
same address may be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
--------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. The Trust will not issue share certificates
except upon request.
Each time a transaction takes place in a shareholder's account, the
shareholder will receive a statement showing complete details of the
transaction and the current balance in the account. (Under certain investment
plans, statements may be sent only quarterly). THE LIFETIME INVESTING ACCOUNT
ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING
A CHECK FOR $50 OR MORE to the Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of
the shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Trust's dividend disbursing agent, First Data Investor Services Group, P.O.
Box 5123, Westborough, MA 01581-5123. The currently effective option will
appear on each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more
will be reinvested in the account in shares at the then current net asset
value. Furthermore, the distribution option on the account will be
automatically changed to the Share Option until such time as the shareholder
selects a different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional
shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.
"STREET NAME" ACCOUNTS. If shares are held in a "street name" account with an
Authorized Firm, all recordkeeping, transaction processing and payments of
distributions relating to the beneficial owner's account will be performed by
the Authorized Firm, and not by the Trust and its Transfer Agent. Since the
Trust will have no record of the beneficial owner's transactions, a beneficial
owner should contact the Authorized Firm to purchase, redeem or exchange
shares, to make changes in or give instructions concerning the account, or to
obtain information about the account. The transfer of shares in a "street
name" account to an account with another Authorized Firm or to an account
directly with the Trust involves special procedures and will require the
beneficial owner to obtain historical purchase information about the shares in
the account from the Authorized Firm. Before establishing a "street name"
account with an Authorized Firm, or transferring the account to another
Authorized Firm, an investor wishing to reinvest distributions should
determine whether the Authorized Firm which will hold the shares allows
reinvestment of distributions in "street name" accounts.
THE EATON VANCE EXCHANGE PRIVILEGE
--------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A shares may
also be exchanged for shares of Eaton Vance Cash Management Fund, Eaton Vance
Income Fund of Boston, Eaton Vance Municipal Bond Fund L.P., and Eaton Vance
Tax Free Reserves. Class B shares may also be exchanged for shares of Eaton
Vance Prime Rate Reserves, which are subject to an early withdrawal charge, or
shares of Eaton Vance Money Market Fund, which are subject to a CDSC, and
shares of a money market fund sponsored by an Authorized Firm and approved by
the Principal Underwriter (an "Authorized Firm fund"). Class C shares may also
be exchanged for shares of Eaton Vance Money Market Fund. Any such exchange
will be made on the basis of the net asset value per share of each fund/class
at the time of the exchange (plus, in the case of an exchange made within six
months of the date of purchase of Class A shares subject to an initial sales
charge, an amount equal to the difference, if any, between the sales charge
previously paid on the shares being exchanged and the sales charge payable on
the shares being acquired). Exchange offers are available only in States where
shares of the fund being acquired may be legally sold. Exchanges are subject
to any restrictions or qualifications set forth in the current prospectus of
any such fund.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Trust does not permit the
exchange privilege to be used for "Market Timing" and may terminate the
exchange privilege for any shareholder account engaged in Market Timing
activity. Any shareholder account for which more than two round-trip exchanges
are made within any twelve month period will be deemed to be engaged in Market
Timing. Furthermore, a group of unrelated accounts for which exchanges are
entered contemporaneously by a financial intermediary will be considered to be
engaged in Market Timing.
The Transfer Agent makes exchanges at the next determined net asset value
after receiving an exchange request in good order (see "How to Redeem
Shares"). Consult the Transfer Agent for additional information concerning the
exchange privilege. Applications and prospectuses of other funds are available
from Authorized Firms or the Principal Underwriter. The prospectus for each
fund describes its investment objectives and policies, and shareholders should
obtain a prospectus and consider these objectives and policies carefully
before requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of
the original purchase of the exchanged shares, except that time during which
shares are held in an Authorized Firm fund will not be credited toward
completion of the CDSC period. For the CDSC schedule applicable to the Eaton
Vance Class B Funds (except Prime Rate Reserves and Class B shares of the
Limited Maturity Funds), see "How to Redeem Shares." The CDSC or early
withdrawal charge schedule applicable to Prime Rate Reserves and Class B
shares of the Limited Maturity Funds is 3%, 2.5%, 2% or 1% in the event of a
redemption occurring in the first, second, third or fourth year, respectively,
after the original share purchase.
Telephone exchanges are accepted by the Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect
such exchanges, call the Transfer Agent at 800-262-1122, Monday through
Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by
telephone exchange must be registered in the same name(s) and with the same
address as the shares being exchanged. Neither the Trust, the Principal
Underwriter nor the Transfer Agent will be responsible for the authenticity of
exchange instructions received by telephone, provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
--------------------------------------------------------------------------------
THE TRUST OFFERS THE FOLLOWING SERVICES WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter.
The cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund or Class as an expense to all
shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order the Fund
and Class being purchased may be mailed directly to the Transfer Agent, First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 at any
time -- whether or not distributions are reinvested. The name of the
shareholder, the Fund and Class and the account number should accompany each
investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments
of $50 or more may be made automatically each month or quarter from a
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks. For Class B and Class C shares, any such
withdrawals may not in the aggregate exceed 12% annually of the account
balance at the time the plan is established. Such amount will not be subject
to the Class B or Class C CDSC. See "How to Redeem Shares." A minimum deposit
of $5,000 in shares is required. The maintenance of a withdrawal plan
concurrently with purchases of additional Class A shares would be
disadvantageous because of the sales charge included in such purchase.
STATEMENT OF INTENTION: Purchases of $50,000 or more of Class A shares made
over a 13-month period are eligible for reduced sales charges. See "How to Buy
Shares -- Statement of Intention and Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges on
Class A shares when the current market value of holdings (shares at current
offering price), plus new purchases, reaches $50,000 or more. Class A shares
of the Eaton Vance funds listed under "The Eaton Vance Exchange Privilege" may
be combined under the Statement of Intention and Right of Accumulation.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest,
with credit for any CDSCs paid on the redeemed shares, any portion or all of
the redemption proceeds (plus that amount necessary to acquire a fractional
share to round off the purchase to the nearest full share) in the same shares
(or for Class A shares in Class A shares of any other Eaton Vance fund),
provided that the reinvestment is effected within 60 days after such
redemption and the privilege has not been used more than once in the prior 12
months. Shares are sold to a reinvesting shareholder at the next determined
net asset value following timely receipt of a written purchase order by the
Principal Underwriter or by the Trust (or by the Trust's Transfer Agent). To
the extent that any shares are sold at a loss and the proceeds are reinvested
in shares (or other shares are acquired) within the period beginning 30 days
before and ending 30 days after the date of the redemption, some or all of the
loss generally will not be allowed as a tax deduction. Shareholders should
consult their tax advisers concerning the tax consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Class A and Class C shares of the Fund are
available for purchase in connection with certain tax-sheltered retirement
plans. Detailed information concerning these plans, including certain
exceptions to minimum investment requirements, and copies of the plans are
available from the Principal Underwriter. This information should be read
carefully and consultation with an attorney or tax adviser may be advisable.
The information sets forth the service fee charged for retirement plans and
describes the federal income tax consequences of establishing a plan.
Participant accounting services (including trust fund reconciliation services)
will be offered only through third party recordkeepers and not by the
Principal Underwriter. Under all plans, dividends and distributions will be
automatically reinvested in additional shares.
DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of the Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of
the investment income allocated to the Fund by the Portfolio (less the Fund's
direct and allocated expenses and class-specific expenses), and (B) at least
one distribution annually of all or substantially all of the net realized
capital gains (if any) allocated to the Fund by the Portfolio (reduced by any
available capital loss carryforwards from prior years). Shareholders may
reinvest all distributions in shares of the Fund without a sales charge at the
per share net asset value as of the close of business on the record date.
The Fund's investment income consists of the Fund's allocated share of the net
investment income of the Portfolio, less all actual and accrued expenses of
the Fund determined in accordance with generally accepted accounting
principles. The Portfolio's net investment income consists of all income
accrued on the Portfolio's assets, less all actual and accrued expenses of the
Portfolio determined in accordance with generally accepted accounting
principles. The Fund's net realized capital gains, if any, consist of the net
realized capital gains (if any) allocated to the Fund by the Portfolio for tax
purposes, after taking into account any available capital loss carryovers.
TAXES. Distributions by the Fund which are derived from the Fund's allocated
share of the Portfolio's net investment income, net short-term capital gains
and certain foreign exchange gains are taxable to shareholders as ordinary
income, whether received in cash or reinvested in additional shares of the
Fund. The Fund's distributions will generally not qualify for the dividends-
received deduction for corporate shareholders. The Fund anticipates that for
federal tax purposes the entire distribution will constitute ordinary income
to the shareholders. Shareholders reinvesting such distributions should treat
the entire amount of the distribution as the tax basis of the additional
shares acquired by reason of such reinvestment.
Capital gains referred to in clause (B) above, if any, realized by the
Portfolio and allocated to the Fund for the Fund's fiscal year, which ends on
August 31, will usually be distributed by the Fund prior to the end of
December. Distributions by the Fund of long-term capital gains allocated to
the Fund by the Portfolio are taxable to shareholders as long-term capital
gains, whether paid in cash or reinvested in additional shares of the Fund and
regardless of the length of time Fund shares have been owned by the
shareholder.
If shares are purchased shortly before the record date of a distribution, the
shareholder will pay the full price for the shares and then receive some
portion of the price back as a taxable distribution. The amount, timing and
character of the Fund's distributions to shareholders may be affected by
special tax rules governing the Portfolio's activities in options, futures and
forward foreign currency exchange transactions or certain other investments.
Certain distributions, if declared by the Fund in October, November or
December and paid the following January will be taxable to shareholders as if
received on December 31 of the year in which they are declared.
Sales charges paid upon a purchase of Class A shares cannot be taken into
account for purposes of determining gain or loss on a redemption or exchange
of the shares before the 91st day after their purchase to the extent a sales
charge is reduced or eliminated in a subsequent acquisition of shares of the
Fund or of another fund pursuant to the Fund's reinvestment or exchange
privilege. Any disregarded or disallowed amounts will result in an adjustment
to the shareholder's tax basis in some or all of any other shares acquired.
The Fund intends to qualify as a regulated investment company under the Code
and to satisfy all requirements necessary to avoid paying federal income taxes
on the part of its investment company taxable income (consisting of taxable
net investment income and net short-term capital gains) and net capital gains
that it distributes to shareholders. In satisfying these requirements, the
Fund will treat itself as owning its proportionate share of each of the
Portfolio's assets and as entitled to the income of the Portfolio properly
attributable to such share.
As a regulated investment company under the Code, the Fund does not pay
federal income or excise taxes to the extent that it distributes to
shareholders substantially all of its ordinary income and capital gain net
income in accordance with the timing requirements imposed by the Code. As a
partnership under the Code, the Portfolio does not pay federal income or
excise taxes.
Income realized by the Portfolio from certain instruments and allocated to the
Fund may be subject to foreign income taxes, and the Fund may make an election
under Section 853 of the Code that would allow shareholders to claim a credit
or deduction on their federal income tax returns for (and treated as
additional amounts distributed to them) their pro rata portion of the Fund's
allocated share of qualified taxes paid by the Portfolio to foreign countries.
This election may be made only if more than 50% of the assets of the Fund,
including its allocable share of the Portfolio's assets, at the close of the
Fund's taxable year consists of securities in foreign corporations. The Fund
will send a written notice of any such election (not later than 60 days after
the close of its taxable year) to each shareholder indicating the amount to be
treated as the shareholder's proportionate share of such taxes. Availability
of foreign tax credits or deductions for shareholders is subject to certain
additional restrictions and limitations under the Code.
The Fund will provide its shareholders annually with tax information notices
and Forms 1099 to assist in the preparation of their federal and state tax
returns for the prior calendar year's distributions, proceeds from the
redemption or exchange of shares, and federal income tax (if any) withheld by
the Transfer Agent.
Shareholders should consult with their tax advisors concerning the
applicability of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
--------------------------------------------------------------------------------
FROM TIME TO TIME, AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED. Average
annual total return is determined separately for each Class of the Fund by
computing the average annual percentage change in value of $1,000 invested at
the maximum public offering price (including maximum sales charge for Class A
shares; net asset value for Class B and Class C shares) for specified periods,
assuming reinvestment of all distributions. The average annual total return
calculation assumes a complete redemption of the investment and the deduction
of any CDSC at the end of the period. The Fund may also publish annual and
cumulative total return figures from time to time. The Fund may use such total
return figures, together with comparisons with the Consumer Price Index,
various domestic and foreign securities indices and performance studies
prepared by independent organizations, in advertisements and in information
furnished to present or prospective shareholders. Total return may be quoted
for the period prior to commencement of operations which would reflect the
Class' total return (or that of its predecessor) adjusted to reflect any
applicable sales charge.
The Fund may also publish total return figures for each Class which do not
take into account any sales charge. Any performance figure which does not take
into account a sales charge would be reduced to the extent such charge is
imposed upon a redemption.
Investors should note that investment results will fluctuate over time, and
any presentation of the total return for any prior period should not be
considered a representation of what an investment may earn or what the total
return may be in any future period. Investment results are based on many
factors, including market conditions, the composition of the security holdings
of the Portfolio and the operating expenses of the Fund and the Portfolio.
Investment results also often reflect the risks associated with the particular
investment objective and policies of the Fund and the Portfolio. Among others,
these factors should be considered when comparing investment results to those
of other mutual funds and other investment vehicles.
The following chart reflects the annual investment returns of Class B of the
Fund for one year periods ending August 31 and does not take into account any
sales charge which investors may bear. The performance of the predecessor
funds of Class A and Class C was different.
Life of Fund Average Annual Total Return - 11.28%
1993(1) ......................... 26.58%
1994 ............................ 25.08%
1995 ............................ (9.06%)
1996 ............................ 4.71%
(1) From the start of business, October 28, 1992, to August 31, 1993
[LOGO]
EATON VANCE
======================
Mutual Funds
EATON VANCE
GREATER CHINA
GROWTH FUND
PROSPECTUS
SEPTEMBER 1, 1997
EATON VANCE GREATER
CHINA GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
--------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EATON VANCE GREATER CHINA GROWTH FUND
ADMINISTRATOR OF GREATER CHINA GROWTH PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF GREATER CHINA GROWTH PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
CGP
Part A
Information Required in a Prospectus
[Graphic Omitted]
EATON VANCE
GROWTH FUND
--------------------------------------------------------------------------------
EATON VANCE GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING GROWTH OF CAPITAL.
THE FUND INVESTS ITS ASSETS IN GROWTH PORTFOLIO (THE "PORTFOLIO"), A DIVERSIFIED
OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS THE FUND,
RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN PORTFOLIO OF
SECURITIES. THE FUND IS A SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank or other insured depository institution, and are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency. Shares of the Fund involve investment risks,
including fluctuations in value and the possible loss of some or all of the
principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated September 1, 1997 for the Fund, as supplemented
from time to time, has been filed with the Securities and Exchange Commission
(the "Commission") and is incorporated herein by reference. This Statement of
Additional Information is available without charge from the Fund's principal
underwriter, Eaton Vance Distributors, Inc. (the "Principal Underwriter"), 24
Federal Street, Boston, MA 02110 (telephone (800) 225-6265). The Portfolio's
investment adviser is Boston Management and Research (the "Investment Adviser"),
a wholly-owned subsidiary of Eaton Vance Management, and Eaton Vance Management
is the administrator (the "Administrator") of the Fund. The offices of the
Investment Adviser and the Administrator are located at 24 Federal Street,
Boston, MA 02110.
--------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
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PAGE PAGE
Shareholder and Fund Expenses ......................... 2 How to Buy Shares ................................. 9
The Fund's Financial Highlights ....................... 4 How to Redeem Shares............................... 11
The Fund's Investment Objective ....................... 5 Reports to Shareholders ........................... 13
Investment Policies and Risks ......................... 5 The Lifetime Investing Account/Distribution Options 14
Organization of the Fund and the Portfolio ............ 6 The Eaton Vance Exchange Privilege ................ 15
Management of the Fund and the Portfolio .............. 7 Eaton Vance Shareholder Services .................. 15
Distribution and Service Plans ....................... 8 Distributions and Taxes ........................... 16
Valuing Shares......................................... 9 Performance Information ........................... 17
----------------------------------------------------------------------------------------------------------------------
PROSPECTUS DATED SEPTEMBER 1, 1997
SHAREHOLDER AND FUND EXPENSES
--------------------------------------------------------------------------------
[Enlarge/Download Table]
SHAREHOLDER TRANSACTION EXPENSES
----------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.75% None None
Sales Charges Imposed on Reinvested Distributions None None None
Fees to Exchange Shares None None None
Maximum Contingent Deferred Sales Charge None 5.00% 1.00%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of
average daily net assets)
----------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
Investment Adviser Fee 0.625% 0.625% 0.625%
Rule 12b-1 Distribution and/or Service Fees 0.089% 0.900% 1.000%
Other Expenses 0.266% 0.266% 0.266%
---- ---- ----
Total Operating Expenses 0.980% 1.791% 1.891%
===== ===== =====
EXAMPLE
----------------------------------------------------------------------------------------------------------
An investor would pay the following expenses and, in the case of Class A shares, maximum initial sales
charge or, in the case of Class B and Class C shares, the applicable contingent deferred sales charge on
a $1,000 investment, assuming (a) 5% annual return and (b) redemption at the end of each period:
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
1 Year $ 67 $ 67 $ 29
3 Years $ 87 $ 94 $ 59
5 Years $109 $113 $102
10 Years $171 $202 $221
An investor would pay the following expenses on the same investment, assuming (a) 5% annual return and
(b) no redemptions:
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
1 Year $ 67 $ 17 19
3 Years $ 87 $ 54 59
5 Years $109 $ 93 102
10 Years $171 $202 221
NOTES:
The table and Examples summarize the aggregate expenses of the Portfolio and each Class of shares of the
Fund and are designed to help investors understand the costs and expenses they will bear, directly or
indirectly, by investing in the Fund. Information for Class A shares is for the most recent fiscal year.
Information for Class B and Class C shares is estimated based upon the most recent fiscal year of its
predecessor fund adjusted for the multiple-class structure.
The Fund offers three classes of shares. Class A shares are sold subject to a sales charge imposed at the
time of purchase. No sales charge is payable at the time of purchase on investments in Class A shares of
$1 million or more. However, a contingent deferred sales charge ("CDSC") of 1% will be imposed on such
investments in the event of certain redemptions within 12 months of purchase. Class B shares are sold
subject to a declining CDSC (5% maximum) if redeemed within six years of purchase and Class C shares are
sold subject to a 1% CDSC if redeemed within one year of purchase. The CDSC does not apply in certain
circumstances. See "How to Buy Shares" and "How to Redeem Shares."
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal regulations
require the Example to assume a 5% annual return, but actual return may vary.
Long-term holders of Class B and Class C shares may pay more than the economic
equivalent of the maximum front-end sales charge permitted by a rule of the
National Association of Securities Dealers, Inc. For further information
regarding the expenses of both the Fund and the Portfolio see "The Fund's
Financial Highlights," "Management of the Fund and the Portfolio," "Distribution
and Service Plans," and "How to Redeem Shares."
The Fund invests exclusively in the Portfolio. Other investment companies with
different distribution arrangements and fees are investing in the Portfolio and
others may do so in the future. See "Organization of the Fund and the
Portfolio."
THE FUND'S FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements that appear in the Fund's annual report to shareholders.
The Fund's annual financial statements have been audited by Coopers & Lybrand
L.L.P., independent accountants, as experts in accounting and auditing. The
annual financial statements and the report of independent accountants are
incorporated by reference into the Statement of Additional Information.
Further information regarding the performance of the Fund is contained in its
annual report to shareholders which may be obtained without charge by
contacting the Principal Underwriter. The financial information for each of
the periods presented in the Fund's Financial Highlights are for the Fund
prior to reclassification of its shares as Class A shares on September 1,
1997. Information for Class B and Class C shares is not presented because
these classes did not exist prior to September 1, 1997. The Financial
Highlights for Class B and Class C shares will differ from the Financial
Highlights for Class A shares due to the different fees imposed on Class B and
Class C shares.
[Enlarge/Download Table]
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SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1997 ------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993(1) 1992*
--------- ------- ------- ------- ------- -------
NET ASSET VALUE, beginning of year $ 9.240 $ 8.330 $ 7.960 $ 8.070 $ 8.520 $ 8.450
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income $ 0.006 $ 0.043 $ 0.024 $ 0.052 $ 0.030 $ 0.046
Net realized and unrealized gain
(loss) on investments 1.534 1.202 1.086 (0.092) 0.660 0.544
------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations $ 1.540 $ 1.245 $ 1.110 $(0.040) $ 0.690 $ 0.590
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.023) $(0.035) $(0.032) $(0.060) $ -- $(0.040)
in excess of net investment income(4) (0.002) -- (0.018) -- -- --
From net realized gains on
investments (0.707) (0.300) (0.083) (0.010) (1.140) (0.480)
In excess of net realized gains on
investments(4) (0.078) -- (0.607) -- -- --
------- ------- ------- ------- ------- -------
Total distributions $ 0.810 $(0.335) $(0.740) $(0.070) $(1.140) $(0.520)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, end of year $ 9.970 $ 9.240 $ 8.330 $ 7.960 $ 8.070 $ 8.520
======= ======= ======= ======= ======= =======
TOTAL RETURN(2) 17.54% 15.38% 15.95% (0.50)% 7.63% 7.22%
RATIOS/SUPPLEMENTAL DATA:
Ratio of net expenses to average
daily net assets(1) 0.98%+ 0.98% 0.98% 0.95% 0.89% 0.87%
Ratio of net investment income to
average daily net assets 0.12%+ 0.48% 0.42% 0.61% 0.56% 0.53%
PORTFOLIO TURNOVER(3) -- -- -- 89% 84% 68%
NET ASSETS, END OF YEAR (000'S
OMITTED) $153,941 $138,252 $130,966 $130,269 $143,264 $143,695
YEAR ENDED AUGUST 31,
------------------------------------------------------
1991* 1990* 1989* 1988* 1987*
------- ------- ------- ------- -------
NET ASSET VALUE, beginning of year $ 7.750 $ 8.560 $6.730 $ 9.670 $ 8.130
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income $ 0.101 $ 0.109 $0.150 $ 0.114 $ 0.115
Net realized and unrealized gain
(loss) on investments 1.499 (0.319) 1.980 (1.764) 2.335
------- ------- ------- ------- -------
Total income (loss) from
investment operations $ 1.600 $(0.210) $2.130 $(1.650) $ 2.450
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.080) $(0.110) $(0.080) $(0.060) $(0.110)
in excess of net investment income(4) -- ---- -- --
From net realized gains on
investments (0.820) (0.490) (0.220) (1.230) (0.800)
In excess of net realized gains on
investments(4) -- ---- -- --
------- ------- ------- ------- -------
Total distributions $(0.900) $(0.600) $(0.300) $(1.290) $(0.910)
------- ------- ------- ------- -------
NET ASSET VALUE, end of year $ 8.450 $ 7.750 $8.560 $ 6.730 $ 9.670
======= ======= ====== ======= =======
TOTAL RETURN(2) 23.24% (2.65)% 32.90% (18.96)% 34.03%
RATIOS/SUPPLEMENTAL DATA:
Ratio of net expenses to average
daily net assets(1) 0.92% 0.96% 0.98% 1.00% 0.92%
Ratio of net investment income to
average daily net assets 1.35% 1.38% 2.04% 1.66% 1.42%
PORTFOLIO TURNOVER(3) 73% 66% 54% 55% 57%
NET ASSETS, END OF YEAR (000'S
OMITTED) $143,090 $80,582 $92,448 $84,667 $112,843
* Audited by previous auditors.
(1) Includes the Fund's share of the Portfolio's allocated expenses subsequent to August 2, 1994.
(2) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at
the net asset value on the last day of each period reported. Distributions, if any, are assumed to be
reinvested at the net asset value on the record date. Total return is computed on a non-annualized
basis.
(3) Portfolio turnover represents the rate of portfolio activity for the period while the Fund was making
investments directly in securities. The portfolio turnover for the period since the Fund transferred
substantially all of its assets to the Portfolio is shown in the Portfolio's financial statements
which are incorporated by reference into the Statement of Additional Information.
(4) The Fund has followed the Statement of Position (SOP) 93-2: Determination, Disclosure and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital Distribution by Investment
Companies. The SOP requires that differences in the recognition or classification of income between
the financial statements and tax earnings and profits that result in temporary over-distributions for
financial statement purposes, are classified as distributions in excess of net investment income or
accumulated net realized gains.
THE FUND'S INVESTMENT OBJECTIVE
------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO ACHIEVE CAPITAL GROWTH. The Fund currently
seeks to meet its investment objective by investing its assets in the Growth
Portfolio (the "Portfolio"), a separate registered investment company, which has
the same investment objective as the Fund. While income is a subordinate
consideration to capital growth, the Portfolio will earn dividend or interest
income to the extent that it receives dividends or interest from its
investments.
The Fund's and the Portfolio's investment objectives are nonfundamental and may
be changed when authorized by a vote of the Trustees of the Trust or the
Portfolio without obtaining the approval of the Fund's shareholders or the
investors in the Portfolio, as the case may be. The Trustees of the Trust have
no present intention to change the Fund's objective and intend to submit any
proposed material change in the investment objective to shareholders in advance
for their approval.
The Fund cannot assure achievement of its capital growth objective. The Fund is
not intended to be a complete investment program, and prospective investors
should take into account their objectives and other investments when considering
the purchase of Fund shares.
INVESTMENT POLICIES AND RISKS
--------------------------------------------------------------------------------
THE PORTFOLIO INVESTS IN A CAREFULLY SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO
CONSISTING PRIMARILY OF DOMESTIC AND FOREIGN EQUITY SECURITIES. It may invest in
all kinds of companies. The Portfolio invests primarily in common stocks or
securities convertible into common stocks (including convertible debt). It may
also invest in other securities and obligations of all kinds. These include
preferred stocks, rights, warrants, bonds, repurchase agreements and other
evidences of indebtedness.The Portfolio may also invest in money market
instruments.
Investing in foreign securities entails considerations and possible risks not
typically associated with investing in securities issued by the U.S. Government
and domestic corporations. The values of foreign investments are affected by
changes in currency rates or exchange control regulations, application of
foreign tax laws (including withholding tax), changes in governmental
administration or economic or monetary policy (in this country or abroad), or
changed circumstances in dealings between nations. Because investment in foreign
issuers will usually involve currencies of foreign countries, the value of the
assets of the Portfolio as measured in U.S. dollars may be adversely affected by
changes in foreign currency exchange rates. Such rates may fluctuate
significantly over short periods of time causing the Portfolio's net asset value
to fluctuate as well. Costs are incurred in connection with conversions between
various currencies. In addition, foreign brokerage commissions, custody fees and
other costs of investing are generally higher than in the United States, and
foreign securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be adversely affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations. Currently, the Portfolio does not intend to invest more
than 25% of its net assets in foreign securities.
The Portfolio may purchase and sell exchange-traded futures contracts on stock
indices and options thereon to hedge against fluctuations in securities prices
or as a substitute for the purchase or sale of securities. Such transactions
involve a risk of loss or depreciation due to: unanticipated adverse changes in
securities prices, interest rates, the other financial instruments' prices or
currency exchange rates; the inability to close out a position; default by the
counterparty; imperfect correlation between a position and the desired hedge;
tax constraints on closing out positions; and portfolio management constraints
on securities subject to such transactions. The loss on such transactions (other
than purchased options) may substantially exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in future and options thereon. There can be no assurance
that the Adviser's use of such instruments will be advantageous to the
Portfolio.
The Portfolio may sell a security short if it owns at least an equal amount of
the security sold short or another security convertible or exchangeable for an
equal amount of the security sold short without payment of further compensation
(a short sale against-the-box). A short sale against-the-box requires that the
short seller absorb certain costs so long as the position is open. In a short
sale against-the-box, the short seller is exposed to the risk of being forced to
deliver appreciated stock to close the position if the borrowed stock is called
in. The Portfolio expects normally to close its short sales against-the-box by
delivering newly-acquired stock.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio's investments in equity
securities are subject to the risk of adverse developments affecting particular
companies or industries and the stock market generally. The Portfolio may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions.
The Fund and the Portfolio have adopted certain fundamental investment
restrictions which are enumerated in detail in the Statement of Additional
Information and which may not be changed unless authorized by a shareholder vote
and an investor vote, respectively. Except for such enumerated restrictions and
as otherwise indicated in this Prospectus, the investment objective and policies
of the Fund and the Portfolio are not fundamental policies and accordingly may
be changed by the Trustees of the Trust and the Portfolio without obtaining the
approval of the Fund's shareholders or the investors in the Portfolio, as the
case may be.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
--------------------------------------------------------------------------------
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST, A BUSINESS TRUST
ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST DATED MAY
25, 1989 AND ORGANIZED AS THE SUCCESSOR TO A MASSACHUSETTS CORPORATION WHICH
COMMENCED ITS INVESTMENT COMPANY OPERATIONS IN 1954. The Trustees of the Trust
are responsible for the overall management and supervision of its affairs. The
Trust may issue an unlimited number of shares of beneficial interest (no par
value per share) in one or more series (such as the Fund). The Trustees of the
Trust have divided the shares of the Fund into multiple classes, including Class
A, Class B and Class C shares. Each class represents an interest in the Fund,
but is subject to different expenses, rights and privileges. See "Distribution
and Service Plans" and "How to Buy Shares." The Trustees have the authority
under the Declaration of Trust to create additional classes of shares with
differing rights and privileges. As a result of a reorganization with separate
series of the Trust, the Fund commenced offering Class A, B and C shares on
September 1, 1997.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem Shares." There are no
annual meetings of shareholders, but special meetings may be held as required by
law to elect Trustees and consider certain other matters. Shareholders are
entitled to one vote for each full share held. Fractional shares may be voted
proportionately. Shares of the Fund will be voted together except that only
shareholders of a particular class may vote on matters affecting only that
class. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders of each
class are entitled to share pro rata in the net assets attributable to that
class available for distribution to shareholders.
The Trustees of the Trust have considered the advantages and disadvantages of
investing the assets of the Fund in the Portfolio, as well as the advantages and
disadvantages of the two-tier format. The Trustees believe that the structure
offers opportunities for growth in the assets of the Portfolio, may afford the
potential for economies of scale for the Fund and may over time result in lower
expenses for the Fund.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. In addition
to selling an interest to the Fund, the Portfolio may sell interests to other
affiliated and non-affiliated mutual funds or institutional investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, these differences may
result in differences in returns experienced by investors in the various funds
that invest in the Portfolio. Information regarding other pooled investment
entities or funds which invest in the Portfolio may be obtained by contacting
the Principal Underwriter, 24 Federal Street, Boston, MA 02110, (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, or the Board of Trustees of the Trust determines that the
investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, the Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets (or the assets of another
investor in the Portfolio) from the Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
--------------------------------------------------------------------------------
THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the Portfolio,
BMR manages the Portfolio's investments and affairs. BMR also furnishes for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of the average daily
net assets of the Portfolio up to and including $300 million, and 1/24 of 1%
(equivalent to 0.50% annually) of the average daily net assets over $300
million. For the fiscal year ended August 31, 1996, the Portfolio paid BMR
advisory fees equivalent to 0.625% of the Portfolio's average daily net assets
for such year.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $20 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly-held holding company which through its subsidiaries and
affiliates engages primarily in investment management, administration and
marketing activities. The Principal Underwriter is a wholly-owned subsidiary of
Eaton Vance.
Thomas E. Faust, Jr. has acted as the portfolio manager of the Portfolio since
April 1, 1996. Mr. Faust is a Vice President of Eaton Vance and of BMR and
manages other Eaton Vance portfolios.
BMR places the portfolio transactions of the Portfolio with many broker-dealer
firms and uses its best efforts to obtain execution of such transactions at
prices which are advantageous to the Portfolio and at reasonably competitive
commission rates. Subject to the foregoing, BMR may consider sales of shares of
the Fund or of other investment companies sponsored by BMR or Eaton Vance as a
factor in the selection of broker-dealer firms to execute portfolio
transactions. The Trust, the Portfolio and BMR have adopted Codes of Ethics
relating to personal securities transactions. The Codes permit Eaton Vance
personnel to invest in securities (including securities that may be purchased or
held by a Portfolio) for their own accounts, subject to certain pre- clearance,
reporting and other restrictions and procedures contained in such Codes.
The Trust has retained the services of Eaton Vance to act as Administrator of
the Fund. The Trust has not retained the services of an investment adviser since
the Trust seeks to achieve the investment objective of the Fund by investing the
Fund's assets in the Portfolio. As Administrator, Eaton Vance provides the Fund
with general office facilities and supervises the overall administration of the
Fund. For these services Eaton Vance currently receives no compensation. The
Trustees of the Trust may determine, in the future, to compensate Eaton Vance
for such services.
The Portfolio and the Fund, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by BMR under
the investment advisory agreement, by Eaton Vance under the administrative
services agreement, or by the Principal Underwriter under the distribution
agreement.
DISTRIBUTION AND SERVICE PLANS
--------------------------------------------------------------------------------
The Trust has adopted a Service Plan (the "Class A Plan") for the Fund's Class A
shares that is designed to meet the service fee requirements of the sales charge
rule of the National Association of Securities Dealers, Inc. THE CLASS A PLAN
PROVIDES THAT CLASS A MAY MAKE SERVICE FEE PAYMENTS FOR PERSONAL SERVICES AND/OR
THE MAINTENANCE OF SHAREHOLDER ACCOUNTS TO THE PRINCIPAL UNDERWRITER, FINANCIAL
SERVICE FIRMS ("AUTHORIZED FIRMS") AND OTHER PERSONS IN AMOUNTS NOT EXCEEDING
.25% OF ITS AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR. The Trustees of the
Trust have initially implemented the Class A Plan by authorizing Class A to make
quarterly service fee payments to the Principal Underwriter and Authorized Firms
in amounts not expected to exceed .25% of its average daily net assets for any
fiscal year which is based on the value of Class A shares sold by such persons
and remaining outstanding for at least twelve months. During the fiscal year
ended August 31, 1996, Class A shares paid or accrued service fee payments
equivalent to 0.089% of average daily net assets.
The Trust has also adopted Distribution Plans ("Class B Plan" and "Class C
Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 ("1940
Act") for the Fund's Class B and Class C shares. Each Plan is designed to permit
an investor to purchase shares through an Authorized Firm without incurring an
initial sales charge and at the same time permit the Principal Underwriter to
compensate Authorized Firms in connection therewith. UNDER SUCH PLANS, CLASS B
AND CLASS C EACH PAYS THE PRINCIPAL UNDERWRITER A FEE, ACCRUED DAILY AND PAID
MONTHLY, AT AN ANNUAL RATE NOT EXCEEDING .75% OF ITS AVERAGE DAILY NET ASSETS TO
FINANCE THE DISTRIBUTION OF ITS SHARES. Such fees compensate the Principal
Underwriter for sales commissions paid by it to Authorized Firms on the sale of
Class B and Class C shares and for interest expenses. Under the Class B Plan,
the Principal Underwriter uses its own funds to pay sales commissions (except on
exchange transactions and reinvestments) to Authorized Firms at the time of sale
equal to 4% of the purchase price of the Class B shares sold by such Firms.
Under the Class C Plan, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) sales commissions (except on exchange transactions and
reinvestments) at the time of sale equal to .75% of the purchase price of the
shares sold by such Firm, and (b) monthly sales commissions approximately
equivalent to 1/12 of .75% of the value of shares sold by such Firm and
remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the Principal Underwriter will retain the sales
commission as reimbursement for the sales commissions paid to Authorized Firms
at the time of sale. CDSCs paid to the Principal Underwriter will be used to
reduce amounts owed to it. Because payments to the Principal Underwriter under
the two Plans are limited, uncovered distribution charges (sales commissions
paid by the Principal Underwriter plus interest, less CDSCs received by it) may
exist indefinitely.
THE CLASS B AND CLASS C PLANS ALSO AUTHORIZE EACH CLASS TO MAKE PAYMENTS OF
SERVICE FEES TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN
AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR PERSONAL
SERVICES, AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS. Under the Class B
Plan, this fee is paid quarterly in arrears based on the value of Class B shares
sold by such persons and remaining outstanding for at least twelve months. Under
the Class C Plan, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) a service fee (except on exchange transactions and
reinvestments) at the time of sale equal to .25% of the purchase price of the
Class C shares sold by such Firm, and (b) monthly service fees approximately
equivalent to 1/12 of .25% of the value of Class C shares sold by such Firm and
remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the Principal Underwriter will retain the service
fee as reimbursement for the service fee payment made to Authorized Firms at the
time of sale.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed by
the Principal Underwriter. In some instances, such additional incentives may be
offered only to certain Authorized Firms whose representatives sell or are
expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
The Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of its shares at any time. In determining
whether any such action should be taken, the Trust's management intends to
consider all relevant factors, including (without limitation) the size of the
Fund or class, the investment climate and market conditions, the volume of sales
and redemptions of shares, and, in the case of Class B and Class C shares, the
amount of uncovered distribution charges of the Principal Underwriter. The Plans
may continue in effect and payments may be made under the Plans following any
such suspension, discontinuance or limitation of the offering of shares;
however, there is no contractual obligation to continue any Plan for any
particular period of time. Suspension of the offering of shares would not, of
course, affect a shareholder's ability to redeem shares.
VALUING SHARES
--------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). Each Class's net asset value per
share is determined by the Trust's custodian, Investors Bank & Trust Company
("IBT"), (as agent for the Trust) in the manner authorized by the Trustees of
the Trust. The net asset value of each Class is computed by dividing the value
of that Class's pro rata share of the Fund's total assets, less its liabilities,
by the number of shares of that class outstanding. Because the Fund invests its
assets in an interest in the Portfolio, each Class's net asset value will
reflect the value of the Fund's interest in the Portfolio (which, in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per share and, for Class A shares, the public
offering price based thereon. It is the Authorized Firms' responsibility to
transmit orders promptly to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) based
on market or fair value in the manner authorized by the Trustees of the
Portfolio. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY SHARES
--------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
ACCEPTABLE SECURITIES. Class A shares are purchased at the effective public
offering price, which price is based on the effective net asset value per share
plus the applicable sales charge. The sales charge is divided between the
Authorized Firm and the Principal Underwriter. Class B and Class C shares are
purchased at the net asset value per share next determined after an order is
effective. An Authorized Firm may charge its customers a fee in connection with
transactions executed by that Firm. The Trust may suspend the offering of shares
at any time and may refuse an order for the purchase of shares.
An initial investment must be at least $1,000. Once an account has been
established the investor may send investments of $50 or more at any time
directly to the Trust's transfer agent (the "Transfer Agent") as follows:
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123.
The $1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
In connection with employee benefit or other continuous group purchase plans,
the Trust may accept initial investments of Class B and C shares of less than
$1,000 on the part of an individual participant. In the event a shareholder who
is a participant of such a plan terminates participation in the plan, his or her
shares will be transferred to a regular individual account. However, such
account will be subject to the right of redemption by the Trust as described
under "How to Redeem Shares."
CLASS A SHARES. The sales charge may vary depending on the size of the purchase
and the number of Class A shares of Eaton Vance funds the investor may already
own, any arrangement to purchase additional shares during a 13- month period or
special purchase programs. Complete details of how investors may purchase shares
at reduced sales charges under a Statement of Intention or Right of Accumulation
are available from Authorized Firms or the Principal Underwriter.
The current sales charges and dealer commissions are:
[Enlarge/Download Table]
SALES CHARGE SALES CHARGE DEALER COMMISSION
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
-----------------------------------------------------------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75 4.99 4.00
$100,000 but less than $250,000 3.75 3.90 3.00
$250,000 but less than $500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more 0.00* 0.00* See Below**
* No sales charge is payable at the time of purchase on investments of $1 million or more. A CDSC of 1% will be
imposed on such investments in the event of certain redemptions within 12 months of purchase.
** A commission on sales of $1 million or more will be paid as follows: 1.00% on amounts of $1 million or more but less
than $3 million; plus 0.50% on amounts from $3 million but less than $5 million; plus 0.25% on amounts of $5 million
or more. Purchases of $1 million or more will be aggregated over a 12-month period for purposes of determining the
commission to be paid.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in the
Securities Act of 1933.
Class A shares may be sold at net asset value to current and retired Directors
and Trustees of Eaton Vance funds, including the Portfolio; to clients and
current and retired officers and employees of Eaton Vance, its affiliates and
other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company or series thereof with the Fund, (2) to investors making an
investment as part of a fixed fee program whereby an entity unaffiliated with
the Investment Adviser provides multiple investment services, such as
management, brokerage and custody, and (3) to investment advisors, financial
planners or other intermediaries who place trades for their own accounts or the
accounts of their clients and who charge a management, consulting or other fee
for their services; clients of such investment advisors, financial planners or
other intermediaries who place trades for their own accounts if the accounts are
linked to the master account of such investment advisor, financial planner or
other intermediary on the books and records of the broker or agent; and
retirement and deferred compensation plans and trusts used to fund those plans,
including, but not limited to, those defined in Section 401(a), 403(b) or 457 of
the Internal Revenue Code of 1986, as amended (the "Code") and "rabbi trusts."
The Trust's Principal Underwriter may pay commissions to Authorized Firms who
initiate and are responsible for purchases of Class A shares of the Fund by
Eligible Plans of up to 1.00% of the amount invested in such shares.
No sales charge is payable at the time of purchase where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton Vance
if the redemption occurred no more than 60 days prior to the purchase of Class A
shares and the redeemed shares were potentially subject to a sales charge. A
CDSC of 0.50% will be imposed on such investments in the event of certain
redemptions within 12 months of purchase and the Authorized Firm will be paid a
commission on such sales of 0.50% of the amount invested.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an application,
makes a Statement of Intention to invest a specified amount over a
thirteen-month period in Class A shares, then out of the initial purchase (or
subsequent purchases if necessary) 5% of the dollar amount specified on the
application shall be held in escrow by the escrow agent in the form of such
shares (computed to the nearest full share at the public offering price
applicable to the initial purchase hereunder) registered in the investor's name.
All income dividends and capital gains distributions on escrowed shares will be
paid to the investor or to the investor's order. When the minimum investment so
specified is completed, the escrowed shares will be delivered to the investor.
If the investor has an accumulation account the shares will remain on deposit
under the investor's account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation an Authorized Firm other than the original Firm is placing the
orders, the adjustment will be made only on those shares purchased through the
Firm then handling the investor's account.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange for
Fund shares. The minimum value of securities (or securities and cash) accepted
for deposit is $5,000. Securities accepted will be sold on the day of their
receipt or as soon thereafter as possible. The number of Fund shares to be
issued in exchange for securities will be the aggregate proceeds from the sale
of such securities, divided by the applicable net asset value of Class B and
Class C shares or public offering price of Class A shares on the day such
proceeds are received. Eaton Vance will use reasonable efforts to obtain the
then current market price for such securities but does not guarantee the best
available price. Eaton Vance will absorb any transaction costs, such as
commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance Growth Fund (and
Investors Bank & Trust Company Class)
For A/C Eaton Vance Growth Fund Physical Securities Processing
(and Class) Settlement Area
200 Clarendon Street
Boston, MA 02116
Investors who are contemplating an exchange of securities for shares, or their
representatives, must contact Eaton Vance to determine whether the securities
are acceptable before forwarding such securities. Eaton Vance reserves the right
to reject any securities. Exchanging securities for shares may create a taxable
gain or loss. Each investor should consult his or her tax adviser with respect
to the particular federal, state and local tax consequences of exchanging
securities.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM SHARES
-------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM SHARES IN ONE OF THREE WAYS -- BY MAIL, BY TELEPHONE OR
THROUGH AN AUTHORIZED FIRM. The redemption price will be based on the net asset
value per share next computed after a redemption request is received in the
proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a Commission regulation and
acceptable to the Transfer Agent. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Trust, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the Principal Underwriter, as
the Trust's agent, receives the order. It is the Authorized Firm's
responsibility to transmit promptly repurchase orders to the Principal
Underwriter. Throughout this Prospectus, the word "redemption" is generally
meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the Trust will make payment in cash for the net asset value of
the shares as of the date determined above, reduced by the amount of any
applicable CDSC (described below) and any federal income tax required to be
withheld. While normally payments will be made in cash for redeemed shares, the
Trust, subject to compliance with applicable regulations, has reserved the right
to pay the redemption price of shares of the Fund, either totally or partially,
by a distribution in kind of readily marketable securities withdrawn from the
Portfolio. The securities so distributed would be valued pursuant to the
Portfolio's valuation procedures. If a shareholder received a distribution in
kind, the shareholder could incur brokerage or other charges in converting the
securities to cash.
If shares were recently purchased, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Trust reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required by the Trust if the
cause of the low account balance was a reduction in the net asset value of
shares. No CDSC will be imposed with respect to involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A. If Class A shares have been
purchased at net asset value with no initial sales charge by virtue of the
purchase having been in the amount of $1 million or more and are redeemed within
12 months of purchase, a CDSC of 1% will be imposed on such redemption. If
shares were purchased at net asset value because the amount invested represents
redemption proceeds from a mutual fund unaffiliated with Eaton Vance (as
described under "How to Buy Shares"), and are redeemed within 12 months of
purchase, a CDSC of 0.50% will be imposed on such redemption. The CDSC will be
imposed on an amount equal to the lesser of the current market value or the
original purchase price of the shares redeemed. Accordingly, no CDSC will be
imposed on increases in account value above the initial purchase price,
including any distributions that have been reinvested in additional shares. In
determining whether a CDSC is applicable to a redemption, it will be assumed
that redemptions are made first from any shares in the shareholder's account
that are not subject to a CDSC. The CDSC will be retained by the Principal
Underwriter.
The CDSC imposed on Class A shares is waived for redemptions involving certain
liquidation, merger or acquisition transactions involving other investment
companies. If a shareholder reinvests redemption proceeds in accordance with the
conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment
Privilege," the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B. Class B Shares redeemed within the
first six years of their purchase (except shares acquired through the
reinvestment of distributions) generally will be subject to a CDSC. This CDSC is
imposed on any redemption, the amount of which exceeds the aggregate value at
the time of redemption of (a) all shares in the account purchased more than six
years prior to the redemption, (b) all shares in the account acquired through
reinvestment of distributions, and (c) the increase, if any, of value of all
other shares in the account (namely those purchased within the six years
preceding the redemption) over the purchase price of such shares. Redemptions
are processed in a manner to maximize the amount of redemption proceeds which
will not be subject to a CDSC. That is, each redemption will be assumed to have
been made first from the exempt amounts referred to in clauses (a), (b) and (c)
above, and second through liquidation of those shares in the account referred to
in clause (c) on a first-in-first-out basis. Any CDSC which is required to be
imposed on Class B share redemptions will be made in accordance with the
following schedule:
YEAR OF REDEMPTION AFTER PURCHASE CDSC
------------------------------------------------------------------------
First or Second ..................................................... 5%
Third ............................................................... 4%
Fourth .............................................................. 3%
Fifth ............................................................... 2%
Sixth ............................................................... 1%
Seventh and following ............................................... 0%
In calculating the CDSC upon the redemption of Class B shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," the CDSC schedule applicable to the shares at the time of purchase
will apply and the purchase of shares acquired in the exchange is deemed to have
occurred at the time of the original purchase of the exchanged shares.
No CDSC will be imposed on Class B shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will also
be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton
Vance Shareholder Services"), (2) as part of a required distribution from a
tax-sheltered retirement plan, or (3) following the death of all beneficial
owners of such shares, provided the redemption is requested within one year of
death (a death certificate and other applicable documents may be required). In
addition, shares acquired as a result of a merger or liquidation of another
Eaton Vance sponsored fund will have a CDSC imposed at the same rate as would
have been imposed in the prior fund.
CONTINGENT DEFERRED SALES CHARGE -- CLASS C. Class C shares redeemed within the
first year of their purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a CDSC equal to 1% of the net asset
value of the redeemed shares. This CDSC is imposed on any redemption the amount
of which exceeds the aggregate value at the time of redemption of (a) all shares
in the account purchased more than one year prior to the redemption, (b) all
shares in the account acquired through reinvestment of distributions, and (c)
the increase, if any, of value in the other shares in the account (namely those
purchased within the year preceding the redemption) over the purchase price of
such shares. Redemptions are processed in a manner to maximize the amount of
redemption proceeds which will not be subject to a CDSC. That is, each
redemption will be assumed to have been made first from the exempt amounts
referred to in clauses (a), (b) and (c) above, and second through liquidation of
those shares in the account referred to in clause (c) on a first-in-first out
basis.
In calculating the CDSC upon the redemption of Class C shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," the purchase of shares acquired in the exchange is deemed to have
occurred at the time of the original purchase of the exchanged shares.
No CDSC will be imposed on Class C shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will also
be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton
Vance Shareholder Services"), (2) as part of a distribution from a retirement
plan qualified under Section 401, 403(b) or 457 of the Code, or (3) as part of a
minimum required distribution from other tax-sheltered retirement plans.
REPORTS TO SHAREHOLDERS
-------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent accountants. Shortly after the end of each
calendar year, the Fund will furnish all shareholders with information necessary
for preparing federal and state tax returns. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information to
shareholders residing at the same address may be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
--------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. The Trust will not issue share certificates except
upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain plans, statements may be sent
only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO
MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to the
Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and Class and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Trust's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares are held in a "street name" account with an
Authorized Firm, all recordkeeping, transaction processing and payments of
distributions relating to the beneficial owner's account will be performed by
the Authorized Firm, and not by the Trust and its Transfer Agent. Since the
Trust will have no record of the beneficial owner's transactions, a beneficial
owner should contact the Authorized Firm to purchase, redeem or exchange shares,
to make changes in or give instructions concerning the account, or to obtain
information about the account. The transfer of shares in a "street name" account
to an account with another Authorized Firm or to an account directly with the
Trust involves special procedures and will require the beneficial owner to
obtain historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an Authorized
Firm, or transferring the account to another Authorized Firm, an investor
wishing to reinvest distributions should determine whether the Authorized Firm
which will hold the shares allows reinvestment of distributions in "street name"
accounts.
THE EATON VANCE EXCHANGE PRIVILEGE
--------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A shares may
also be exchanged for shares of Eaton Vance Cash Management Fund, Eaton Vance
Income Fund of Boston, Eaton Vance Municipal Bond Fund L.P., and Eaton Vance Tax
Free Reserves. Class B shares may also be exchanged for shares of Eaton Vance
Prime Rate Reserves, which are subject to an early withdrawal charge, or shares
of Eaton Vance Money Market Fund, which are subject to a CDSC, and shares of a
money market fund sponsored by an Authorized Firm and approved by the Principal
Underwriter (an "Authorized Firm fund"). Class C shares may also be exchanged
for shares of Eaton Vance Money Market Fund. Any such exchange will be made on
the basis of the net asset value per share of each fund/class at the time of the
exchange (plus, in the case of an exchange made within six months of the date of
purchase of Class A shares subject to an initial sales charge, an amount equal
to the difference, if any, between the sales charge previously paid on the
shares being exchanged and the sales charge payable on the shares being
acquired). Exchange offers are available only in States where shares of the fund
being acquired may be legally sold. Exchanges are subject to any restrictions or
qualifications set forth in the current prospectus of any such fund.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Trust does not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve-month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
The Transfer Agent makes exchanges at the next determined net asset value after
receiving an exchange request in good order (see "How to Redeem Shares").
Consult the Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that time during which shares
are held in an Authorized Firm fund will not be credited toward completion of
the CDSC period. For the CDSC schedule applicable to Class B shares (except
Prime Rate Reserves and Class B shares of the Limited Maturity Funds), see "How
to Redeem Shares." The CDSC or early withdrawal charge schedule applicable to
Prime Rate Reserves and Class B shares of the Limited Maturity Funds is 3%,
2.5%, 2% or 1% in the event of a redemption occurring in the first, second,
third or fourth year, respectively, after the original share purchase.
Telephone exchanges are accepted by the Transfer Agent provided the investor has
not disclaimed in writing the use of the privilege. To effect such exchanges,
call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00 a.m. to
4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange must be
registered in the same name(s) and with the same address as the shares being
exchanged. Neither the Trust, the Principal Underwriter nor the Transfer Agent
will be responsible for the authenticity of exchange instructions received by
telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
--------------------------------------------------------------------------------
THE TRUST OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the applicable Fund or Class as an expense to
all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the Fund
and Class being purchased may be mailed directly to the Transfer Agent, First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 at any
time -- whether or not dividends are reinvested. The name of the shareholder,
the Fund and Class and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks. For Class B and Class C shares, any such
withdrawals may not in the aggregate exceed 12% annually of the account balance
at the time the plan is established. Such amount will not be subject to the
Class B or Class C CDSC. See "How to Redeem Shares." A minimum deposit of $5,000
in shares is required. The maintenance of a withdrawal plan concurrently with
purchases of additional Class A shares would be disadvantageous because of the
sales charge included in such purchase.
STATEMENT OF INTENTION: Purchases of $50,000 or more of Class A shares made
over a 13-month period are eligible for reduced sales charges. See "How to Buy
Shares -- Statement of Intention and Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges on Class
A shares when the current market value of holdings (shares at current offering
price), plus new purchases, reaches $50,000 or more. Class A shares of the Eaton
Vance funds listed under "The Eaton Vance Exchange Privilege" may be combined
under the Statement of Intention and Right of Accumulation.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in the same shares (or for
Class A shares in Class A shares of any other Eaton Vance fund), provided that
the reinvestment is effected within 60 days after such redemption, and the
privilege has not been used more than once in the prior 12 months. Shares are
sold to a reinvesting shareholder at the next determined net asset value
following timely receipt of a written purchase order by the Principal
Underwriter or by the Trust (or by the Trust's Transfer Agent). To the extent
that any shares are sold at a loss and the proceeds are reinvested in shares (or
other shares are acquired) within the period beginning 30 days before and ending
30 days after the date of the redemption, some or all of the loss generally will
not be allowed as a tax deduction. Shareholders should consult their tax
advisers concerning the tax consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Class A and Class C shares of the Fund are
available for purchase in connection with certain tax-sheltered retirement
plans. Detailed information concerning these plans, including certain exceptions
to minimum investment requirements, and copies of the plans are available from
the Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------
The Fund's present policy is to distribute semi-annually substantially all of
the net investment income allocated to the Fund by the Portfolio, less the
Fund's direct and allocated expenses and class-specific expenses, and to
distribute at least annually any net realized capital gains. A portion of
distributions from net investment income may be eligible for the
dividends-received deduction for corporations. The Fund's distributions from its
net investment income, net short-term capital gains, and certain net foreign
exchange gains will be taxable to shareholders as ordinary income, whether
received in cash or reinvested in additional shares. Distributions that the Fund
designates as from its net long-term capital gains are taxable to shareholders
as long-term capital gains, whether received in cash or reinvested in additional
shares of the Fund and regardless of the length of time shares have been owned
by shareholders. If shares are purchased shortly before the record date of a
distribution, the shareholder will pay the full price for the shares and then
receive some portion of the price back as a taxable distribution. Certain
distributions, if declared in October, November or December and paid the
following January, will be taxed to shareholders as if received on December 31
of the year in which they are declared.
Sales charges paid upon a purchase of Class A shares cannot be taken into
account for purposes of determining gain or loss on a redemption or exchange of
the shares before the 91st day after their purchase to the extent a sales charge
is reduced or eliminated in a subsequent acquisition of such shares of the Fund
or of another fund pursuant to the Fund's reinvestment or exchange privilege. In
addition, losses realized on a redemption of Class A shares may be disallowed
under certain "wash sale" rules if within a period beginning 30 days before and
ending 30 days after the date of redemption other shares of the Fund are
acquired. Any disregarded or disallowed amounts will result in an adjustment to
the shareholder's tax basis in some or all or any other shares acquired.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of
shares, and federal income tax withheld (if any) by the Transfer Agent.
The Fund intends to qualify as a regulated investment company under the Code and
to satisfy all requirements necessary to avoid paying federal income taxes on
the part of its investment company taxable income (consisting generally of net
investment income and net short-term capital gain) and net capital gains that it
distributes to shareholders. In satisfying these requirements, the Fund will
treat itself as owning its proportionate share of each of the Portfolio's assets
and as entitled to the income of the Portfolio properly attributable to such
share.
As a regulated investment company under the Code, the Fund does not pay federal
income or excise taxes to the extent that it distributes to shareholders
substantially all of its ordinary income and capital gain net income in
accordance with the timing requirements imposed by the Code. As a partnership
under the Code, the Portfolio does not pay federal income or excise taxes.
Shareholders should consult with their tax advisors concerning the applicability
of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
--------------------------------------------------------------------------------
FROM TIME TO TIME, AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED. Average annual
total return is determined separately for each Class of the Fund by computing
the average annual percentage change in value of $1,000 invested at the maximum
public offering price (net asset value for Class B and Class C shares; including
maximum sales charge for Class A shares) for specified periods, assuming
reinvestment of all distributions. Total return may be quoted for the period
prior to commencement of operations which would reflect the Class's total return
(or that of its predecessor) adjusted to reflect any applicable sales charge.
The average annual total return calculation assumes a complete redemption of the
investment and the deduction of any applicable CDSC at the end of the period.
The Fund may publish annual and cumulative total return figures from time to
time.
The Fund may also publish total return figures for each Class which do not take
into account any sales charge. Any performance figure which does not take into
account a sales charge would be reduced to the extent such charge is imposed
upon a redemption. The Fund's performance may be compared in publications to the
performance of various indices and investments for which reliable data is
available, and to averages, performance rankings, or other information prepared
by recognized mutual fund statistical services.
Investors should note that investment results will fluctuate over time, and any
presentation of the total return for any prior period should not be considered a
representation of what an investment may earn or what the total return may be in
any future period.
The following chart reflects the annual investment returns of Class A of the
Fund for one-year periods ending August 31 and does not take into account any
sales charge which investors may bear. The performance of the predecessor funds
of Class B and Class C was lower.
5 Year Average Annual Total Return - 8.96%
10 Year Average Annual Total Return - 10.28%
1987 ............................ 34.03%
1988 ............................ (18.96%)
1989 ............................ 32.90%
1990 ............................ (2.65%)
1991 ............................ 23.24%
1992 ............................ 7.22%
1993 ............................ 7.63%
1994 ............................ (0.50%
1995 ............................ 15.95%
1996 ............................ 15.37%
[LOGO]
EATON VANCE
======================
Mutual Funds
EATON VANCE
GROWTH
FUND
PROSPECTUS
SEPTEMBER 1, 1997
EATON VANCE
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
--------------------------------------------------------------------------------
INVESTMENT ADVISER OF GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
ADMINISTRATOR OF EATON VANCE GROWTH FUND
Eaton Vance Management, 24 Federal Street, Boston, MA02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA02109
GFP
PART A
INFORMATION REQUIRED IN A PROSPECTUS
[GRAPHIC OMITTED]
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
EATON VANCE INFORMATION AGE FUND
-------------------------------------------------------------------------------
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND (THE "DEVELOPING RESOURCES
FUND") IS A MUTUAL FUND SEEKING CAPITAL APPRECIATION AND PROTECTION OF
PURCHASING POWER THROUGH NATURAL RESOURCE RELATED INVESTMENTS. EATON VANCE
WORLDWIDE HEALTH SCIENCES FUND (THE "HEALTH SCIENCES FUND") IS A MUTUAL FUND
SEEKING LONG-TERM CAPITAL GROWTH BY INVESTING IN A GLOBAL AND DIVERSIFIED
PORTFOLIO OF HEALTH SCIENCES COMPANIES. EATON VANCE INFORMATION AGE FUND (THE
"INFORMATION AGE FUND") IS A MUTUAL FUND SEEKING LONG-TERM CAPITAL GROWTH BY
INVESTING IN A GLOBAL AND DIVERSIFIED PORTFOLIO OF SECURITIES OF INFORMATION AGE
COMPANIES. EACH FUND INVESTS ITS ASSETS IN A CORRESPONDING OPEN-END INVESTMENT
COMPANY (A "PORTFOLIO") HAVING THE SAME INVESTMENT OBJECTIVE AS THE FUND, RATHER
THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN PORTFOLIO OF SECURITIES. EACH
FUND IS A SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Funds involve
investment risks, including fluctuations in value and the possible loss of some
or all of the principal investment.
This combined Prospectus is designed to provide you with information you should
know before investing. Please retain this document for future reference. A
combined Statement of Additional Information dated September 1, 1997 for the
Funds, as supplemented from time to time, has been filed with the Securities and
Exchange Commission (the "Commission") and is incorporated herein by reference.
This Statement of Additional Information is available without charge from the
Funds' principal underwriter, Eaton Vance Distributors, Inc. (the "Principal
Underwriter") 24 Federal Street, Boston, MA 02110 (telephone (800) 225-6265).
================================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
[Enlarge/Download Table]
=======================================================================================================
PAGE PAGE
Shareholder and Fund Expenses ................ 2 How to Buy Shares ............................. 20
The Funds' Financial Highlights .............. 4 How to Redeem Shares .......................... 22
The Funds' Investment Objectives ............. 7 Reports to Shareholders ....................... 24
Investment Profiles .......................... 7 The Lifetime Investing Account/Distribution
Investment Policies and Risks ................ 9 Options ..................................... 25
Organization of the Funds and the Portfolios . 14 The Eaton Vance Exchange Privilege ............ 26
Management of the Funds and the Portfolios ... 15 Eaton Vance Shareholder Services .............. 26
Distribution and Service Plans ............... 18 Distributions and Taxes ....................... 27
Valuing Shares ............................... 19 Performance Information ....................... 29
=======================================================================================================
PROSPECTUS DATED SEPTEMBER 1, 1997
SHAREHOLDER AND FUND EXPENSES
--------------------------------------------------------------------------------
[Enlarge/Download Table]
SHAREHOLDER TRANSACTION EXPENSES
-----------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.75% None None
Sales Charges Imposed on Reinvested Distributions None None None
Fees to Exchange Shares None None None
Maximum Contingent Deferred Sales Charge None 5.00% 1.00%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
-----------------------------------------------------------------------------------------------------------------
INFORMATION AGE DEVELOPING RESOURCES HEALTH SCIENCES
FUND FUND FUND
------------------------------- -------------------- --------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS A CLASS B
SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------ ------
Investment Adviser and/or Management
Fees 1.25% 1.25% 1.25% 0.75% 0.75% 1.37% 1.37%
Rule 12b-1 Distribution and/or
Service Fees 0.50% 0.80% 1.00% 0.00% 0.92% 0.25% 0.85%
Other Expenses 0.96% 0.96% 0.96% 0.82% 0.82% 0.38% 0.38%
---- ---- ---- ---- ---- ---- ----
Total Operating Expenses 2.71% 3.01% 3.21% 1.57% 2.49% 2.00% 2.60%
==== ==== ==== ==== ==== ==== ====
EXAMPLES
----------------------------------------------------------------------------------------------------------------------
An investor would pay the following expenses and, in the case of Class A shares, maximum initial sales charge and
in the case of Class B and Class C shares, the applicable contingent deferred sales charge on a $1,000 investment,
assuming (a) 5% annual return and (b) redemption at the end of each period:
INFORMATION AGE DEVELOPING RESOURCES HEALTH SCIENCES
FUND FUND FUND
------------------------------- -------------------- --------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS A CLASS B
SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------ ------
1 Year $ 83 $ 80 $ 42 $ 73 $ 75 $ 77 $ 76
3 Years $137 $133 $ 99 $104 $118 $117 $121
5 Years $193 $178 $168 $138 $153 $159 $158
10 Years $344 $333 $351 $233 $283 $277 $293
An investor would pay the following expenses on the same investment, assuming (a) 5% annual return and (b) no
redemptions:
INFORMATION AGE DEVELOPING RESOURCES HEALTH SCIENCES
FUND FUND FUND
------------------------------- -------------------- --------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS A CLASS B
SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------ ------
1 Year $ 83 $ 30 $ 32 $ 73 $ 25 $ 77 $ 26
3 Years $137 $ 93 $ 99 $104 $ 78 $117 $ 81
5 Years $193 $158 $168 $138 $133 $159 $138
10 Years $344 $333 $351 $233 $283 $277 $293
NOTES:
The table and Examples summarize the aggregate expenses of the Portfolios and
each class of shares of the Funds and are designed to help investors understand
the costs and expenses they will bear, directly or indirectly, by investing in a
Fund. Information for Class B shares of the Information Age and Developing
Resources Funds are based on their expenses for the most recent fiscal year
except for service fees which have been estimated. Information for Class A
shares of Developing Resources Fund and Class A and Class C shares of
Information Age Fund is estimated based upon the most recent fiscal year of its
predecessor fund adjusted for the multiple-class structure. Information for
Class A and Class B shares of the Health Sciences Fund is estimated for the
current fiscal year. Management Fees for the Information Age Fund include
management fees paid by each Class and investment advisory and administration
fees paid by the Portfolio of 0.25%, 0.75% and 0.25%, respectively. Management
Fees for the Health Sciences Fund include estimated management fees paid by each
Class and investment advisory and administration fees paid by the Portfolio of
0.25%, 0.87% and 0.25%, respectively. The advisory fee is subject to a
performance adjustment after September 1, 1997. See "Management of the Funds and
the Portfolios." The Manager of the Health Sciences Fund has agreed to waive its
fee and/or reimburse Class A for operating expenses to maintain an annual
expense ratio of 2.00% or less until August 31, 1999.
Each Fund offers multiple classes of shares. Class A shares are sold subject to
a sales charge imposed at the time of purchase. No sales charge is payable at
the time of purchase on investments in Class A shares of $1 million or more.
However, a contingent deferred sales charge ("CDSC") of 1% will be imposed on
such investments in the event of certain redemptions within 12 months of
purchase. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase and Class C shares are sold subject to a
1% CDSC if redeemed within one year of purchase. The CDSC does not apply in
certain circumstances. See "How to Buy Shares" and "How to Redeem Shares".
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Example to assume a 5% annual return, but actual annual
return will vary. Long-term shareholders in Class B and Class C shares may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by a rule of the National Association of Securities Dealers, Inc. For
further information regarding the expenses of both the Funds and the Portfolios,
see "The Funds" Financial Highlights", "Management of the Funds and the
Portfolios", "Distribution and Service Plans" and "How to Redeem Shares".
For Developing Resources Fund Class A shares sold by Authorized Firms and
remaining outstanding for at least one year, the Fund will pay service fees not
exceeding .25% per annum of its average daily net assets. The Developing
Resources Fund expects to begin making service fee payments during the quarter
ending September 30, 1998. After such date, other expenses will be higher. See
"Distribution and Service Plans".
Each Fund invests exclusively in its corresponding Portfolio. Other investment
companies and investors with different distribution arrangements and fees are
investing in the Portfolios and others may do so in the future. See
"Organization of the Funds and the Portfolios".
THE FUNDS' FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements that appear in the Funds' annual reports to shareholders.
The Developing Resources Fund's annual financial statements have been audited
by Deloitte & Touche LLP, independent accountants, the Health Sciences Fund's
annual financial statements have been audited by Tait, Weller & Baker,
independent accountants and the Information Age Fund's annual financial
statements have been audited by Coopers & Lybrand L.L.P., independent
accountants, as experts in accounting and auditing. The annual financial
statements and the independent auditors' reports are incorporated by reference
into the Statement of Additional Information. Further information regarding
the performance of a Fund is contained in its annual report to shareholders
which may be obtained without charge by contacting the Principal Underwriter.
The financial information for each of the periods presented in the Funds'
Financial Highlights are for a Fund prior to reclassification as a separate
Class of shares on September 1, 1997. Information for the new Classes of
shares are not presented because these classes did not exist prior to
September 1, 1997. The Financial Highlights for the new Classes will differ due
to the different fees borne by them.
------------------------------------------------------------------------------
[Enlarge/Download Table]
DEVELOPING RESOURCES FUND -- CLASS B SHARES
-------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED AUGUST
FEBRUARY 28, 31, YEAR ENDED SEPTEMBER 30,
1997 ------------------ ----------------------------------------------------------------------
(UNAUDITED) 1996 1995++ 1994 1993 1992 1991 1990 1989 1988**
----------- ------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, beginning
of year ................... $21.580 $16.420 $14.890 $13.240 $11.850 $11.140 $12.140 $13.460 $11.420 $10.000
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM OPERATIONS:
Net investment income
(loss) .................. $(0.131) $(0.261) $(0.100)(3)$(0.050) $(0.090) $(0.083) $ 0.020 $ 0.069 $ 0.060 $ 0.134
Net realized and unrealized
gain (loss) on investments 1.226 6.371 1.630 (3) 2.650 1.480 1.103 (0.570) (0.009) 2.480 1.406
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations $ 1.095 $ 6.110 $ 1.530 $ 2.600 $ 1.390 $ 1.020 $(0.550) $ 0.060 $ 2.540 $ 1.540
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $ -- $ -- $ -- $ -- $ -- $ -- $(0.020) $(0.069) $(0.074) $(0.120)
In excess of net investment
income(1)(4) ............ -- -- -- (0.020) -- (0.250) (0.110) (0.091) (0.146) --
From net realized gain on
investments ............. (2.875) (0.950) -- -- -- (0.060) (0.320) (1.220) (0.280) --
In excess of realized gain
on investments .......... -- -- -- (0.930) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions ..... $(2.875) $(0.950) $ -- $(0.950) $ -- $(0.310) $(0.450) $(1.380) $(0.500) $(0.120)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, end of year $19.800 $21.580 $16.420 $14.890 $13.240 $11.850 $11.140 $12.140 $13.460 $11.420
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN(2) ............. 5.62% 39.69% 10.28% 20.47% 11.73% 9.44% (4.36)% 0.01% 22.96% 15.39%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year
(000's omitted) ......... $30,598 $20,129 $15,259 $13,055 $ 5,792 $ 3,775 $ 4,042 $ 4,391 $ 2,999 $ 2,424
Ratio of net expenses to
average daily net
assets(6) ............... 2.24%+ 2.49% 2.43%+ 2.64% 3.15% 3.26% 3.29% 2.50% 1.62% 0.99%+
average daily net assets
after custodian fee
reduction(6) ............ 2.23%+ 2.47% -- -- -- -- -- -- -- --
Ratio of net investment
income (loss) to average
daily net assets ........ (1.62)%+ (1.60%) (0.74)%+ (0.96)% (0.92)% (0.67)% 0.17% 0.33% 0.45% 0.83%+
PORTFOLIO TURNOVER .......... 23% 86% 49% 17% 57% 32% 27% 35% 53% 25%
AVERAGE COMMISSION RATE
PAID(5) ................... $0.0307 $0.0382 -- -- -- -- -- -- -- --
* For the six years ended September 30, 1993, the operating expenses of the Fund reflect a reduction of the investment adviser
fee, an allocation of expenses to the Investment Adviser, or both. Had such actions not been taken, net investment loss per
share and the ratios would have been as follows:
NET INVESTMENT LOSS PER SHARE $(0.210) $(0.240) $(0.110) $(0.300) $(0.600) $(0.980)
======= ======= ======= ======= ======= =======
RATIOS (As a percentage of average daily net assets):
Expenses ....................... 3.90% 4.65% 4.42% 5.23% 6.87% 7.90%+
Net investment loss ............ (1.67)% (2.06)% (0.96)% (2.40)% (4.80)% (6.08)%+
Note: During each of the fiscal years shown above the Fund invested directly in securities. As of the close of business on March
31, 1997, the Fund transferred its assets to the Portfolio in exchange for an interest in the Portfolio (unaudited).
(See footnotes on page 6.)
THE FUNDS' FINANCIAL HIGHLIGHTS -- CONTINUED
-------------------------------------------------------------------------------
[Enlarge/Download Table]
ADJUSTED FOR 100% STOCK DIVIDEND --
RECORD DATE SEPTEMBER 23, 1996 HEALTH SCIENCES FUND -- CLASS A SHARES
---------------------------------- ----------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
1997 ------------------------------------------------------------------------------------------------
(UNAUDITED) 1996(3) 1995(3) 1994(3) 1993(3) 1992(3) 1991(3) 1990(3) 1989 1988 1987
------------- ------- ------- ------- ------- ------- ------- ------- ------- -------- -------
PER SHARE DATA
NET ASSET VALUE, at
beginning of year $ 13.54 $ 11.71 $ 9.15 $ 9.64 $ 8.97 $ 8.57 $ 7.35 $ 6.96 $ 5.30 $ 7.63 $ 6.82
------- ------- ------- ------- ------- ------- ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (0.09) (0.23) (0.17) (0.16) (0.13) (0.13) (0.11) (0.16) (0.43) (0.23) (0.10)
------- ------- ------- ------- ------- ------- ------ ------ ------ ------ ------
Net realized and
unrealized gain
(loss) on
investments 1.65 3.46 3.41 0.43 1.86 1.15 2.15 0.91 2.09 (1.58) 1.30
------- ------- ------- ------- ------- ------- ------ ------ ------ ------ ------
Total from
investment
operations 1.56 3.23 3.24 0.27 1.73 1.02 2.04 0.75 1.66 (1.81) 1.20
------- ------- ------- ------- ------- ------- ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
FROM:
Net realized gain
on investments (0.61) 1.40 0.68 0.76 1.06 0.62 0.81 0.36 -- 0.52 0.39
------- ------- ------- ------- ------- ------- ------ ------ ------ ------ ------
NET ASSET VALUE, at
end of year $ 14.49 $ 13.54 $ 11.71 $ 9.15 $ 9.64 $ 8.97 $ 8.58 $ 7.35 $ 6.96 $ 5.30 $ 7.63
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN(2) 12.02% 31.04% 38.13% 2.69% 21.37% 12.04% 30.60% 11.13% 31.32% (25.30)% 19.81%
RATIOS/SUPPLEMENTAL DATA
Net assets at end
of year (in
thousands) $67,474 $55,016 $17,690 $13,231 $10,223 $11,415 $6,955 $3,771 $2,754 $2,819 $4,015
Ratio of operating
expenses to
average net assets(7):
Before expense
reimbursement 2.42% 2.21% 2.44% 2.67% 2.87% 2.59% 3.74% 4.77% 5.54% 5.71% 6.72%
After expense
reimbursement 2.00% N/A N/A 2.50% 2.50% 2.48% 2.50% 3.51% 5.27% 5.59% 6.08%
Ratio of net
investment loss to
average net assets:
Before expense
reimbursement (2.19)% (1.81)% (1.80)% (1.82)% (1.90)% (1.56)% (2.71)% (3.51)% (4.00)% (4.12)% (5.01)%
After expense
reimbursement (1.83)% N/A N/A (1.65)% (1.53)% (1.45)% (1.47)% (2.26)% (3.73)% (4.00)% (4.37)%
PORTFOLIO TURNOVER
RATE -- 66% 45% 49% 77% 71% 81% 143% 75% 59% 95%
AVERAGE COMMISSION
RATE (PER SHARE
OF SECURITY)(5) -- $0.0864 N/A N/A N/A N/A N/A N/A N/A N/A N/A
(See footnotes on page 6.)
THE FUNDS' FINANCIAL HIGHLIGHTS -- CONTINUED
-------------------------------------------------------------------------------
INFORMATION AGE FUND -- CLASS B SHARES
--------------------------------------
SIX MONTHS
ENDED
FEBRUARY 28, YEAR ENDED
1997 AUGUST 31,
(UNAUDITED) 1996**
NET ASSET VALUE, beginning of period $11.040 $10.000
------------ ----------
INCOME FROM OPERATIONS:
Net investment loss $(0.115) $(0.134)
Net realized and unrealized gain on
investments 1.167 1.178
------- -------
Total income from operations $ 1.052 $ 1.040
------- -------
LESS DISTRIBUTIONS FROM:
Net realized gain on investments $(0.012) $ --
------- -------
Total distributions $(0.012) $ --
------- -------
NET ASSET VALUE, end of period $12.080 $11.040
======= =======
TOTAL RETURN(2) 9.53% 10.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted) $25,914 $21,800
Ratio of net expenses to average net
assets*** 2.98%+ 2.96%+
Ratio of net investment loss to
average net assets (2.07)%+ (1.34)%+
NOTE: Certain of the above per share information was computed based on average
shares outstanding.
** For the Developing Resources Fund, for the period from the start of
business, October 21, 1987, to September 30, 1988 and for the Information
Age Fund for the period from the start of business, September 18, 1995, to
August 31, 1996.
*** Includes the Fund's share of the Portfolio's allocated expenses.
+ Computed on an annualized basis.
++ For the eleven months ended August 31, 1995.
(1) Distributions from paid-in capital for the years ended September 30, 1992
and for the years prior thereto have been restated to conform with the
treatment under current financial reporting standards.
(2) Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of each period.
Distributions, if any, are assumed to be reinvested at the net asset value
on the reinvestment date. Total return is computed on a non-annualized
basis.
(3) Computed using average shares outstanding.
(4) The Fund has followed the Statement of Position (SOP) 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distribution by Investment Companies. The SOP requires
that differences in the recognition or classification of income between the
financial statements and tax earnings and profits that result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
(5) Average commission rate paid is computed by dividing the total dollar amount
of commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were
charged. For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged. Average commission rate for the
period since a Fund transferred substantially all of its investable assets
to a Portfolio is shown in the Portfolio's financial statements.
(6) The expense ratios for the year ended August 31, 1996 have been adjusted to
reflect a change in reporting requirements. The new reporting guidelines
require a Fund to increase its expense ratio by the effect of any expense
offset arrangements with its service providers. The expense ratios for each
of the periods ended on or before August 31, 1995 have not been adjusted to
reflect this change.
(7) Since September, 1989, Mehta and Isaly Asset Management, Inc. as adviser and
the administrator reimbursed a portion of their fees, when necessary, in
order to allow the Health Sciences Fund to operate within the expense
limitation of any state having jurisdiction over the Health Sciences Fund
and/or to maintain a specific expense ratio.
THE FUNDS' INVESTMENT OBJECTIVES
------------------------------------------------------------------------------
THE DEVELOPING RESOURCES FUND'S INVESTMENT OBJECTIVE IS CAPITAL APPRECIATION AND
PROTECTION OF THE PURCHASING POWER OF THE SHAREHOLDER'S CAPITAL. It currently
seeks to meet its investment objective by investing its assets in the Worldwide
Developing Resources Portfolio (the "Developing Resources Portfolio"), a
separate registered investment company, which has the same investment objective
and policies as the Fund and invests in natural resource related investments.
THE HEALTH SCIENCES FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL
GROWTH BY INVESTING IN A GLOBAL AND DIVERSIFIED PORTFOLIO OF SECURITIES OF
HEALTH SCIENCE COMPANIES. It currently seeks to meet its investment objective by
investing its assets in the Worldwide Health Sciences Portfolio (the "Health
Sciences Portfolio"), a separate registered investment company which has the
same investment objective and policies of the Fund, and invests in securities of
health sciences companies.
THE INFORMATION AGE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL GROWTH. It
currently seeks to meet its investment objective by investing its assets in the
Information Age Portfolio (the "Information Age Portfolio"), a separate
registered investment company which has the same investment objective and
policies as the Fund, and invests in securities of information age companies.
Except as otherwise indicated in this Prospectus, the investment objective and
policies of each Fund and its corresponding Portfolio are the same and may be
changed by the Trustees of the Trust or the Portfolio without obtaining the
approval of the Fund's shareholders or the investors in the Portfolio, as the
case may be. The Trustees of the Trust have no present intention to change any
Fund's objective and intend to submit any proposed material change in investment
objective to shareholders for their approval.
Each Fund is intended for long-term investors who can withstand share price
fluctuations and can accept international risks and little or no current income.
Prospective investors should take into account their objectives and other
investments when considering the purchase of a Fund's shares. No Fund is a
complete investment program and poses special risks. The Information Age
Portfolio is exposed to technology orientated companies; the Worldwide Health
Sciences Portfolio concentrates its investments in medical research and the
health care industry, and the Worldwide Developing Resources Portfolio is
subject to the volatile market in which natural resource investments are traded.
Numerous worldwide economic, financial and political factors can affect a
Portfolio's holdings. No Fund can assure achievement of its investment
objective.
Boston Management and Research ("BMR"), a wholly-owned subsidiary of Eaton
Vance, serves as investment adviser to Information Age Portfolio and Worldwide
Developing Resources Portfolio. In addition, Lloyd George Investment Management
(Bermuda) Limited ("Lloyd George") serves as investment adviser to Information
Age Portfolio and Mehta and Isaly Asset Management, Inc. ("M&I") serves as
investment adviser to Worldwide Health Sciences Portfolio (each an "Adviser,"
collectively, the "Advisers"). The sponsor and manager of the Funds and the
administrator of the Portfolios is Eaton Vance Management, 24 Federal Street,
Boston, MA 02110 ("Eaton Vance" or the "Manager").
INVESTMENT PROFILES
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NATURAL RESOURCE OPPORTUNITIES
The Adviser to the Developing Resources Portfolio, BMR, will seek to identify
securities of companies in this investment sector which, in its judgment, are
undervalued relative to the value of their natural resource assets, revenues or
profits in light of current and anticipated economic or financial conditions.
BMR believes that the market value of securities of companies that have
different kinds of natural resource assets, revenues or profits may move
relatively independently of one another during different stages of investment
and inflationary cycles. BMR's flexible investment approach enables it to change
the Developing Resources Portfolio's investment emphasis to various subsectors
within the large natural resource investment sector depending upon it's outlook
as to developments and trends which may affect the value of and prospects for
different types of natural resource related investments.
In reviewing natural resource related investments available to the Developing
Resources Portfolio, BMR will consider, among other investments, domestic and
foreign companies which may
o EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD PRECIOUS METALS. BMR will
give special emphasis in this subsector to efficiently managed, low cost
gold producers which are able to operate profitably at the current level
of gold prices, thereby benefiting from any future increase in gold
prices.
o EXPLORE FOR, FINANCE, DEVELOP OR PRODUCE ENERGY RESOURCES. In this
subsector, BMR will stress low cost producers whose reserves will allow
expansion of production and those companies with established earnings
records in both rising and falling energy markets.
o EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD STRATEGIC METALS.
o CREATE AND DEVELOP NEW GEOCHEMICAL TECHNOLOGY OR PROPRIETARY METHODS FOR
DETECTING, DEVELOPING, PRODUCING OR PROCESSING MINERAL DEPOSITS AND OTHER
NATURAL RESOURCES.
o OWN, LEASE OR HAVE RIGHTS TO HOLDINGS OF TIMBER AND TIMBERLANDS. This
would include those companies which manufacture or process pulp, paper,
wood products and other specialty products.
o PROVIDE NATURAL RESOURCE TRANSPORTATION, DISTRIBUTION AND PROCESSING
SERVICES, SUCH AS PIPELINES AND REFINING.
HEALTH SCIENCE INVESTMENTS
Markets for health sciences products and services have undergone significant
growth over the last 25 years. In the U.S., the Department of Health and Human
Services estimates health care expenditures alone could increase to over 16% of
gross national product by the year 2000, compared to 7.6%, 10.3% and 14.0% in
1972, 1982 and 1992, respectively. Outside the U.S., most developed countries
are seeing similar growth in health care expenditures. In emerging markets,
health care spending is increasing as standards of living are improving and as
revenues become available to fund government and private programs to address
basic health needs. Factors contributing to this growth include demographic
shifts tending to a higher world population and a larger elderly populaton in
industrialized nations, technological advances, and popular acceptance of and
worldwide familiarity with health care products, resulting in high consumer
demand. In addition to increased demand for health science products and
services, substantial public and private expenditures on basic medical research
and advances in technology have accelerated the pace of medical discoveries. The
Adviser of the Health Sciences Portfolio, M&I, believes that the rate of change
may accelerate in the future, causing certain segments of the business to
decline and others to experience growth. Favorable investment opportunities may
be found in companies that provide products or services designed for the
prevention, diagnosis and treatment of physical and mental disorders.
In making portfolio selections, in addition to evaluating trends in corporate
revenues, earnings and dividends, M&I generally considers the amount of capital
currently being expended on research and development, and the nature thereof.
M&I believes that dollars invested in research and development today frequently
have significant bearing on future growth.
Portfolio securities generally will be selected from companies in the following
groups:
BIOTECHNOLOGY -- Companies which are producing or plan to produce as a result of
current research, diagnostic and therapeutic drugs and reagents based on genetic
engineering and the use of monoclonal antibodies or on recombinant DNA; also,
specialty companies catering to the unique requirements of biotechnology
companies such as those providing enzymes, media and purification equipment.
DIAGNOSTICS -- Private organizations that develop or maintain sophisticated
diagnostic equipment such as CAT scanners and Magnetic Resonance Imaging as well
as urological and serological assays.
MANAGED HEALTHCARE -- Operators of investor-owned hospital chains (including
acute care psychiatric hospitals), nursing centers for the elderly, health
maintenance organizations, and rehabilitation clinics which seek to deliver
hospital care on an efficient cost basis.
MEDICAL EQUIPMENT AND SUPPLIES -- Companies engaged in the manufacture of
inpatient and outpatient medical (and dental), surgical, laboratory and
diagnostic products (ranging from cotton swabs through kidney dialyses equipment
to CAT scanners).
PHARMACEUTICALS -- Companies involved with new types of drugs and their delivery
systems.
THE INFORMATION AGE
In recent years, a number of technological advances have facilitated the global
dissemination of information of all types including text, voice, images, moving
pictures and digital data streams. These technological advances may be likened
to the dynamic process of invention and application of new technology in the
eighteenth and nineteenth centuries that has come to be known as the Industrial
Revolution, ushering in the Industrial Age. In the same way, the Advisers to the
Information Age Portfolio, BMR and Lloyd George, believe that the current pace
of technological change in the dissemination and use of information will be
looked upon as the Information Revolution and will usher in the Information Age.
The leading equity investments of the Information Age may be those companies,
referred to as information age companies, developing and successfully adopting
these new technologies to meet the needs of the rapidly changing information
marketplace. The global dissemination of information and information processing
technologies has enhanced economic growth in the developed economies of the
world and is contributing to the rapid modernization of the world's newly
developing economies. BMR and Lloyd George believe that the pace and scope of
these technological developments are likely to increase and that their economic
impact will become increasingly important. The Advisers believe that investment
in companies participating in these developments both as producers and as
beneficiaries of new technologies is likely to produce favorable returns. These
industries are dynamic and the Advisers will endeavor to keep abreast of changes
in information products, services and technologies. The Advisers may consider
investment in companies that benefit from:
o EMERGING AND ESTABLISHED TECHNOLOGIES THAT WILL ENHANCE THE PROCESSING AND
TRANSFER OF INFORMATION. These may include digital technologies, such as
computer hardware, software and networks; mobile telephony and established
telecommunications networks of all sorts; fiber optic communications
equipment; and developing methods of utilizing electromagnetic spectrum for
communications.
o PRIVATIZATION AND DEREGULATION OF STATE OWNED BUSINESSES, such as
telecommunication, television and other information media companies both in
the developed economies and the emerging economies where these companies may
reach new markets and expand their business opportunities.
o WIDER ACCESS TO INFORMATION AND ENTERTAINMENT MEDIA BY PEOPLES AROUND THE
GLOBE, including broadcasters; cable television networks; producers and
publishers of entertainment, news, literature and scholarly information;
owners of libraries and data bases of all kinds; advertising agencies and in
some cases advertisers who can capitalize on rising demand due to broader
consumer awareness, particularly in new markets.
o DEVELOPMENT OF NEW INFORMATION INFRASTRUCTURE IN DEVELOPING COUNTRIES, such as
producers and developers of communication network equipment and managers of
sophisticated communication networks.
o AFFORDABILITY OF, AND RISING DEMAND FOR, INFORMATION INDUSTRIES' CONSUMER
PRODUCTS AND SERVICES particularly in the emerging economies such as China,
India, Africa, Latin America, and Eastern Europe where penetration of these
products and services is low by world standards.
INVESTMENT POLICIES AND RISKS
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DEVELOPING RESOURCES PORTFOLIO. The Developing Resources Portfolio seeks to
achieve its investment objective by investing in domestic and foreign natural
resource related investments. Under normal investment conditions, the Developing
Resources Portfolio will invest primarily in common stocks, but it may also hold
convertible bonds, convertible preferred stocks, warrants, preferred stocks and
debt securities if BMR believes such investments would help to achieve the
Portfolio's investment objective. The Portfolio may also invest in debt,
preferred or convertible securities, the value of which is related in part to
the market value of some natural resource asset ("asset- related securities").
The Portfolio under normal circumstances will maintain at least 65% of its total
assets in natural resource related investments or in asset-related securities.
In making investments for the Portfolio, BMR will seek to identify companies or
asset-related securities it believes are attractively priced relative to the
intrinsic value of the underlying natural resource assets, revenues or profits
or are especially well positioned to benefit during particular periods of
investment or inflationary cycles. The Portfolio may also from time to time
invest to a limited extent in natural resource-related direct placement
securities and venture capital companies and in gold or silver bullion,
strategic metals, and gold or silver coins.
During temporary defensive periods, such as during abnormal market or economic
conditions, the Portfolio may invest in U.S. Government securities and money
market securities, including repurchase agreements, or hold a portion of its
assets in cash or cash equivalents. The Portfolio may also hold a portion of its
assets in cash or money market instruments, including repurchase agreements and
cash equivalents, for liquidity purposes. In addition, under certain
circumstances, the Portfolio may invest a majority of its assets in gold-related
investments. See below. Emphasis on underperforming investment sectors can
result in substantial losses.
Natural resource related investments include securities issued by companies
engaged in exploring for, developing, processing, fabricating, producing,
distributing, dealing in or owning natural resources, companies engaged in the
creation or development of technologies for the production or use of natural
resources, and companies engaged in the furnishing of technology, equipment,
supplies or services to the natural resource investment sector. BMR currently
deems a company to be in the natural resource investment sector if (a) at least
50% of the non-current assets, capitalization, gross revenues or operating
profit of the company in the most recent or current fiscal year are involved in
or result from (whether directly or indirectly through affiliates) any of the
foregoing activities or (b) in BMR's judgment the company's natural resource
assets, revenues or profit are of such magnitude, when compared with the total
non-current assets, capitalization, gross revenues or operating profit of the
company, that favorable changes in the value of such assets or level of its
natural resource revenues or profit could favorably affect the market value of
the equity securities of the company.
Natural resources include substances, materials and energy derived from natural
sources which have economic value. Examples of natural resources include
precious metals (e.g., gold, silver and platinum), ferrous and nonferrous metals
(e.g., iron, aluminum and copper), strategic metals (e.g., titanium, chromium,
vanadium and niobium), energy resources (coal, oil, natural gas, oil shale and
uranium), timberland, undeveloped real property and agricultural and other
commodities.
HEALTH SCIENCES PORTFOLIO. The Health Sciences Portfolio invests in a global and
diversified portfolio of securities of health science companies. These companies
principally are engaged in the development, production or distribution of
products or services related to scientific advances in health care, including
biotechnology, diagnostics, managed health care and medical equipment and
supplies, and pharmaceuticals. At the time the Portfolio makes an investment,
50% or more of such a company's sales, earnings or assets will arise from or
will be dedicated to the application of scientific advances related to health
care. The Health Sciences Portfolio may invest in securities of both established
and emerging companies, some of which may be denominated in foreign currencies.
Under normal market conditions, the Health Sciences Portfolio will invest at
least 65% of its assets in securities of health science companies, including
common and preferred stocks; equity interests in partnerships; convertible
preferred stocks; and other convertible instruments. Convertible debt
instruments generally will be rated below investment grade (i.e., rated lower
than Baa by Moody's Investors Service, Inc. or lower than BBB by Standard &
Poor's Ratings Group) or, if unrated, determined by M&I to be of equivalent
quality. Convertible debt securities so rated are commonly called "junk bonds"
and have risks similar to equity securities; they are speculative and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade debt securities. Such below investment grade debt securities will not
exceed 20% of total assets. For temporary defensive purposes, such as during
abnormal market or economic conditions, the Health Sciences Portfolio may invest
without limit in high grade debt securities of foreign and United States
companies, foreign governments and the U.S. Government, and their respective
agencies, instrumentalities, political subdivisions and authorities, as well as
in high quality money market instruments.
Many health science companies are subject to substantial governmental
regulations that can affect their prospects. Changes in governmental policies,
such as reductions in the funding of third-party payment programs, may have a
material effect on the demand for particular health care products and services.
Regulatory approvals (often entailing lengthy application and testing
procedures) are also generally required before new drugs and certain medical
devices and procedures may be introduced. Many of the products and services of
companies engaged in medical research and health care are also subject to
relatively high risks of rapid obsolescence caused by progressive scientific and
technological advances. The enforcement of patent, trademark and other
intellectual property laws will affect the value of many such companies. The
Health Sciences Portfolio will invest in securities of emerging growth health
science companies, which may offer limited products or services or which are at
the research and developmental stage with no marketable or approved products or
technologies.
INFORMATION AGE PORTFOLIO. The Information Age Portfolio invests in a global and
diversified portfolio of securities of information age companies. Information
age companies are companies that may be engaged in providing information
services, such as telephony, broadcasting, cable or satellite television,
publishing, advertising, producing information and entertainment media, data
processing, networking of data processing and communication systems, or
providing consumer interconnection to computer communication networks. In
addition, such companies may be engaged in the development, manufacture, sale,
or servicing of information age products, such as computer hardware, software
and networking equipment, mobile telephony devices, telecommunications network
switches and equipment, television and radio broadcasting and receiving
equipment, or news and information media of all types. The Information Age
Portfolio may invest in securities of both established and emerging companies
operating in developed and emerging economies.
Under normal market conditions, the Information Age Portfolio will invest at
least 65% of its assets in securities of information age companies. Securities
eligible for purchase include common and preferred stocks; equity interests in
trusts, partnerships, joint ventures and other unincorporated entities or
enterprises; special classes of shares available only to foreign investors in
markets that restrict ownership by foreign investors to certain classes of
equity securities; convertible preferred stocks; and other convertible
instruments. Convertible debt instruments generally will be rated below
investment grade (i.e., rated lower than Baa by Moody's Investors Service, Inc.
or lower than BBB by Standard & Poor's Ratings Group) or, if unrated, determined
by an Adviser to be of equivalent quality. Convertible debt securities so rated
are commonly called "junk bonds" and have risks similar to equity securities;
they are speculative and changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade debt securities. Such debt
securities will not exceed 20% of total assets. For temporary defensive
purposes, the Information Age Portfolio may invest without limit in debt
securities of foreign and United States companies, foreign governments and the
U.S. Government, and their respective agencies, instrumentalities, political
subdivisions and authorities, as well as in high quality money market
instruments.
Many information age companies are subject to substantial governmental
regulations that can affect their prospects. The enforcement of patent,
trademark and other intellectual property laws will affect the value of many of
such companies.
An investment in a Fund entails the risk that the principal value of Fund shares
may not increase or may decline. Each Portfolio's investments are subject to the
risk of adverse developments affecting particular companies or industries and
securities markets generally.
ADDITIONAL INVESTMENT POLICIES AND RISKS FOR THE DEVELOPING RESOURCES FUND:
METALS INVESTMENTS. The Developing Resources Portfolio may invest up to 10% of
its portfolio in gold or silver bullion, strategic metals, and gold or silver
coins. The Portfolio will invest only in metals that are readily marketable, and
in coins only if there is an active quoted market for the coins in question.
Coins will not be purchased for their numismatic value. Prices of precious
metals may fluctuate sharply over short periods due to various events, such as
changes in actual or anticipated inflation, currency fluctuations, metal sales
by governments, central banks or international agencies, investment speculation,
changes in demand, or governmental restrictions on private ownership.
GOLD-RELATED INVESTMENTS. Based on historic experience, during periods of
economic or political instability the securities of gold-related companies may
be subject to wide price fluctuations, reflecting the high volatility of gold
prices during such periods. In addition, the instability of gold prices may
result in volatile earnings of gold-related companies which, in turn, may affect
adversely the financial condition of such companies. Gold mining companies also
are subject to the risks generally associated with mining operations. The major
producers of gold include the Republic of South Africa, the United States,
Russia, Australia, China and Canada. Economic, social and political developments
within South Africa, Russia and China, including civil unrest, may significantly
affect gold production and values.
WHEN BMR ANTICIPATES SIGNIFICANT ECONOMIC OR POLITICAL INSTABILITY, SUCH AS HIGH
INFLATION OR TURMOIL IN THE FOREIGN CURRENCY EXCHANGE MARKETS, THE DEVELOPING
RESOURCES PORTFOLIO, IN SEEKING TO PROTECT THE PURCHASING POWER OF SHAREHOLDERS'
CAPITAL, MAY INVEST A MAJORITY OF ITS ASSETS IN COMPANIES THAT EXPLORE FOR,
EXTRACT, PROCESS OR DEAL IN GOLD OR IN ASSET-RELATED SECURITIES INDEXED TO THE
VALUE OF SOME NATURAL RESOURCE SUCH AS GOLD BULLION. Such a change in investment
strategy could require the Portfolio to liquidate portfolio assets and incur
transaction costs. There can be no assurance that any such change in investment
strategy will be successful.
NON-DIVERSIFICATION. The Developing Resources Portfolio is a "non-diversified"
investment company, and so may invest its assets in a more limited number of
issuers than if it were a diversified investment company. Under applicable tax
requirements, the Portfolio may not invest more than 25% of its assets in
obligations of any one issuer (other than U.S. Government obligations) and, with
respect to 50% of its total assets, the Portfolio may not invest more than 5% of
its total assets in the securities of any one issuer (except U.S. Government
securities). Thus, the Portfolio may invest up to 25% of its total assets in the
securities of each of any two issuers. This practice involves an increased risk
of loss. To mitigate this risk, the Developing Resources Portfolio has adopted
an investment policy that it will not purchase more than 10% of the total
outstanding voting securities of an issuer, except when significant economic,
political or financial instability is anticipated.
BORROWING AND LEVERAGE. The Developing Resources Portfolio may borrow money to
invest in additional portfolio securities. This practice, known as "leverage,"
increases the Portfolio's market exposure and its risk. The interest the
Portfolio must pay on borrowed money will reduce the amount of any potential
gains or increase any losses. The extent to which the Portfolio will borrow
money, and the amount it may borrow, depend on market conditions and interest
rates. Successful use of leverage depends on BMR's ability to predict market
movements correctly. The Portfolio may at times borrow money by means of reverse
repurchase agreements. Reverse repurchase agreements generally involve the sale
by the Portfolio of securities held by it and an agreement to repurchase the
securities at an agreed-upon price, date, and interest payment. Reverse
repurchase agreements will increase the Portfolio's overall investment exposure
and may result in losses. The amount of money borrowed by the Portfolio for
leverage may generally not exceed one-third of the Portfolio's assets (including
the amount borrowed).
COMMON INVESTMENT POLICIES AND RISKS:
INVESTING IN FOREIGN SECURITIES. Each Portfolio may invest in foreign
securities, and under normal market conditions the Health Sciences and
Developing Resources Portfolios will each hold securities of issuers in at least
three countries. Investing in securities issued by foreign companies and
governments (including depository receipts) involves considerations and possible
risks not typically associated with investing in securities issued by the U.S.
Government and domestic corporations. The values of foreign investments are
affected by changes in currency rates or exchange control regulations,
application of foreign tax laws (including withholding tax), changes in
governmental administration or economic or monetary policy (in this country or
abroad), or changed circumstances in dealings between nations. Because
investment in foreign issuers will usually involve currencies of foreign
countries, the value of the assets of a Portfolio as measured in U.S. dollars
may be adversely affected by changes in foreign currency exchange rates. Such
rates may fluctuate significantly over short periods of time causing a
Portfolio's net asset value to fluctuate as well. Costs are incurred in
connection with conversions between various currencies. In addition, foreign
brokerage commissions, custody fees and other costs of investing are generally
higher than in the United States, and foreign securities markets may be less
liquid, more volatile and less subject to governmental supervision than in the
United States. Investments in foreign issuers could be adversely affected by
other factors not present in the United States, including expropriation,
confiscatory taxation, lack of uniform accounting and auditing standards and
potential difficulties in enforcing contractual obligations. In addition to
investing in foreign companies of countries which represent established and
developed economies, the Health Sciences Portfolio may also invest some of its
assets in the emerging economies of lesser developed countries such as China and
India, and countries located in Latin America and Eastern Europe, and the
Developing Resources Portfolio may invest in Africa, the Far East, Latin America
and Eastern Europe. Consistent with its investment objective, a Portfolio is not
limited in the percentage of assets it may invest in such securities; however,
the number of health science issuers in less developed countries is relatively
small. The relative risk and cost of investing in the securities of companies in
such emerging economies may be higher than an investment in securities of
companies in more developed countries. As of the date of this Prospectus,
approximately 50%, 44% and 49%, respectively, of the Developing Resources,
Health Sciences and Information Age Portfolios' assets were comprised of foreign
securities.
DERIVATIVE INSTRUMENTS. Each Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return, to hedge against
fluctuations in securities prices, interest rates or currency exchange rates (or
commodity prices for Developing Resources Portfolio), or as a substitute for the
purchase or sale of securities or currencies (or commodities for Developing
Resources Portfolio). A Portfolio's transactions in derivative instruments may
be in the U.S. or abroad and may include the purchase or sale of futures
contracts on securities, securities indices, other indices, other financial
instruments or currencies; options on futures contracts; exchange-traded and
over-the-counter options on securities, indices or currencies; and forward
foreign currency exchange contracts. A Portfolio's transactions in derivative
instruments involve a risk of loss or depreciation due to: unanticipated adverse
changes in securities prices, interest rates, the other financial instruments'
prices or currency exchange rates; the inability to close out a position;
default by the counterparty; imperfect correlation between a position and the
desired hedge; tax constraints on closing out positions; and portfolio
management constraints on securities subject to such transactions. The loss on
derivative instruments (other than purchased options) may substantially exceed a
Portfolio's initial investment in these instruments. In addition, a Portfolio
may lose the entire premium paid for purchased options that expire before they
can be profitably exercised by a Portfolio. A Portfolio incurs transaction costs
in opening and closing positions in derivative instruments. There can be no
assurance that a Portfolio's Adviser's use of derivative instruments will be
advantageous to the Portfolio.
To the extent that a Portfolio enters into futures contracts, options on futures
contracts and options on foreign currencies traded on an exchange regulated by
the Commodity Futures Trading Commission ("CFTC"), in each case that are not for
bona fide hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums required to establish these positions (excluding the amount
by which options are "in-the-money") may not exceed 5% of the liquidation value
of the Portfolio's investments, after taking into account unrealized profits and
unrealized losses on any contracts the Portfolio has entered into.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. Each Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
the Portfolio's Adviser determines that there is an established historical
pattern or correlation between the two currencies (or the basket of currencies
and the underlying currency). Use of a different foreign currency magnifies a
Portfolio's exposure to foreign currency exchange rate fluctuations. Each
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
CURRENCY SWAPS. A Portfolio may enter into currency swaps for both hedging and
non-hedging purposes. Currency swaps involve the exchange of rights to make or
receive payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of correlation
between its portfolio investments and its currency swap positions. Currency
swaps usually involve the delivery of the entire principal value of one
designated currency in exchange for the other designated currency. Therefore,
the entire principal value of a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery obligations.
The use of currency swaps is a highly specialized activity which involves
special investment techniques and risks. If an Adviser is incorrect in its
forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. Each Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell) with respect to its
permitted investments, but currently intends to do so only with member banks of
the Federal Reserve System or with primary dealers in U.S. Government
securities. In the event of the bankruptcy of the other party to a repurchase
agreement, the Portfolio might experience delays in recovering its cash. To the
extent that, in the meantime, the value of the securities a Portfolio purchased
may have decreased, the Portfolio could experience a loss. The Portfolios do not
expect to invest more than 5% of their respective total assets in repurchase
agreements under normal circumstances.
RESTRICTED SECURITIES. Securities that are not freely tradeable or which are
subject to restrictions on sale under the Securities Act of 1933 are considered
restricted. Such securities are illiquid and may be difficult to properly value.
Each Portfolio's holdings of illiquid securities may not exceed 15% of its net
assets. Illiquid securities include securities legally restricted as to resale
such as commercial paper issued pursuant to Section 4 (2) of the Securities Act
of 1933, and securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933. Section 4(2) and Rule 144A securities may, however, be
treated as liquid by an Adviser pursuant to procedures adopted by the Trustees,
which require consideration of factors such as trading activity, availability of
market quotations and number of dealers willing to purchase the security. Such
Rule 144A securities may increase the level of fund illiquidity to the extent
qualified institutional buyers become uninterested in purchasing such
securities.
DIRECT PLACEMENT SECURITIES, VENTURE CAPITAL INVESTMENTS AND SMALLER COMPANIES.
The Developing Resources Portfolio may make natural resource related investments
in "direct placement securities" issued by a company directly to the Portfolio.
The Developing Resources Portfolio is also empowered to make natural resource
related investments in "venture capital companies" -- companies, the securities
of which have no public market at the time of investment. The Developing
Resources Portfolio's direct placement securities and venture capital
investments are considered speculative in nature and are not readily marketable.
Each Portfolio's investments may include securities of smaller, less seasoned
companies. Such securities, are generally subject to greater price fluctuations,
limited liquidity, higher transaction costs and higher investment risk. Smaller
companies may have limited product lines, markets or financial resources, or
they may be dependent on a limited management group. There is generally less
publicly available information about such companies than larger, more
established companies. Because of the absence of any public trading market for
some of these investments (such as those that are legally restricted) it may
take longer to liquidate these positions at fair value than would be the case
for publicly traded securities.
CONCENTRATION. The Developing Resources Portfolio has adopted a fundamental
policy which requires it during normal market conditions to concentrate at least
25% of its total assets in the natural resources group of industries. The Health
Sciences Portfolio, as a matter of fundamental policy, will not invest 25% or
more of its total assets in the securities of issuers in any one industry other
than U.S. Government securities and securities of health science companies.
Therefore, either Portfolio could be adversely affected by a single economic,
political or regulatory occurrence or other development affecting its investment
sector. As a Portfolio's concentration increases, so does the potential for
fluctuation in the value of shares of a mutual fund which invests in a broader
range of industries. (The Information Age Portfolio may not invest 25% or more
of its total assets in the securities, other than U.S. Government securities, of
issuers in any one industry.) No Fund should be considered a balanced or
complete investment program.
OTHER INVESTMENT COMPANIES. Each Portfolio reserves the right to invest up to
10% of its total assets in the securities of other investment companies
unaffiliated with the Portfolio's Adviser that have the characteristics of
closed-end investment companies. A Portfolio will indirectly bear its
proportionate share of any management fees paid by investment companies in which
it invests in addition to the advisory fee paid by a Portfolio. The value of
closed-end investment company securities, which are usually traded on an
exchange, is affected by demand for the securities themselves, independent of
the demand for the underlying portfolio assets, and, accordingly, such
securities can trade at a discount from their net asset values.
CERTAIN INVESTMENT POLICIES. The Funds and the Portfolios have adopted certain
fundamental investment restrictions and policies, in addition to their
concentration policies set forth above, which are enumerated in detail in the
Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote. In addition, the
Statement of Additional Information contains nonfundamental investment policies;
for example, each Portfolio may temporarily borrow up to 5% of the value of its
total assets to satisfy redemption requests or settle securities transactions.
Investment restrictions are considered at the time of acquisition of assets; the
sale of portfolio assets generally is not required in the event of a subsequent
change in circumstances.
Except for the fundamental investment restrictions and policies specifically
identified above and enumerated in the Statement of Additional Information, the
investment objective and policies of the Funds and the Portfolios are not
fundamental policies and accordingly may be changed by the Trustees of the Trust
and the Portfolios without obtaining the approval of the shareholders of the
Funds or the investors in the Portfolios, as the case may be. The Developing
Resources Fund may also invest in other registered investment companies in the
Eaton Vance group of funds in addition to or in lieu of the Developing Resources
Portfolio, if such other funds invest in securities that the Fund can invest in
and the Trustees of the Trust determine it is in the best interests of the Fund
to do so. Any other registered investment company in which such Fund invests is
likely to be organized and to operate in the manner described under
"Organization of the Funds and the Portfolios."
ORGANIZATION OF THE FUNDS AND THE PORTFOLIOS
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THE INFORMATION AGE AND HEALTH SCIENCES FUNDS ARE EACH DIVERSIFIED SERIES AND
THE DEVELOPING RESOURCES FUND IS A NON-DIVERSIFIED SERIES OF EATON VANCE GROWTH
TRUST, A BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A
DECLARATION OF TRUST DATED MAY 25, 1989, AS AMENDED. The Trustees of the Trust
are responsible for the overall management and supervision of its affairs. The
Trust may issue an unlimited number of shares of beneficial interest (no par
value per share) in one or more series (such as the Funds). The Trustees of the
Trust have divided the shares of each Fund into multiple classes, including
Class A, Class B and Class C shares. Each class represents an interest in a
Fund, but is subject to different expenses, rights and privileges. See
"Distribution and Service Plans" and "How to Buy Shares". The Trustees have the
authority under the Declaration of Trust to create additional classes of shares
with differing rights and privileges. As a result of a reorganization with
separate series of the Trust, the Funds commenced offering Class A, Class B and,
for the Information Age Fund, Class C shares on September 1, 1997.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem Shares". There are no
annual meetings of shareholders, but special meetings may be held as required by
law to elect Trustees and consider other matters. Shareholders are entitled to
one vote for each full share held. Fractional shares may be voted
proportionately. Shares of a Fund will be voted together except that only
shareholders of a particular class may vote on matters affecting only that
class. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of a Fund, shareholders of each
class are entitled to share pro rata in the net assets attributable to that
class available for distribution to shareholders.
The Trustees of the Trust have considered the advantages and disadvantages of
investing the assets of each Fund in its corresponding Portfolio, as well as the
advantages and disadvantages of the two-tier format. The Trustees believe that
the structure offers opportunities for growth in the assets of the Portfolios,
may afford the potential for economies of scale for each Fund and may over time
result in lower expenses for a Fund.
EACH PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. In addition
to selling an interest to its corresponding Fund, a Portfolio may sell interests
to other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in a Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in a Portfolio are not required to sell their shares at the
same public offering price as the corresponding Fund due to variations in sales
commissions and other operating expenses. Therefore, these differences may
result in differences in returns experienced by investors in the various funds
that invest in its corresponding Portfolio. Such differences in returns are also
present in other mutual fund structures, including funds that have multiple
classes of shares. Information regarding other pooled investment entities or
funds which invest in a Portfolio may be obtained by contacting the Principal
Underwriter, 24 Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever a Fund as an investor in a Portfolio is requested to vote on matters
pertaining to the Portfolio (other than the termination of the Portfolio's
business, which may be determined by the Trustees of the Portfolio without
investor approval), the Fund will hold a meeting of Fund shareholders and will
vote its interest in the Portfolio for or against such matters proportionately
to the instructions to vote for or against such matters received from Fund
shareholders. A Fund shall vote shares for which it receives no voting
instructions in the same proportion as the shares for which it receives voting
instructions. Other investors in a Portfolio may alone or collectively acquire
sufficient voting interests in the Portfolio to control matters relating to the
operation of the Portfolio, which may require the corresponding Fund to withdraw
its investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, a Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of a
Fund. Notwithstanding the above, there are other means for meeting shareholder
redemption requests, such as borrowing.
A Fund may withdraw (completely redeem) all its assets from its corresponding
Portfolio at any time if the Board of Trustees of the Trust determines that it
is in the best interest of that Fund to do so. In the event a Fund withdraws all
of its assets from its corresponding Portfolio, or the Board of Trustees of the
Trust determines that the investment objective of such Portfolio is no longer
consistent with the investment objective of the Fund, the Trustees would
consider what action might be taken, including investing the assets of such Fund
in another pooled investment entity or retaining an investment adviser to manage
the Fund's assets in accordance with its investment objective. A Fund's
investment performance may be affected by a withdrawal of all its assets (or the
assets of another investor in the Portfolio) from its corresponding Portfolio.
Although each Fund offers only its own shares of beneficial interest, it is
possible that a Fund or class might become liable for a misstatement or omission
in the Prospectus regarding another Fund or class because the Funds use this
combined Prospectus. The Trustees of the Trust have considered this factor in
approving the use of a combined Prospectus.
MANAGEMENT OF THE FUNDS AND THE PORTFOLIOS
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Eaton Vance Management ("Eaton Vance") acts as the sponsor and manager of the
Health Sciences and Information Age Funds and as the administrator of the Health
Sciences and Information Age Portfolios and the Developing Resources Fund. The
Developing Resources Portfolio has engaged Boston Management and Research
("BMR"), a wholly-owned subsidiary of Eaton Vance as its investment adviser. The
Information Age Portfolio has engaged Eaton Vance and Lloyd George Investment
Management (Bermuda) Limited ("Lloyd George") as investment advisers, with the
Portfolio's non-U.S. assets managed by Lloyd George and its U.S. assets managed
by Eaton Vance. The Health Sciences Portfolio has engaged Mehta and Isaly Asset
Management, Inc. ("M&I") as its investment adviser.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. BMR or Eaton Vance acts as investment adviser to
investment companies and various individual and institutional clients with
assets under management of approximately $20 billion. Eaton Vance is a
wholly-owned subsidiary of Eaton Vance Corp., a publicly-held holding company
which through its subsidiaries and affiliates engages primarily in investment
management, administration and marketing activities. The Principal Underwriter
is a wholly-owned subsidiary of Eaton Vance. Eaton Vance Corp. owns 22% of the
Class A Shares issued by Lloyd George Management (B.V.I.)
Limited ("LGM"), the parent of Lloyd George.
William D. Burt and Barclay Tittman are the co-portfolio managers of the
Developing Resources Portfolio since inception. Mr. Burt joined Eaton Vance and
BMR as a Vice President in November, 1994. Prior to joining Eaton Vance, he was
a Vice President of The Boston Company (1990-1994) and a Vice President of
Baring America Asset Management (1979-1990). Mr. Tittman joined Eaton Vance and
BMR as a Vice President in October 1993. He was a Vice President, portfolio
manager and analyst with Invesco Management and Research (formerly Gardner and
Preston Moss) from 1970-1993.
Duncan W. Richardson has acted as a portfolio manager of the Information Age
Portfolio since it commenced operations. Mr. Richardson is a Vice President of
Eaton Vance and of BMR and manages other Eaton Vance portfolios.
Lloyd George, which maintains offices in Hong Kong, London, England and Bombay,
India, is a corporation formed on October 29, 1991 under the laws of Bermuda.
Lloyd George is registered as an investment adviser with the Commission. Lloyd
George is a subsidiary of LGM. LGM and its subsidiaries act as investment
adviser to various individual and institutional clients with total assets under
management of more than $1 billion. Robert J. D. Lloyd George has acted as a
portfolio manager of the Information Age Portfolio since it commenced
operations. He is the Chairman and Chief Executive Officer of LGM and Lloyd
George. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services, Ltd. (1984-1991).
While the Information Age Portfolio is a New York trust, Lloyd George, together
with Mr. Lloyd George and Edward K.Y. Chen (a Trustee of the Information Age
Portfolio), are not residents of the United States and substantially all of
their respective assets may be located outside of the United States. It may be
difficult for investors to effect service of process within the United States
upon the individuals identified above, or to realize judgments of courts of the
United States predicated upon civil liabilities of Lloyd George and such
individuals under the federal securities laws of the United States. The
Information Age Portfolio has been advised that there is substantial doubt as to
the enforceability in the countries in which Lloyd George and such individuals
reside of such civil remedies and criminal penalties as are afforded by the
federal securities laws of the United States.
Investment decisions for the Health Sciences Portfolio are made by the portfolio
manager, Samuel D. Isaly. Mr. Isaly has been active in international and health
care investing throughout his career, beginning at Chase Manhattan Bank in New
York in 1968. He studied international economics, mathematics and econometrics
at Princeton and the London School of Economics. His company, Gramercy
Associates, was the first to develop an integrated worldwide system of analysis
on the 100 leading worldwide pharmaceutical companies, with investment
recommendations conveyed to 50 leading financial institutions in the United
States and Europe beginning in 1982. Gramercy Associates was absorbed into S.G.
Warburg & Company Inc. in 1986, where Mr. Isaly became a Senior Vice President.
In July of 1989, Mr. Isaly joined with Dr. Viren Mehta to found the partnership
of Mehta and Isaly. The operations of the combined effort are (1) to provide
investment ideas to institutional investors on the subject of worldwide health
care, (2) to undertake cross-border merger and acquisition projects in the
industry and (3) to provide investment management services to selected
investors. The latter activity is undertaken primarily through the legal entity
Mehta and Isaly Asset Management, Inc., which is an investment advisory firm
registered with the Commission.
Each Adviser, acting under the general supervision of the Board of Trustees of a
Portfolio, manages a Portfolio's investments and affairs pursuant to an
investment advisory agreement. The Advisers also furnish for the use of the
respective Portfolios office space and all necessary office facilities,
equipment and personnel for servicing the investments of the Portfolio.
Under its investment advisory agreement with the Developing Resources Portfolio,
BMR will receive a monthly advisory fee of .0625% (equivalent to .75% annually)
of the average daily net assets of the Portfolio up to $500 million; the fee
will be reduced at various asset levels over $500 million. For the period from
the Portfolio's start of business, April 17, 1997, to July 31, 1997, the
Portfolio paid BMR advisory fees equivalent to .75% of the Fund's average daily
net assets for such year.
Under the investment advisory agreement with the Information Age Portfolio, BMR
and Lloyd George receive a monthly advisory fee, to be divided equally between
them, of .0625% (equivalent to .75% annually) of the average daily net assets of
the Portfolio up to $500 million, which fee declines at intervals above $500
million. As of August 31, 1996, the Portfolio had net assets of $42,703,385. For
the period from the start of business, September 18, 1995, to August 31, 1996,
the Portfolio paid such Advisers advisory fees equivalent to 0.75% (annualized)
of the Portfolio's average daily net assets for such period.
Under the investment advisory agreement with the Health Sciences Portfolio, M&I
receives a fee computed daily and payable monthly at an annual rate of 1.00% of
the Portfolio's average daily net assets up to $30 million of such assets, 0.90%
of the next $20 million of such assets, and 0.75% on such assets in excess of
$50 million. The fee rate declines for net assets of $500 million and greater.
Beginning September 1, 1997, M&I may receive a performance based adjustment of
up to 0.25% of the average daily net assets of the Portfolio based upon the
investment performance of the Portfolio compared to the Standard & Poor's Index
of 500 Common Stocks over specified periods. For the fiscal year ended August
31, 1996, M&I received an advisory fee of 0.97% of average daily net assets,
during which time assets were managed at the Fund level. M&I has agreed to pay
the Principal Underwriter the equivalent of one-third of its advisory fee
receipts out of M&I's own resources for the Principal Underwriter's activities
as placement agent of the Portfolio.
The Advisers place the portfolio transactions of the Portfolios for execution
with many broker-dealer firms and use their best efforts to obtain execution of
such transactions at prices which are advantageous to a Portfolio and at
reasonably competitive commission rates. Subject to the foregoing, the Advisers
may consider sales of shares of a Fund as a factor in the selection of
broker-dealer firms to execute portfolio transactions. The Funds, the Portfolios
and the Advisers have adopted Codes of Ethics relating to personal securities
transactions. The Codes permit Eaton Vance and M&I personnel to invest in
securities (including securities that may be purchased or held by a Portfolio)
for their own accounts, subject to certain reporting and other restrictions and
procedures contained in such Codes.
Eaton Vance, acting under the general supervision of the Boards of Trustees of
the Trust and the Information Age and Health Sciences Portfolios, manages and
administers the business affairs of the Information Age and Health Sciences
Funds and the Portfolios. Eaton Vance's services include monitoring and
providing reports to the Trustees of the Trust and the Portfolios concerning the
investment performance achieved by the Advisers for the Portfolios,
recordkeeping, preparation and filing of documents required to comply with
federal and state securities laws, supervising the activities of the transfer
agent of the Trust and the custodian of the Portfolios, providing assistance in
connection with Trustees' and shareholders' meetings and other management and
administrative services necessary to conduct the business of the Funds and the
Portfolios. Eaton Vance also furnishes for the use of the Funds and the
Portfolios office space and all necessary office facilities, equipment and
personnel for managing and administering the business affairs of the Funds and
the Portfolios. Eaton Vance does not provide any investment management or
advisory services to the Portfolios or the Funds.
Under its management contract with the Information Age and Health Sciences
Funds, Eaton Vance receives a monthly management fee in the amount of 1/48 of 1%
(equal to 0.25% annually) of the average daily net assets of each Fund up to
$500 million, which fee declines at intervals above $500 million. Under its
administration agreement with the Information Age and Health Sciences
Portfolios, Eaton Vance receives a monthly administration fee in the amount of
1/48 of 1% (equal to .25% annually) of the average daily net assets of each
Portfolio up to $500 million, which fee declines at intervals above $500
million.
For the period from the start of business, September 18, 1995, to August 31,
1996, Eaton Vance earned management fees equivalent to 0.25% (annualized) of the
Information Age Fund's average daily net assets for such period. In addition,
for the period from the Information Age Portfolio's start of business, September
18, 1995, to August 31, 1996, Eaton Vance earned administration fees equivalent
to 0.25% (annualized) of the Portfolio's average daily net assets for such
period.
The Portfolios and the Funds, as the case may be, will each be responsible for
all respective costs and expenses not expressly stated to be payable by an
Adviser under the investment advisory agreements, by Eaton Vance under the
management contracts or the administration agreements, or by the Principal
Underwriter under the distribution agreements. Eaton Vance has agreed that
through August 31, 1999, if the annual aggregate expenses of the Class A shares
of Health Sciences Fund (excluding extraordinary expenses) exceed 2.00% of
average daily net assets, then Eaton Vance will reduce its fees and take other
actions to the extent required to reduce Health Sciences Fund Class A expenses.
The Trust has retained the services of Eaton Vance to act as Administrator of
the Developing Resources Fund. The Trust has not retained the services of an
investment adviser since the Trust seeks to achieve the investment objective of
the Fund by investing the Fund's assets in the Developing Resources Portfolio.
As Administrator, Eaton Vance provides the Developing Resources Fund with
general office facilities and supervises the overall administration of the Fund.
For these services Eaton Vance currently receives no compensation. The Trustees
of the Trust may determine, in the future, to compensate Eaton Vance for such
services.
DISTRIBUTION AND SERVICE PLANS
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The Trust has adopted a Distribution Plan (the "Class A Plan") for the Health
Sciences and Information Age Funds' Class A shares that is designed to meet the
requirements of Rule 12b-1 under the 1940 Act. THE CLASS A PLAN FOR THE
INFORMATION AGE FUND PROVIDES FOR THE PAYMENT OF A MONTHLY DISTRIBUTION FEE TO
THE PRINCIPAL UNDERWRITER IN AN AMOUNT EQUAL TO THE AGGREGATE OF (a) .50% OF
THAT PORTION OF CLASS A AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR WHICH IS
ATTRIBUTABLE TO ITS SHARES WHICH HAVE REMAINED OUTSTANDING FOR LESS THAN ONE
YEAR AND (b) .25% OF THAT PORTION OF CLASS A AVERAGE DAILY NET ASSETS FOR ANY
FISCAL YEAR WHICH IS ATTRIBUTABLE TO ITS SHARES WHICH HAVE REMAINED OUTSTANDING
FOR MORE THAN ONE YEAR. THE CLASS A PLAN FOR THE HEALTH SCIENCES FUND PROVIDES
FOR THE PAYMENT OF A MONTHLY DISTRIBUTION FEE TO THE PRINCIPAL UNDERWRITER IN AN
AMOUNT EQUAL TO 0.25% OF ITS AVERAGE DAILY NET ASSETS. The Principal Underwriter
intends to use at least part of such fees from the Health Sciences Fund to
compensate Authorized Firms, including M&I, for personal services rendered to
Health Sciences Fund shareholders and/or the maintenance of shareholder
accounts. Aggregate payments to the Principal Underwriter under the Class A Plan
are limited to those permissible, pursuant to a rule of the National Association
of Securities Dealers, Inc. For the fiscal year ended August 31, 1996, the
Health Sciences Fund paid distribution fees to the prior distributor of the Fund
representing 0.25% of the average daily net assets of the Fund.
The Information Age Fund Class A Plan also provides that the Class will pay a
quarterly service fee to the Principal Underwriter in an amount equal on an
annual basis to .25% of that portion of its average daily net assets for any
fiscal year which is attributable to Class A shares which have remained
outstanding for more than one year; from such service fee the Principal
Underwriter expects to pay a quarterly service fee to Authorized Firms, as
compensation for providing personal services and/or the maintenance of
shareholder accounts, with respect to shares sold by such Firms which have
remained outstanding for more than one year. The Trustees of the Trust have
implemented the Class A Plan by authorizing each Class A to make quarterly
service fee payments to the Principal Underwriter not to exceed on an annual
basis .25% of that portion of average daily net assets for any fiscal year which
is attributable to Class A shares which have remained outstanding for more than
one year. Service fee payments to Authorized Firms will be in addition to sales
charges on Class A shares which are reallowed to Authorized Firms. If the Class
A Plan is terminated or not continued in effect, the Class has no obligation to
reimburse the Principal Underwriter for amounts expended by the Principal
Underwriter in distributing Class A shares.
The Trust has adopted a Service Plan (the "Class A Service Plan") for the
Developing Resources Fund's Class A shares that is designed to meet the service
fee requirements of the sales charge rule of the National Association of
Securities Dealers, Inc. THE CLASS A SERVICE PLAN PROVIDES THAT CLASS A MAY MAKE
SERVICE FEE PAYMENTS FOR PERSONAL SERVICES AND/OR THE MAINTENANCE OF SHAREHOLDER
ACCOUNTS TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN
AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR.
The Trustees of the Trust have initially implemented the Class A Service Plan by
authorizing the Class A to make quarterly service fee payments to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% of its
average daily net assets for any fiscal year which is based on the value of
Class A shares sold by such persons and remaining outstanding for at least
twelve months. The Class A expects to begin making service fee payments during
the quarter ending September 30, 1998.
The Trust has also adopted Distribution Plans ("Class B Plan" and "Class C
Plan") pursuant to Rule 12b-1 under the 1940 Act for the Funds' Class B and
Class C (for the Information Age Fund only) shares. Each Plan is designed to
permit an investor to purchase shares through an Authorized Firm without
incurring an initial sales charge and at the same time permit the Principal
Underwriter to compensate Authorized Firms in connection therewith. UNDER SUCH
PLANS, CLASS B AND CLASS C EACH PAYS THE PRINCIPAL UNDERWRITER A FEE, ACCRUED
DAILY AND PAID MONTHLY, AT AN ANNUAL RATE NOT EXCEEDING .75% OF ITS AVERAGE
DAILY NET ASSETS TO FINANCE THE DISTRIBUTION OF ITS SHARES. Such fees compensate
the Principal Underwriter for sales commissions paid by it to Authorized Firms
on the sale of Class B and Class C shares and for interest expenses. Under each
Class B Plan, the Principal Underwriter uses its own funds to pay sales
commissions (except on exchange transactions and reinvestments) to Authorized
Firms at the time of sale equal to 4% of the purchase price of the Class B
shares sold by such Firms. Under the Class C Plan, the Principal Underwriter
currently expects to pay to an Authorized Firm (a) sales commissions (except on
exchange transactions and reinvestments) at the time of sale equal to .75% of
the purchase price of the Class C shares sold by such Firm, and (b) monthly
sales commissions approximately equivalent to 1/12 of .75% of the value of Class
C shares sold by such Firm and remaining outstanding for at least one year.
During the first year after a purchase of Class C shares, the Principal
Underwriter will retain the sales commission as reimbursement for the sales
commissions made to Authorized Firms at the time of sale. CDSCs paid to the
Principal Underwriter will be used to reduce amounts owed to it. Because
payments to the Principal Underwriter under the two Plans are limited, uncovered
distribution charges (sales commissions paid by the Principal Underwriter plus
interest, less the above fees and CDSCs received by it) may exist indefinitely.
During the fiscal year ended August 31, 1996, each Class B (which were then
separate series funds) paid or accrued sales commissions equivalent to .75% of
average daily net assets. As at August 31, 1996, the outstanding uncovered
distribution charges calculated under the Developing Resources and Information
Age Class B Plans amounted to approximately $450,000 and $923,000, respectively
(equivalent to 2.2% and 4.2%, respectively, of net assets on such day).
THE CLASS B AND CLASS C PLANS ALSO AUTHORIZE EACH SUCH CLASS TO MAKE PAYMENTS OF
SERVICE FEES TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN
AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR PERSONAL
SERVICES, AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS. Under each Class B
Plan, this fee is paid quarterly in arrears based on the value of Class B shares
sold by such persons and remaining outstanding for at least twelve months. Under
the Class C Plan, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) a service fee (except on exchange transactions and
reinvestments) at the time of sale equal to .25% of the purchase price of the
Class C shares sold by such Firm, and (b) monthly service fees approximately
equivalent to 1/12 of .25% of the value of Class C shares sold by such Firm and
remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the Principal Underwriter will retain the service
fee as reimbursement for the service fee payment made to Authorized Firms at the
time of sale. For the fiscal year ended August 31, 1996, Developing Resources
Class B paid or accrued service fees under its Plan equivalent to .17% of
average daily net assets for such year. The Information Age Fund Class B began
making service fee payments during the quarter ended September 30, 1996.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed by
the Principal Underwriter. In some instances, such additional incentives may be
offered only to certain Authorized Firms whose representatives sell or are
expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
The Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of shares at any time. In determining
whether any such action should be taken, the Trust's management intends to
consider all relevant factors, including (without limitation) the size of the
Fund or class, the investment climate and market conditions, the volume of sales
and redemptions of shares, and in the case of Class B and Class C shares, the
amount of uncovered distribution charges of the Principal Underwriter. The Plans
may continue in effect and payments may be made under the Plans following any
such suspension, discontinuance or limitation of the offering of shares;
however, there is no contractual obligation to continue any Plan for any
particular period of time. Suspension of the offering of shares would not, of
course, affect a shareholder's ability to redeem shares.
VALUING SHARES
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EACH FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). Each Class's net asset value per
share is determined by IBT Fund Services (Canada) Inc. (as agent for the Trust)
in the manner authorized by the Trustees of the Trust. IBT Fund Services
(Canada) Inc. is a subsidiary of Investors Bank & Trust ("IBT"), the Trust's
custodian. The net asset value of each Class is computed by dividing the value
of that Class's pro rata share of each Fund's total assets, less its
liabilities, by the number of shares of that Class outstanding. Because each
Fund invests its assets in an interest in its corresponding Portfolio, each
Class's net asset value will reflect the value of each Fund's interest in the
Portfolio (which, in turn, reflects the underlying value of the Portfolio's
assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per share, and, for Class A shares, the
public offering price based thereon. It is the Authorized Firms' responsibility
to transmit orders promptly to the Principal Underwriter.
Each Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT Fund Services (Canada) Inc. (as agent for the
Portfolio) in the manner authorized by the Trustees of the Portfolio. Net asset
value is computed by subtracting the liabilities of a Portfolio from the value
of its total assets.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY SHARES
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SHARES OF A FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
ACCEPTABLE SECURITIES. Class A shares are purchased at the effective public
offering price, which price is based on the effective net asset value per share
plus the applicable sales charge. The sales charge is divided between the
Authorized Firm and the Principal Underwriter. Class B and Class C shares are
purchased at the net asset value per share next determined after an order is
effective. An Authorized Firm may charge its customers a fee in connection with
transactions executed by that Firm. The Trust may suspend the offering of shares
at any time and may refuse an order for the purchase of shares.
An initial investment must be at least $1,000. Once an account has been
established the investor may send investments of $50 or more at any time
directly to the Trust's transfer agent (the "Transfer Agent") as follows: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans,
the Fund may accept initial investments from Class B and Class C shares of less
than $1,000 on the part of an individual participant. In the event a shareholder
who is a participant of such a plan terminates participation in the plan, his or
her shares will be transferred to a regular individual account. However, such
account will be subject to the right of redemption by the Trust as described
below under "How to Redeem Shares".
CLASS A SHARES. The sales charge may vary depending on the size of the purchase
and the number of shares of Class A shares of Eaton Vance funds the investor may
already own, any arrangement to purchase additional shares during a 13-month
period or special purchase programs. Complete details of how investors may
purchase shares at reduced sales charges under a Statement of Intention or Right
of Accumulation are available from Authorized Firms or the Principal
Underwriter.
The current sales charges and dealer commissions are:
[Enlarge/Download Table]
SALES CHARGE SALES CHARGE DEALER COMMISSION
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
------------------------------------------------------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75 4.99 4.00
$100,000 but less than $250,000 3.75 3.90 3.00
$250,000 but less than $500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more 0.00* 0.00* See Below**
* No sales charge is payable at the time of purchase on investments of $1 million or more. A CDSC of 1% will be imposed on
such investments in the event of certain redemptions within 12 months of purchase.
** A commission on sales of $1 million or more will be paid as follows: 1.00% on amounts of $1 million or more but less than
$3 million; plus 0.50% on amounts from $3 million but less than $5 million; plus 0.25% on amounts of $5 million or more.
Purchases of $1 million or more will be aggregated over a 12-month period for purposes of determining the commission to be
paid.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in the
Securities Act of 1933.
Class A shares may be sold at net asset value to current and retired Directors
and Trustees of Eaton Vance funds, including the Portfolio; to clients and
current and retired officers and employees of Eaton Vance, its affiliates and
other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company or series thereof with the Fund, (2) to investors making an
investment as part of a fixed fee program whereby an entity unaffiliated with
the Investment Adviser provides multiple investment services, such as
management, brokerage and custody, and (3) to investment advisors, financial
planners or other intermediaries who place trades for their own accounts or the
accounts of their clients and who charge a management, consulting or other fee
for their services; clients of such investment advisors, financial planners or
other intermediaries who place trades for their own accounts if the accounts are
linked to the master account of such investment advisor, financial planner or
other intermediary on the books and records of the broker or agent; and
retirement and deferred compensation plans and trusts used to fund those plans,
including, but not limited to, those defined in Section 401(a), 403(b) or 457 of
the Internal Revenue Code of 1986, as amended (the "Code") and "rabbi trusts."
The Trust's Principal Underwriter may pay commissions to Authorized Firms who
initiate and are responsible for purchases of Class A shares of the Fund by
Eligible Plans of up to 1.00% of the amount invested in such shares.
No sales charge is payable at the time of purchase where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton Vance
if the redemption occurred no more than 60 days prior to the purchase of Class A
shares and the redeemed shares were potentially subject to a sales charge. A
CDSC of 0.50% will be imposed on such investments in the event of certain
redemptions within 12 months of purchase and the Authorized Firm will be paid a
commission on such sales of 0.50% of the amount invested.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an application,
makes a Statement of Intention to invest a specified amount over a
thirteen-month period in Class A shares, then out of the initial purchase (or
subsequent purchases if necessary) 5% of the dollar amount specified on the
application shall be held in escrow by the escrow agent in the form of such
shares (computed to the nearest full share at the public offering price
applicable to the initial purchase hereunder) registered in the investor's name.
All income dividends and capital gains distributions on escrowed shares will be
paid to the investor or to the investor's order. When the minimum investment so
specified is completed, the escrowed shares will be delivered to the investor.
If the investor has an accumulation account the shares will remain on deposit
under the investor's account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation an Authorized Firm other than the original Firm is placing the
orders, the adjustment will be made only on those shares purchased through the
Firm then handling the investor's account.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange for
Fund shares. The minimum value of securities (or securities and cash) accepted
for deposit is $5,000. Securities accepted will be sold on the day of their
receipt or as soon thereafter as possible. The number of Fund shares to be
issued in exchange for securities will be the aggregate proceeds from the sale
of such securities, divided by the applicable public offering price of Class A
shares or net asset value of Class B and Class C shares on the day such proceeds
are received. Eaton Vance will use reasonable efforts to obtain the then current
market price for such securities, but does not guarantee the best available
price. Eaton Vance will absorb any transaction costs, such as commissions, on
the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance [state name]
Investors Bank & Trust Company Fund (and Class)
For A/C Eaton Vance [state name] Physical Securities Processing
Fund (and Class) Settlement Area
200 Clarendon Street
Boston, MA 02116
Investors who are contemplating an exchange of securities for shares, or their
representatives, must contact Eaton Vance to determine whether the securities
are acceptable before forwarding such securities. Eaton Vance reserves the right
to reject any securities. Exchanging securities for shares may create a taxable
gain or loss. Each investor should consult his or her tax adviser with respect
to the particular federal, state and local tax consequences of exchanging
securities.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM SHARES
------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM SHARES IN ONE OF THREE WAYS -- BY MAIL, BY TELEPHONE OR
THROUGH AN AUTHORIZED FIRM. The redemption price will be based on the net asset
value per share next computed after a redemption request is received in the
proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a Commission regulation and
acceptable to the Transfer Agent. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Trust, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the Principal Underwriter, as
the Trust's agent, receives the order. It is the Authorized Firm's
responsibility to transmit promptly repurchase orders to the Principal
Underwriter. Throughout this Prospectus, the word "redemption" is generally
meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the Trust will make payment in cash for the net asset value of
the shares as of the date determined above, reduced by the amount of any
applicable CDSC (described below) and any federal income tax required to be
withheld. While normally payments will be made in cash for redeemed shares, the
Trust, subject to compliance with applicable regulations, has reserved the right
to pay the redemption price of shares of a Fund, either totally or partially, by
a distribution in kind of readily marketable securities withdrawn from its
corresponding Portfolio. The securities so distributed would be valued pursuant
to the Portfolio's valuation procedures. If a shareholder received a
distribution in kind, the shareholder could incur brokerage or other charges in
converting the securities to cash.
If shares were recently purchased, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Trust reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required if the cause of the low
account balance was a reduction in the net asset value of shares. No CDSC will
be imposed with respect to such involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A. If Class A shares have been
purchased at net asset value with no initial sales charge by virtue of the
purchase having been in the amount of $1 million or more and are redeemed within
12 months of purchase, a CDSC of 1% will be imposed on such redemption. If
shares were purchased at net asset value because the amount invested represents
redemption proceeds from a mutual fund unaffiliated with Eaton Vance (as
described under "How to Buy Shares"), and are redeemed within 12 months of
purchase, a CDSC of 0.50% will be imposed on such redemption. The CDSC will be
imposed on an amount equal to the lesser of the current market value or the
original purchase price of the shares redeemed. Accordingly, no CDSC will be
imposed on increases in account value above the initial purchase price,
including any distributions that have been reinvested in additional shares. In
determining whether a CDSC is applicable to a redemption, it will be assumed
that redemptions are made first from any shares in the shareholder's account
that are not subject to a CDSC. The CDSC will be retained by the Principal
Underwriter.
The CDSC imposed on Class A shares is waived for redemptions involving certain
liquidation, merger or acquisition transactions involving other investment
companies. If a shareholder reinvests redemption proceeds in accordance with the
conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment
Privilege," the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B. Class B shares redeemed within the
first six years of their purchase (except shares acquired through the
reinvestment of distributions) generally will be subject to a CDSC. This CDSC is
imposed on any redemption, the amount of which exceeds the aggregate value at
the time of redemption of (a) all shares in the account purchased more than six
years prior to the redemption, (b) all shares in the account acquired through
reinvestment of distributions, and (c) the increase, if any, in the value of all
other shares in the account (namely those purchased within the six years
preceding the redemption) over the purchase price of such shares. Redemptions
are processed in a manner to maximize the amount of redemption proceeds which
will not be subject to a CDSC. That is, each redemption will be assumed to have
been made first from the exempt amounts referred to in clauses (a), (b) and (c)
above, and second through liquidation of those shares in the account referred to
in clause (c) on a first-in-first-out basis. Any CDSC which is required to be
imposed on Class B share redemptions will be made in accordance with the
following schedule:
YEAR OF
REDEMPTION
AFTER PURCHASE CDSC
------------------------------------------------------------
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%
In calculating the CDSC upon the redemption of Class B shares acquired in an
exchange of shares of a fund currently listed under "The Eaton Vance Exchange
Privilege", the CDSC schedule applicable to the shares at the time of purchase
will apply and the purchase of shares acquired in the exchange is deemed to have
occurred at the time of the original purchase of exchanged shares.
No CDSC will be imposed on Class B shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will also
be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton
Vance Shareholder Services"), (2) as part of a required distribution from a
tax-sheltered retirement plan, or (3) following the death of all beneficial
owners of such shares, provided the redemption is requested within one year of
death (a death certificate and other applicable documents may be required). In
addition, shares acquired as a result of a merger or liquidation of another
Eaton Vance sponsored fund will have a CDSC imposed at the same rate as would
have been imposed in the prior fund.
CONTINGENT DEFERRED SALES CHARGE -- CLASS C. Class C shares redeemed within the
first year of their purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a CDSC equal to 1% of the net asset
value of the redeemed shares. This CDSC is imposed on any redemption the amount
of which exceeds the aggregate value at the time of redemption of (a) all shares
in the account purchased more than one year prior to the redemption, (b) all
shares in the account acquired through reinvestment of distributions, and (c)
the increase, if any, of value in the other Class C shares in the account
(namely those purchased within the year preceding the redemption) over the
purchase price of such shares. Redemptions are processed in a manner to maximize
the amount of redemption proceeds which will not be subject to a CDSC. That is,
each redemption will be assumed to have been made first from the exempt amounts
referred to in clauses (a), (b) and (c) above, and second through liquidation of
those shares in the account referred to in clause (c) on a first-in-first out
basis.
In calculating the CDSC upon the redemption of Class C shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," the purchase of shares acquired in the exchange is deemed to have
occurred at the time of the original purchase of the exchanged shares.
No CDSC will be imposed on Class C shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will also
be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton
Vance Shareholder Services"), (2) as part of a distribution from a retirement
plan qualified under Section 401, 403(b) or 457 of the Code, or (3) as part of a
minimum required distribution from other tax-sheltered retirement plans.
REPORTS TO SHAREHOLDERS
-------------------------------------------------------------------------------
EACH FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Funds' independent certified public accountants. Shortly
after the end of each calendar year, each Fund will furnish its shareholders
with information necessary for preparing federal and state tax returns.
Consistent with applicable law, duplicate mailings of shareholder reports and
certain other Fund information to shareholders residing at the same address may
be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
-------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S
RECORDS. This account is a complete record of all transactions which at all
times shows the balance of shares owned. The Trust will not issue share
certificates except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain investment plans, statements may
be sent only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO PERMITS A
SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50
OR MORE TO the Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Trust's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares are held in a "street name" account with an
Authorized Firm, all recordkeeping, transaction processing and payments of
distributions relating to the beneficial owner's account will be performed by
the Authorized Firm, and not by the Trust and its Transfer Agent. Since the
Trust will have no record of the beneficial owner's transactions, a beneficial
owner should contact the Authorized Firm to purchase, redeem or exchange shares,
to make changes in or give instructions concerning the account, or to obtain
information about the account. The transfer of shares in a "street name" account
to an account with another Authorized Firm or to an account directly with the
Trust involves special procedures and will require the beneficial owner to
obtain historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an Authorized
Firm, or transferring the account to another Authorized Firm, an investor
wishing to reinvest distributions should determine whether the Authorized Firm
which will hold the shares allows reinvestment of distributions in "street name"
accounts.
THE EATON VANCE EXCHANGE PRIVILEGE
--------------------------------------------------------------------------------
Shares of each Fund currently may be exchanged for shares of the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A shares may
also be exchanged for shares of Eaton Vance Cash Management Fund, Eaton Vance
Income Fund of Boston, Eaton Vance Municipal Bond Fund L.P., and Eaton Vance Tax
Free Reserves. Class B shares may also be exchanged for shares of Eaton Vance
Prime Rate Reserves, which are subject to an early withdrawal charge, or shares
of Eaton Vance Money Market Fund, which are subject to a CDSC, and shares of a
money market fund sponsored by an Authorized Firm and approved by the Principal
Underwriter (an "Authorized Firm fund"). Class C shares may also be exchanged
for shares of Eaton Vance Money Market Fund. Any such exchange will be made on
the basis of the net asset value per share of each fund/class at the time of the
exchange (plus, in the case of an exchange made within six months of the date of
purchase of Class A shares subject to an initial sales charge, an amount equal
to the difference, if any, between the sales charge previously paid on the
shares being exchanged and the sales charge payable on the shares being
acquired). Exchange offers are available only in states where shares of the fund
being acquired may be legally sold. Exchanges are subject to any restrictions or
qualifications set forth in the current prospectus of any such fund.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Trust does not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
The Transfer Agent makes exchanges at the next determined net asset value after
receiving an exchange request in good order (see "How to Redeem Shares").
Consult the Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of the other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon
redemption of shares acquired in an exchange, the CDSC applicable to the shares
at the time of purchase will apply and the purchase of shares acquired in one or
more exchanges is deemed to have occurred at the time of the original purchase
of the exchanged shares, except that time during which shares are held in an
Authorized Firm fund will not be credited toward completion of the CDSC period.
For the CDSC schedule applicable to the Class B shares (except Class B shares of
the Limited Maturity Funds and Prime Rate Reserves), see "How to Redeem Shares".
The CDSC or early withdrawal charge schedule applicable to Class B shares of the
Limited Maturity Funds and Prime Rate Reserves is 3%, 2.5%, 2% or 1% in the
event of a redemption occurring in the first, second, third or fourth year,
respectively, after the original share purchase.
Telephone exchanges are accepted by the Transfer Agent provided the investor has
not disclaimed in writing the use of the privilege. To effect such exchanges,
call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00 a.m. to
4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange must be
registered in the same name(s) and with the same address as the shares being
exchanged. Neither the Trust, the Principal Underwriter nor the Transfer Agent
will be responsible for the authenticity of exchange instructions received by
telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
--------------------------------------------------------------------------------
THE TRUST OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the applicable Fund or Class as an expense to
all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the Fund
and Class being purchased may be mailed directly to the Transfer Agent, First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 at any
time -- whether or not distributions are reinvested. The name of the
shareholder, the Fund and Class and the account number should accompany each
investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks. For Class B and Class C shares, any such
withdrawals may not in the aggregate exceed 12% annually of the account balance
at the time the plan is established. Such amount will not be subject to the
Class B or Class C CDSC. See "How to Redeem Shares." A minimum deposit of $5,000
in shares is required. The maintenance of a withdrawal plan concurrently with
purchases of additional Class A shares would be disadvantageous because of the
sales charge included in such purchase.
STATEMENT OF INTENTION: Purchases of $50,000 or more of Class A shares made
over a 13-month period are eligible for reduced sales charges. See "How to Buy
Shares -- Statement of Intention and Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges on Class
A shares when the current market value of holdings (shares at current offering
price), plus new purchases, reaches $50,000 or more. Class A shares of the Eaton
Vance funds listed under "The Eaton Vance Exchange Privilege" may be combined
under the Statement of Intention and Right of Accumulation.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest, with
credit for any CDSC paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in the same shares (or for
Class A shares in Class A shares of any other Eaton Vance fund), provided that
the reinvestment is effected within 60 days after such redemption and the
privilege has not been used more than once in the prior 12 months. Shares are
sold to a reinvesting shareholder at the next determined net asset value
following timely receipt of a written purchase order by the Principal
Underwriter or by the Trust (or by the Trust's Transfer Agent). To the extent
that any shares are sold at a loss and the proceeds are reinvested in shares (or
other shares are acquired) within the period beginning 30 days before and ending
30 days after the date of redemption, some or all of the loss generally will not
be allowed as a tax deduction. Shareholders should consult their tax advisers
concerning the tax consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Class A and Class C shares of each Fund are
available for purchase in connection with certain tax-sheltered retirement
plans. Detailed information concerning these plans, including certain exceptions
to minimum investment requirements, and copies of the plans are available from
the Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of each Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of the
net investment income (if any) allocated to a Fund by its corresponding
Portfolio (less the Funds' direct and allocated expenses and class-specific
expenses) and (B) at least one distribution annually of all or substantially all
of the net realized capital gains (if any) and net gains from foreign currency
transactions (if any) allocated to a Fund by its corresponding Portfolio
(reduced by any available capital loss carryforwards from prior years).
Shareholders may reinvest all distributions in shares of a Fund at net asset
value per share as of the close of business on the record date.
Each Fund's net investment income consists of a Fund's allocated share of the
net investment income of its corresponding Portfolio, less all actual and
accrued expenses of the Fund and net realized capital gains, if any, consist of
the net realized capital gains (if any) allocated to a Fund by its corresponding
Portfolio for tax purposes, after taking into account any available capital loss
carryovers. Each Portfolio's net investment income consists of all income
accrued on a Portfolio's assets, less all actual and accrued expenses of the
Portfolio determined in accordance with generally accepted accounting
principles.
TAXES. Distributions by a Fund which are derived from the Fund's allocated share
of its corresponding Portfolio's net investment income, net short-term capital
gains and certain foreign exchange gains are taxable to shareholders as ordinary
income, whether received in cash or reinvested in additional shares of a Fund. A
portion of distributions from a Fund's net investment income may qualify for the
dividends-received deduction for corporate shareholders.
Capital gains referred to in clause (B) above, if any, realized by a Portfolio
and allocated to a Fund for the Fund's fiscal year, which ends on August 31,
will usually be distributed by a Fund prior to the end of December.
Distributions by a Fund of net long-term capital gains allocated to a Fund by
its corresponding Portfolio are taxable to shareholders as long-term capital
gains, whether paid in cash or additional shares of the Fund and regardless of
the length of time Fund shares have been owned by the shareholder.
If shares are purchased shortly before the record date of a distribution, the
shareholder will pay the full price for the shares and then receive some portion
of the price back as a taxable distribution. The amount, timing and character of
the Fund's distributions to shareholders may be affected by special tax rules
governing the Portfolio's activities in options, futures and forward foreign
currency exchange transactions. Certain distributions declared by the Fund in
October, November or December and paid the following January will be taxable to
shareholders as if received on December 31 of the year in which they are
declared.
Sales charges paid upon a purchase of Class A shares cannot be taken into
account for purposes of determining gain or loss on a redemption or exchange of
the shares before the 91st day after their purchase to the extent a sales charge
is reduced or eliminated in a subsequent acquisition of shares of a Fund or
another fund pursuant to a Fund's reinvestment or exchange privilege. Any
disregarded or disallowed amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.
Each Fund intends to qualify as a regulated investment company under the Code
and to satisfy all requirements necessary to avoid paying federal income taxes
on the part of its investment company taxable income (consisting of taxable net
investment income and net short-term capital gains) and net capital gains that
it distributes to shareholders. In satisfying these requirements, each Fund will
treat itself as owning its proportionate share of each of its corresponding
Portfolio's assets and as entitled to the income of the Portfolio properly
attributable to such share.
As a regulated investment company under the Code, each Fund does not pay federal
income or excise taxes to the extent that it distributes to shareholders
substantially all of its ordinary income and capital gain net income in
accordance with the timing requirements imposed by the Code. As partnerships
under the Code, the Portfolios do not pay federal income or excise taxes.
Income realized by a Portfolio from certain investments and allocated to a Fund
may be subject to foreign income taxes, and a Fund may make an election under
Section 853 of the Code that would allow shareholders to claim a credit or
deduction on their federal income tax returns for (and treat as additional
amounts distributed to them) their pro rata portion of a Fund's allocated share
of qualified taxes paid by its corresponding Portfolio to foreign countries.
This election may be made only if more than 50% of the assets of a Fund,
including its allocable share of its corresponding Portfolio's assets, at the
close of a taxable year consists of securities in foreign corporations. Each
Fund will send a written notice of any such election (not later than 60 days
after the close of its taxable year) to each shareholder indicating the amount
to be treated as the proportionate share of such taxes. The availability of
foreign tax credits or deductions for shareholders is subject to certain
additional restrictions and limitations.
Shareholders will receive annually Forms 1099 to assist in preparation of their
federal and state tax returns for the prior calendar year's distributions,
proceeds from the redemption or exchange of Fund shares, and federal income tax
(if any) withheld by the Transfer Agent.
Shareholders should consult with their tax advisers concerning the applicability
of state, local or other taxes to an investment in a Fund.
PERFORMANCE INFORMATION
--------------------------------------------------------------------------------
FROM TIME TO TIME, AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED. Average annual
total return is determined separately for each Class by computing the average
annual percentage change in value of $1,000 invested at the maximum public
offering price (including maximum sales charge for Class A shares; net asset
value for Class B and Class C shares) for specified periods, assuming
reinvestment of all distributions. Total return may be quoted for the period
prior to commencement of operations which would reflect the Class's total return
(or that of its predecessor) adjusted to reflect any applicable sales charge.
The average annual total return calculation assumes a complete redemption of the
investment and the deduction of any applicable CDSC at the end of the period.
Each Fund may publish annual and cumulative total return figures from time to
time.
Each Fund may also publish total return figures for each Class which do not take
into account any sales charge. Any performance figure which does not take into
account a sales charge would be reduced to the extent such charge is imposed
upon a redemption. A Fund's performance may be compared in publications to the
performance of various indices and investments for which reliable data is
available, and to averages, performance rankings, or other information prepared
by recognized mutual fund statistical services.
Investors should note that the investment results will fluctuate over time, and
any presentation of total return for any prior period should not be considered a
representation of what an investment may earn or what the total return may be in
any future period.
The following chart reflects the annual investment returns of CLASS B SHARES OF
THE DEVELOPING RESOURCES FUND for one year periods ending September 30 and does
not take into account any sales charge which investors may bear.
5 Year Average Annual Total Return - 17.13%
Life of Fund Average Annual Total Return - 13.52%
1988(1)* ........................ 15.39%
1989* ........................... 22.96%
1990* ........................... 0.01%
1991* ........................... (4.36)%
1992* ........................... 9.44%
1993* ........................... 11.73%
1994 ............................ 20.47%
1995 ............................ 7.66%
1996 ............................ 45.67%
(1) From the start of business October 21, 1987, to September 30, 1988.
* If a portion of the Fund's expenses had not been subsidized, the Fund would
have had lower returns.
The following chart reflects the annual investment returns of the predecessor to
the CLASS A SHARES OF THE HEALTH SCIENCES FUND for one-year periods ending
August 31 and does not take into account any sales charge which investors may
bear.
5 Year Average Annual Total Return - 20.38%*
Life of Fund Average Annual Total Return - 15.74%
1987 ............................ 19.81%
1988 ............................ (25.30%)
1989 ............................ 31.32%
1990 ............................ 11.13%
1991 ............................ 30.61%
1992 ............................ 12.04%
1993 ............................ 21.37%
1994 ............................ 2.68%
1995 ............................ 38.13%
1996 ............................ 31.04%
* If a portion of the Fund's expenses had not been subsidized, the Fund would
have had lower returns.
[LOGO]
EATON VANCE
======================
Mutual Funds
EATON VANCE WORLDWIDE
DEVELOPING RESOURCES FUND
EATON VANCE WORLDWIDE
HEALTH SCIENCES FUND
EATON VANCE INFORMATION AGE FUND
PROSPECTUS
SEPTEMBER 1, 1997
--------------------------------------------------------------------------------
PORTFOLIO INVESTMENT ADVISERS
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central Hong Kong
Mehta and Isaly Asset Management, Inc., 41 Madison Avenue,
New York, NY 10010-2202
FUND SPONSOR AND MANAGER OR ADMINISTRATOR
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
Coopers & Lybrand, L.L.P., One Post Office Square, Boston, MA 02109
9/1 COMBP
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
September 1, 1997
EATON VANCE GREATER CHINA GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information provides general information
about Eaton Vance Greater China Growth Fund (the "Fund"), and Greater China
Growth Portfolio (the "Portfolio"). This Statement of Additional Information
is sometimes referred to herein as the "SAI".
TABLE OF CONTENTS
PART I
Additional Information about Investment Policies ............... 1
Investment Restrictions ........................................ 3
Trustees and Officers .......................................... 6
Management of the Fund and the Portfolio ....................... 8
Custodian ...................................................... 11
Services for Accumulation -- Class A Shares .................... 12
Service for Withdrawal ......................................... 12
Determination of Net Asset Value ............................... 12
Investment Performance ......................................... 13
Taxes .......................................................... 14
Principal Underwriter .......................................... 16
Distribution Plans ............................................. 17
Portfolio Security Transactions ................................ 19
Other Information .............................................. 21
Independent Certified Public Accountants ....................... 22
Financial Statements ........................................... 22
Appendix A -- Class A Shares ................................... a-1
Appendix B -- Class B Shares ................................... b-1
Appendix C -- Class C Shares ................................... c-1
Appendix D -- China Region Countries ........................... d-1
Appendix E -- Statistical Information .......................... e-1
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED SEPTEMBER 1, 1997, AS SUPPLEMENTED
FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT
OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS,
A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS
AND PHONE NUMBER).
This SAI provides information about the Fund and the Portfolio.
Capitalized terms used in this SAI and not otherwise defined have the meanings
given them in the Prospectus. The Fund is subject to the same investment
policies as those of the Portfolio. The Fund currently seeks to achieve its
objective by investing in the Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
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. Further, economies of particular countries or
areas of the world may differ favorably or unfavorably from the economy of the
United States. It is anticipated that in most cases the best available market
for foreign securities will be on exchanges or in over-the-counter markets
located outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. companies. In addition, foreign brokerage
commissions are generally higher than commissions on securities traded in the
United States and may be non-negotiable. In general, there is less overall
governmental supervision and regulation of foreign securities markets, broker-
dealers, and issuers than in the United States.
FOREIGN CURRENCY TRANSACTIONS. The value of the assets of the Portfolio as
measured in U.S. dollars may be affected favorably or unfavorably by changes
in foreign currency exchange rates and exchange control regulations. Currency
exchange rates can also be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the U.S. or abroad. The
Portfolio may conduct its foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through entering into swaps, forward contracts, options or
futures on currency. In spot transactions, foreign exchange dealers do not
charge a fee for conversion, but they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to the Portfolio at one rate, while offering a lesser rate of
exchange should the Portfolio desire to resell that currency to the dealer.
Currency swaps require maintenance of a segregated account as described
under "Asset Coverage Requirements" below. The Portfolio will not enter into
any currency swap unless the credit quality of the unsecured senior debt or
the claims-paying ability of the other party thereto is considered to be
investment grade by the Advisers.
The Portfolio may enter into forward foreign currency exchange contracts
in several circumstances. First, when the Portfolio enters into a contract for
the purchase or sale of a security denominated in a foreign currency, or when
the Portfolio anticipates the receipt in a foreign currency of dividend or
interest payments on such a security which it holds, the Portfolio may desire
to "lock in" the U.S. dollar price of the security or the U.S. dollar
equivalent of such dividend or interest payment, as the case may be. By
entering into a forward contract for the purchase or sale, for a fixed amount
of dollars, of the amount of foreign currency involved in the underlying
transactions, the Portfolio will attempt to protect itself against an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date on which the security is purchased
or sold, or on which the dividend or interest payment is declared, and the
date on which such payments are made or received.
Additionally, when management of the Portfolio believes that the currency
of a particular foreign country may suffer a substantial decline against the
U.S. dollar, it may enter into a forward contract to sell, for a fixed amount
of dollars, the amount of foreign currency approximating the value of some or
all of the securities held by the Portfolio denominated in such foreign
currency. The precise matching of the forward contract amounts and the value
of the securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a consequence of
market movements in the value of those securities between the date on which
the contract is entered into and the date it matures. The precise projection
of short-term currency market movements is not possible, and short-term
hedging provides a means of fixing the dollar value of only a portion of the
Portfolio's foreign assets.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of
the initial investment made or the premium received by the Portfolio.
Derivative instruments may sometimes increase or leverage the Portfolio's
exposure to a particular market risk. Leverage enhances the Portfolio's
exposure to the price volatility of derivative instruments it holds. The
Portfolio's success in using derivative instruments to hedge portfolio assets
depends on the degree of price correlation between the derivative instruments
and the hedged asset. Imperfect correlation may be caused by several factors,
including temporary price disparities among trading markets for the derivative
instrument, the assets underlying the derivative instrument and the Portfolio
assets. Over-the-counter ("OTC") derivative instruments involve an enhanced
risk that the issuer or counterparty will fail to perform its contractual
obligations. Some derivative instruments are not readily marketable or may
become illiquid under adverse market conditions. In addition, during periods
of market volatility, a commodity exchange may suspend or limit trading in an
exchange-traded derivative instrument, which may make the contract temporarily
illiquid and difficult to price. Commodity exchanges may also establish daily
limits on the amount that the price of a futures contract or futures option
can vary from the previous days settlement price. Once the daily limit is
reached, no trades may be made that day at a price beyond the limit. This may
prevent the Portfolio from closing out positions and limiting its losses. The
staff of the Commission takes the position that certain purchased OTC options,
and assets used as cover for written OTC options, are subject to the
Portfolio's 15% limit on illiquid investments. The Portfolio's ability to
terminate OTC derivative instruments may depend on the cooperation of the
counterparties to such contracts. For thinly traded derivative instruments,
the only source of price quotations may be the selling dealer or counterparty.
In addition, certain provisions of the Code, limit the extent to which the
Portfolio may purchase and sell derivative instruments. The Portfolio will
engage in transactions in futures contracts and related options only to the
extent such transactions are consistent with the requirements of the Code for
maintaining the qualification of the Fund as a regulated investment company
for federal income tax purposes. See "Taxes."
ASSET COVERAGE REQUIREMENTS. Transactions involving reverse repurchase
agreements, currency swaps, forward contracts or futures contracts and options
(other than options that the Portfolio has purchased) expose the Portfolio to
an obligation to another party. The Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, or other options, futures contracts or forward
contracts, or (2) cash or liquid securities (such as readily marketable common
stock and money market instruments) with a value sufficient at all times to
cover its potential obligations not covered as provided in (1) above. The
Portfolio will comply with Commission guidelines regarding cover for these
instruments and, if the guidelines so require, set aside cash or liquid
securities in a segregated account with its custodian in the prescribed
amount. The securities in the segregated account will be marked to market
daily.
Assets used as cover or held in a segregated account maintained by the
custodian cannot be sold while the position requiring coverage or segregation
is outstanding unless they are replaced with other appropriate assets. As a
result, the commitment of a large portion of the Portfolio's assets to
segregated accounts or to cover could impede portfolio management or the
Portfolio's ability to meet redemption requests or other current obligations.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS. The Portfolio does not intend to
write a covered option on any security if after such transaction more than 15%
of its net assets, as measured by the aggregate value of the securities
underlying all covered calls and puts written by the Portfolio, would be
subject to such options. The Portfolio will only write a put option on a
security which it intends to ultimately acquire for its portfolio. The
Portfolio does not intend to purchase any options if after such transaction
more than 5% of its net assets, as measured by the aggregate of all premiums
paid for all such options held by the Portfolio, would be so invested. The
Portfolio may enter into futures contracts (and options thereon) traded on a
foreign exchange if it is determined by the Adviser that trading on such
exchange does not subject the Portfolio to risks, including credit and
liquidity risks, that are materially greater than the risks associated with
trading on United States exchanges regulated by the CFTC.
REPURCHASE AGREEMENTS. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promises to sell that same security
back to the seller at a higher price. At no time will the Portfolio commit
more than 15% of its net assets to repurchase agreements which mature in more
than seven days and other illiquid securities. The Portfolio's repurchase
agreements will provide that the value of the collateral underlying the
repurchase agreement will always be at least equal to the repurchase price,
including any accrued interest earned on the repurchase agreement, and will be
marked to market daily.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, the Portfolio temporarily
transfers possession of a portfolio instrument to another party, such as a
bank or broker-dealer, in return for cash. At the same time, the Portfolio
agrees to repurchase the instrument at an agreed upon time (normally within
seven days) and price, which reflects an interest payment. The Portfolio
expects that it will enter into reverse repurchase agreements when it is able
to invest the cash so acquired at a rate higher than the cost of the
agreement, which would increase the income earned by the Portfolio. The
Portfolio could also enter into reverse repurchase agreements as a means of
raising cash to satisfy redemption requests without the necessity of selling
portfolio assets.
When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to
another party or the securities in which the proceeds may be invested would
affect the market value of the Portfolio's assets. As a result, such
transactions may increase fluctuations in the market value of the Portfolio's
assets. While there is a risk that large fluctuations in the market value of
the Portfolio's assets could affect the Portfolio's net asset value, this risk
is not significantly increased by entering into reverse repurchase agreements,
in the opinion of the Adviser. Because reverse repurchase agreements may be
considered to be the practical equivalent of borrowing funds, they constitute
a form of leverage. If the Portfolio reinvests the proceeds of a reverse
repurchase agreement at a rate lower than the cost of the agreement, entering
into the agreement will lower the Portfolio's yield.
PORTFOLIO TURNOVER. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity
of one year or less). A 100% annual turnover rate would occur, for example, if
all the securities in the portfolio were replaced once in a period of one
year. A high turnover rate (100% or more) necessarily involves greater
expenses to the Portfolio. The Portfolio engages in portfolio trading
(including short-term trading) if it believes that a transaction including all
costs will help in achieving its investment objective either by increasing
income or by enhancing the Portfolio's net asset value. Short-term trading may
be advisable in light of a change in circumstances of a particular company or
within a particular industry, or in light of general market, economic or
political conditions. High portfolio turnover may also result in the
realization of substantial net short-term capital gains. For the fiscal years
ended August 31, 1996 and 1995, the portfolio turnover rates of the Portfolio
were 42% and 32%, respectively.
LENDING PORTFOLIO SECURITIES. The Portfolio may seek to increase its income by
lending portfolio securities to broker-dealers or other institutional
borrowers. Under present regulatory policies of the Commission, such loans are
required to be secured continuously by collateral maintained on a current
basis at an amount at least equal to market value of the securities loaned,
which will be marked to market daily. The financial condition of the borrower
will be monitored by the Adviser on an ongoing basis. The Portfolio would
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities loaned and would also receive a fee, or all or a
portion of the interest on investment of the collateral. The Portfolio would
have the right to call a loan and obtain the securities loaned at any time on
up to five business days' notice. The Portfolio would not have the right to
vote any securities having voting rights during the existence of a loan, but
could call the loan in anticipation of an important vote to be taken among
holders of the securities or the giving or holding of their consent on a
material matter affecting the investment. If the Adviser decides to make
securities loans, it is intended that the value of the securities loaned would
not exceed one-third of the Portfolio's total assets. As with other
extensions of credit there are risks of delay in recovery or even loss of
rights in the securities loaned if the borrower of the securities fails
financially. However, the loans will be made only to organizations deemed by
the Adviser to be sufficiently creditworthy and when, in the judgment of the
Adviser, the consideration which can be earned from securities loans of this
type justifies the attendant risk. Securities lending involves administration
expenses including finders fees.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental and as such cannot be changed without the approval by the holders
of a majority of the Fund's outstanding voting securities, which as used in
this SAI means the lesser of (a) 67% or more of the outstanding voting
securities of the Fund present or represented by proxy at a meeting if the
holders of more than 50% of the shares are present or represented at the
meeting or (b) more than 50% of the shares of the Fund. Accordingly, the Fund
may not:
(1) issue senior securities (as defined in the Investment Company Act of
1940 and rules thereunder) or borrow money, except that the Fund or the
Portfolio may borrow:
(i) from banks to purchase or carry securities, commodities, commodities
contracts or other investments;
(ii) from banks for temporary or emergency purposes not in excess of 10%
of its gross assets taken at market value; or
(iii) by entering into reverse repurchase agreements,
if, immediately after any such borrowing, the value of the Fund's or
Portfolio's total assets, including all borrowings then outstanding, is equal
to at least 300% of the aggregate amount of borrowings then outstanding. Any
such borrowings may be secured or unsecured. The Portfolio or the Fund may
issue securities (including senior securities) appropriate to evidence such
indebtedness, including reverse repurchase agreements.
(2) Pledge its assets, except that the Portfolio or the Fund may pledge
not more than one-third of its total assets (taken at current value) to secure
borrowings made in accordance with investment restriction (1) above; for the
purpose of this restriction the deposit of assets in a segregated account with
the Portfolio's or the Fund's custodian, as the case may be, in connection
with any of the Portfolio's or the Fund's respective investment transactions
is not considered to be a pledge.
(3) Purchase securities on margin (but the Portfolio or the Fund may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities).
(4) Make short sales of securities or maintain a short position, unless at
all times when a short position is open the Portfolio or the Fund either owns
an equal amount of such securities or owns securities convertible into or
exchangeable, without the payment of any additional consideration, for
securities of the same issue as, and equal in amount to, the securities sold
short.
(5) Purchase securities issued by any other open-end investment company or
investment portfolio, except as they may be acquired as part of a merger,
consolidation or acquisition of assets, except that the Fund may invest all or
substantially all of its assets in either the Portfolio or any other
registered investment company having substantially the same investment
objective as the Fund and except as otherwise permitted by the Investment
Company Act of 1940.
(6) Purchase or retain in its portfolio any securities issued by an issuer
any of whose officers, directors, trustees or security holders is an officer
or Trustee of the Portfolio or the Trust or is a member, officer, director or
trustee of any investment adviser of the Portfolio or the Fund, if after the
purchase of the securities of such issuer by the Portfolio or the Fund one or
more of such persons owns beneficially more than 1/2 of 1% of the shares or
securities or both (all taken at current value) of such issuer and such
persons owning more than 1/2 of 1% of such shares or securities together own
beneficially more than 5% of such shares or securities or both (all taken at
current value); provided, however, that the Fund may invest all or
substantially all of its assets in either the Portfolio or any other
registered investment company having substantially the same investment
objective as the Fund and having any officers, directors, trustees or security
holders who are officers or Trustees of the Trust.
(7) Underwrite securities issued by other persons, except insofar as the
Fund or the Portfolio may technically be deemed to be an underwriter under the
Securities Act of 1933 in selling or disposing of a portfolio security, and
except that the Fund may invest all or substantially all of its assets in
either the Portfolio or any other registered investment company having
substantially the same investment objective as the Fund.
(8) Make loans to other persons, except by (a) the acquisition of money
market instruments, debt securities and other obligations in which the
Portfolio or the Fund is authorized to invest in accordance with their
respective investment objective and policies, (b) entering into repurchase
agreements and (c) lending their respective portfolio securities.
(9) Purchase the securities of any one issuer (other than obligations
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, with respect to 75% of its total assets and as a result
of such purchase (a) more than 5% of the total assets of the Portfolio or the
Fund, as the case may be (taken at current value), would be invested in the
securities of such issuer, or (b) the Fund or the Portfolio would hold more
than 10% of the outstanding voting securities of that issuer, except that the
Fund may invest all or substantially all of its assets in, and may acquire up
to 100% of the outstanding voting securities of either the Portfolio or any
other registered investment company having substantially the same investment
objectives as the Fund.
(10) Purchase any security if, as a result of such purchase, 25% or more
of the total assets of the Portfolio or the Fund, as the case may be (taken at
current value) would be invested in the securities of issuers having their
principal business activities in the same industry (the electric, gas and
telephone utility industries being treated as separate industries for the
purpose of this restriction); provided that there is no limitation with
respect to obligations issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities and except that the Fund may invest all or
substantially all of its assets in either the Portfolio or any other
registered investment company having substantially the same investment
objective as the Fund.
(11) Invest for the purpose of gaining control of a company's management.
(12) Purchase or sell real estate, although the Fund or the Portfolio may
purchase and sell securities which are secured by interests in real estate,
securities of issuers which invest or deal in real estate and real estate that
is acquired as the result of the ownership of securities.
(13) Purchase or sell physical commodities (other than currency) or
contracts for the purchase or sale of physical commodities (other than
currency).
(14) Buy investment securities from or sell them to any of the respective
officers or Trustees of the Trust or the Portfolio, the Portfolio's investment
adviser or the Fund's principal underwriter, as principal; provided, however,
that any such person or firm may be employed as a broker upon customary terms
and that this restriction does not apply to the Fund's investments in either
the Portfolio or any other registered investment company having substantially
the same investment objective as the Fund.
(15) Purchase oil, gas or other mineral leases or purchase partnership
interests in oil, gas or other mineral exploration or development programs.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by the Fund;
such restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Portfolio.
For the purpose of investment restrictions (1), (2) and (3), the
arrangements (including escrow, margin and collateral arrangements) made by
the Portfolio or the Fund with respect to their respective transactions in all
types of options, futures contracts, options on futures contracts, forward
contracts, currencies, and commodities and options thereon shall not be
considered to be (i) a borrowing of money or the issuance of securities
(including senior securities) by the Portfolio or the Fund, as the case may
be, (ii) a pledge of its assets or (iii) the purchase of a security on margin.
The Fund and the Portfolio have adopted the following investment policies
which may be changed without shareholder or investor approval. Neither the
Fund nor the Portfolio may invest more than 15% of its net assets in
investments which are not readily marketable, including restricted securities
and repurchase agreements with a maturity longer than seven days. Restricted
securities for the purposes of this limitation do not include securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933 and
commercial paper issued pursuant to Section 4(2) of said Act that the Board of
Trustees of the Trust or the Portfolio, or its delegate, determines to be
liquid. Neither the Fund nor the Portfolio will purchase warrants if, as a
result of such purchase, more than 5% of the Portfolio's or the Fund's net
assets, as the case may be (taken at current value), would be invested in
warrants, and the value of such warrants which are not listed on the New York
or American Stock Exchange may not exceed 2% of the Portfolio's or the Fund's
net assets; this policy does not apply to or restrict warrants acquired by the
Portfolio or the Fund in units or attached to securities, inasmuch as such
warrants are deemed to be without value. Neither the Fund nor the Portfolio
will purchase any securities if at the time of such purchase, permitted
borrowings under investment restriction (1) above exceed 5% of the value of
the Portfolio's or the Fund's total assets, as the case may be.
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset or describes a policy regarding
quality standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, assets or other circumstances, other than a
subsequent rating change below investment grade made by a rating service, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Nevertheless, under normal market conditions the Fund
and the Portfolio must take actions necessary to comply with its policy of
investing at least 65% of total assets in equity securities of China growth
companies. Moreover, the Fund and the Portfolio must always be in compliance
with its borrowing policy set forth above.
Although permissible under the Fund's investment restrictions, the Fund
has no present intention during the coming fiscal year to: borrow money;
pledge its assets; underwrite securities issued by other persons; or make
loans to other persons.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Unless otherwise noted,
the business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Fund's sponsor and
manager, Eaton Vance Management ("Eaton Vance"), of Eaton Vance's wholly-owned
subsidiary, Boston Management and Research ("BMR"), of Eaton Vance's parent,
Eaton Vance Corp. ("EVC"), and of Eaton Vance's trustee, Eaton Vance, Inc.
("EV"). Eaton Vance and EV are both wholly-owned subsidiaries of EVC. The
business address of the Advisers is 3808 One Exchange Square, Central, Hong
Kong. Those Trustees who are "interested persons" of the Trust or the
Portfolio, as defined in the 1940 Act by virtue of their affiliation with the
Advisers, Eaton Vance, BMR, EVC or EV, are indicated by an asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (55), President of the Trust, Vice President of the Portfolio
and Trustee*
President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR. Director of Lloyd George
Management (B.V.I.) Limited.
HON. ROBERT LLOYD GEORGE (44), President of the Portfolio and Trustee of the
Portfolio*
Chairman and Chief Executive Officer of LGM. Chairman and Chief Executive
Officer of the Advisers.
Address: 3808 One Exchange Square, Central, Hong Kong
HON. EDWARD K.Y. CHEN (52), Trustee of the Portfolio
President of Lingnan College in Hong Kong. Professor and Director of Centre of
Asian Studies at the University of Hong Kong from 1979-1995. Director of
First Pacific Company and a Board Member of the Mass Transit Railway
Corporation. Member of the Executive Council of the Hong Kong Government
since 1992 and Chairman of the Consumer Council since 1991.
Address: President's Office, Lingnan College, Tuen Mun, Hong Kong
DONALD R. DWIGHT (66), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company); Chairman of the Board of Newspapers of New England, Inc. Director
or Trustee of various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (62), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02134
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee of the Trust
Former Director of Fiduciary Company Incorporated. Director or Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (67), Trustee of the Trust
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
WILLIAM D. BURT (59), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994). Mr. Burt was elected Vice
President of the Trust on June 19, 1995.
M. DOZIER GARDNER (64), Vice President of the Trust
Vice Chairman of Eaton Vance, BMR, EVC and EV, and Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
BARCLAY TITTMANN (65), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993). Mr. Tittmann was
elected Vice President of the Trust on June 19, 1995.
SCOBIE DICKINSON WARD (31), Vice President, Assistant Secretary and Assistant
Treasurer of the Portfolio
Director of LGM and the Advisers.
Address: 3808 One Exchange Square, Central, Hong Kong
WILLIAM WALTER RALEIGH KERR (46), Vice President and Assistant Treasurer of
the Portfolio
Director, Finance Director and Chief Operating Officer of the Advisers.
Director of LGM.
Address: 3808 One Exchange Square, Central, Hong Kong
JAMES L. O'CONNOR (52), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (56), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of
Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and was Executive
Vice President of Neuberger & Berman Management, Inc., a mutual fund
management company. Officer of various investment companies managed by Eaton
Vance or BMR. Mr. Dynner was elected Secretary of the Trust and the
Portfolio on June 23, 1997.
JANET E. SANDERS (61), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of Eaton Vance, BMR and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Trust and the Portfolio on March 27, 1995.
ERIC G. WOODBURY (40), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads and Gaston & Snow. Officer of
various investment companies managed by Eaton Vance or BMR. Mr. Woodbury was
elected Assistant Secretary of the Trust and the Portfolio on June 19, 1995.
Messrs. Hayes, Reamer and Thorndike, are members of the Special Committee
of the Board of Trustees of the Trust and Messrs. Hayes, Dwight and Reamer,
are members of the Special Committee of the Board of Trustees of the
Portfolio. The purpose of the Special Committee is to consider, evaluate and
make recommendations to the full Board of Trustees concerning (i) all
contractual arrangements with service providers to the Fund and the Portfolio,
including investment advisory (Portfolio only), administrative, transfer
agency, custodial and fund accounting and distribution services, and (ii) all
other matters in which Eaton Vance, the Advisers or their affiliates has any
actual or potential conflict of interest with the Fund, the Portfolio or
investors therein.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio is comprised of four Trustees who are not "interested persons" as
that term is defined under the 1940 Act ("noninterested Trustees"). The
Committee has four-year staggered terms, with one member rotating off the
Committee to be replaced by another noninterested Trustee. The purpose of the
Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance and its affiliates.
Messrs. Treynor and Dwight are members of the Audit Committee of the Board
of Trustees of the Trust and Messrs. Hayes, Chen and Dwight are members of the
Audit Committee of the Board of Trustees of the Portfolio. The Audit
Committee's functions include making recommendations to the Trustees regarding
the selection of the independent certified public accountants, and reviewing
matters relative to trading and brokerage policies and practices, accounting
and auditing practices and procedures, accounting records, internal accounting
controls, and the functions performed by the custodian, transfer agent and
dividend disbursing agent of the Trust and of the Portfolio.
Trustees of the Portfolio (except Mr. Chen) who are not affiliated with
Eaton Vance may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of a Trustees Deferred Compensation Plan
(the "Trustees" Plan"). Under the Trustees' Plan, an eligible Trustee may
elect to have his deferred fees invested by the Portfolio in the shares of one
or more funds in the Eaton Vance Family of Funds, and the amount paid to the
Trustees under the Trustees' Plan will be determined based upon the
performance of such investments. Deferral of Trustees' fees in accordance with
the Trustees' Plan will have a negligible effect on the Portfolio's assets,
liabilities, and net income per share, and will not obligate the Portfolio to
retain the services of any Trustee or obligate the Portfolio to pay any
particular level of compensation to the Trustee. Neither the Portfolio nor the
Trust has a retirement plan for its Trustees.
The fees and expenses of the noninterested Trustees of the Trust and the
Portfolio are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) During the fiscal year ended August 31, 1996, the
noninterested Trustees of the Trust and the Portfolio received the following
compensation in their capacities as Trustees from the Trust and the Portfolio,
and, for the year ended September 30, 1996, earned the following compensation
in their capacities as Trustees of the funds in the Eaton Vance fund complex
(1):
[Enlarge/Download Table]
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
---- ------------- -------------- -----------------
Hon. Edward K.Y. Chen ................... $ -- $16,250 $ 16,850
Donald R. Dwight ........................ 2,165 -- 142,500(3)
Samuel L. Hayes, III .................... 1,992 5,000 153,750(4)
Norton H. Reamer ........................ 1,978 -- 142,500
John L. Thorndike ....................... 2,004 -- 147,500
Jack L. Treynor ......................... 2,146 -- 147,500
------------
(1) The Eaton Vance fund complex consists of 228 registered investment
companies or series thereof.
(2) The Trust consisted of twelve Funds as of August 31, 1996.
(3) Includes $578 of deferred compensation.
(4) Includes $570 of deferred compensation.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
Eaton Vance acts as the sponsor and manager of the Fund and the
administrator of the Portfolio. The Portfolio has engaged Lloyd George
Management (Hong Kong) Limited ("LGM-HK") as its investment adviser. Pursuant
to a service agreement effective on January 1, 1996 between LGM-HK and its
affiliate, Lloyd George Investment Management (Bermuda) Limited ("LGIM-B"),
LGIM-B, acting under the general supervision of the Portfolio's Board of
Trustees, is responsible for managing the Portfolio's investments. LGM-HK
supervises LGIM-B's performance of this function and retains its contractual
obligations under its investment advisory agreement with the Portfolio. LGM-HK
and LGIM-B are both referred to separately as an Adviser or together as the
Advisers.
THE ADVISER
LGIM-B is responsible for effecting all security transactions on behalf of
the Portfolio, including the allocation of principal transactions and
portfolio brokerage and the negotiation of commissions. See "Portfolio
Security Transactions." Under the investment advisory agreement, LGM-HK is
entitled to receive a monthly advisory fee computed by applying the annual
asset rate applicable to that portion of the average daily net assets of the
Portfolio throughout the month in each Category as indicated below:
[Download Table]
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
-------- ------------------------ ----------
1 less than $500 million ..................................... 0.75%
2 $500 million but less than $1 billion ...................... 0.70
3 $1 billion but less than $1.5 billion ...................... 0.65
4 $1.5 billion but less than $2 billion ...................... 0.60
5 $2 billion but less than $3 billion ........................ 0.55
6 $3 billion and over ........................................ 0.50
Since January 1, 1996, LGM-HK pays to LGIM-B the entire amount of the
advisory fee payable by the Portfolio under its investment advisory agreement
with LGM-HK.
As of August 31, 1996, the Portfolio had net assets of $510,297,559. For
the fiscal years ended August 31, 1996, 1995, and 1994, LGM-HK earned advisory
fees of $4,211,398, $4,763,655 and $4,100,334, respectively, (equivalent to
0.74% of the Portfolio's average daily net assets for each such year).
Eaton Vance is among the oldest mutual funds organizations in the country.
As an experienced mutual fund provider, Eaton Vance has contributed to making
the securities market more widely accessible to investors. Eaton Vance equity
funds provide a way to take advantage of the potentially higher returns of
individual stocks. Eaton Vance has a staff of more than 25 investment
professionals specializing in security analysis and equity management.
The Eaton Vance investment process stresses intensive fundamental
research. Portfolios are built on a stock-by-stock basis and the process
includes visits to companies under consideration. The process also focuses on
well-managed companies with the following characteristics: strong underlying
value or franchise; solid earnings growth; steady cash flow, strong balance
sheet; innovative products or services; potential for sustained growth;
seasoned, creative management; or ability to survive variable market
conditions.
By investing in diversified portfolios and employing prudent and
professional management, Eaton Vance mutual funds can provide attractive
return, while exposing shareholders to less risk than if they were to build
investment portfolios on their own. Eaton Vance employs rigorous buy and sell
disciplines. For instance, purchases are made with an eye to both relative and
absolute growth rates and price/earning ratios, and sales are made when a
stock is fully valued, fundamentals deteriorate, management fails to execute
its strategy, or more attractive alternatives are available.
LGM specializes in providing investment management services with respect
to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages portfolios for
both private clients and institutional investors seeking long-term capital
growth and has advised Eaton Vance's international equity funds since 1992.
LGM's core investment team consists of twelve experienced investment
professionals who have worked together over a number of years successfully
managing client portfolios in non-U.S. stock markets. The team has a unique
knowledge of, and experience with, Asian emerging markets. LGM analysts cover
East Asia, the India subcontinent, Russia and Eastern Europe, Latin America,
Australia and New Zealand from offices in Hong Kong, London and Mumbai. LGM is
ultimately controlled by the Hon. Robert Lloyd George, President of the
Portfolio and Chairman and Chief Executive Officer of the Adviser. LGM's only
business is portfolio management. Eaton Vance's parent is a shareholder of
LGM.
The Advisers and LGM have adopted a conservative management style,
providing a blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, the Advisers and LGM maintain a network of international
contacts in order to monitor international economic and stock market trends
and offer clients a global management service.
The directors of LGM-HK are the Honourable Robert Lloyd George, William
Walter Raleigh Kerr, M.F. Tang and Scobie Dickinson Ward. The Hon. Robert
Lloyd George is Chairman and Chief Executive Officer of each Adviser and Mr.
Kerr is an officer of each Adviser. The directors of LGIM-B are the Honorable
Robert Lloyd George, William Walter Raleigh Kerr, Scobie Dickinson Ward, M.F.
Tang, Pamela Chan, Adaline Mang-Yee Ko, Peter Bubenzer and Judith Collis. The
business address of the first six individuals is 3808 One Exchange Square,
Central, Hong Kong and of the last two is Cedar House, 41 Cedar Avenue,
Hamilton HM 12, Bermuda.
Mr. Lloyd George was born in London in 1952 and educated at Eton College,
where he was a King's Scholar, and at Oxford University. Prior to founding
LGM, Mr. Lloyd George was Managing Director of Indosuez Asia Investment
Services Ltd. In 1983 Mr. Lloyd George launched and managed the Henderson
Japan Special Situations Trust. Prior to that he spent four years with the
Fiduciary Trust Company of New York researching international securities, in
the United States and Europe, for the United Nations Pension Fund.
Eaton Vance and the Advisers follow a common investment philosophy,
striving to identify companies with outstanding management and earnings growth
potential by following a disciplined management style, adhering to the most
rigorous international standards of fundamental security analysis, placing
heavy emphasis on research, visiting every company owned, and closely
monitoring political and economic developments.
Eaton Vance mutual funds are distributed by the Principal Underwriter both
within the United States and offshore. The Principal Underwriter believes that
an investment professional can provide valuable services to you to help you
reach your investment goals. Meeting investment goals requires time,
objectivity and investment savvy. Before making an investment recommendation,
a representative can help you carefully consider your short- and long-term
financial goals, your tolerance for investment risk, your investment time
frame, and other investments you may already own. Your professional investment
representatives are knowledgeable about financial markets, as well as the wide
range of investment opportunities available. A representative can provide you
with tailored financial advice and help you decide when to buy, sell or
persevere with your investments.
The Portfolio's investment advisory agreement with LGM-HK remains in
effect from year to year for so long as such continuance is approved at least
annually (i) by the vote of a majority of the noninterested Trustees of the
Portfolio cast in person at a meeting specifically called for the purpose of
voting on such approval and (ii) by the Board of Trustees of the Portfolio or
by vote of a majority of the outstanding voting securities of the Portfolio.
The Agreement may be terminated at any time without penalty on sixty days'
written notice by the Board of Trustees of either party or by vote of the
majority of the outstanding voting securities of the Portfolio, and the
Agreement will terminate automatically in the event of its assignment. The
Agreement provides that the LGM-HK may render services to others. The
Agreement also provides that, in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties under
the Agreement on the part of LGM-HK, LGM-HK shall not be liable to the
Portfolio or to any shareholder for any act or omission in the course of or
connected with rendering services or for any losses sustained in the purchase,
holding or sale of any security.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Fund and the Portfolio" in the Fund's current
Prospectus for a description of the services Eaton Vance performs as the
manager and sponsor of the Fund and the administrator of the Portfolio. Under
Eaton Vance's management contract with the Fund and administration agreement
with the Portfolio, Eaton Vance receives a monthly management fee from the
Fund and a monthly administration fee from the Portfolio. Each fee is computed
by applying the annual asset rate applicable to that portion of the average
daily net assets of the Fund or the Portfolio throughout the month in each
Category as indicated below:
[Download Table]
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
-------- ------------------------ ----------
1 less than $500 million ..................................... 0.25%
2 $500 million but less than $1 billion ...................... 0.23333
3 $1 billion but less than $1.5 billion ...................... 0.21667
4 $1.5 billion but less than $2 billion ...................... 0.20
5 $2 billion but less than $3 billion ........................ 0.18333
6 $3 billion and over ........................................ 0.16667
As of August 31, 1996 the Portfolio had net assets of $510,297,559. For
the fiscal years ended August 31, 1996, 1995, and 1994, Eaton Vance earned
administration fees of $1,404,681, $1,571,184 and $1,383,471, respectively,
(equivalent to 0.25%, 0.24% and 0.25%, respectively, of the Portfolio's
average daily net assets for each such year).
Eaton Vance's management contract with the Fund and administration
agreement with the Portfolio will each remain in effect from year to year for
so long as such continuance is approved annually by the vote of a majority of
the Trustees of the Trust or the Portfolio, as the case may be. Each agreement
may be terminated at any time without penalty on sixty days' written notice by
the Board of Trustees of either party thereto, or by a vote of a majority of
the outstanding voting securities of the Fund or the Portfolio, as the case
may be. Each agreement will terminate automatically in the event of its
assignment. Each agreement provides that, in the absence of Eaton Vance's
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties to the Fund or the Portfolio under such contract or
agreement, Eaton Vance will not be liable to the Fund or the Portfolio for any
loss incurred. Each agreement was initially approved by the Trustees,
including the noninterested Trustees, of the Trust or the Portfolio which is a
party thereto at meetings held on September 8, 1992 and on October 8, 1992,
respectively, of the Trust and the Portfolio.
The Fund and the Portfolio, as the case may be, will each be responsible
for all of its respective costs and expenses not expressly stated to be
payable by Eaton Vance under the management contract or the administration
agreement. Such costs and expenses to be borne by each of the Fund or the
Portfolio, as the case may be, include, without limitation, custody and
transfer agency fees and expenses, including those incurred for determining
net asset value and keeping accounting books and records, expenses of pricing
and valuation services; the cost of share certificates; membership dues in
investment company organizations; brokerage commissions and fees; fees and
expenses of registering under the securities laws; expenses of reports to
shareholders and investors; proxy statements, and other expenses of
shareholders' or investors' meetings; insurance premiums, printing and mailing
expenses; interest, taxes and corporate fees; legal and accounting expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance;
distribution and service fees payable by the Fund under its Rule 12b-1
distribution plan; and investment advisory, management and administration
fees. The Fund or the Portfolio will also each bear expenses incurred in
connection with litigation in which the Fund or the Portfolio, as the case may
be, is a party and any legal obligation to indemnify its respective officers
and Trustees with respect thereto, to the extent not covered by insurance.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR.
The Directors of EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and
Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and
John G.L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is
vice chairman and Mr. Hawkes is president and chief executive officer of EVC,
Eaton Vance, BMR and EV. All of the issued and outstanding shares of Eaton
Vance and of EV are owned by EVC. All of the issued and outstanding shares of
BMR are owned by Eaton Vance. All shares of the outstanding Voting Common
Stock of EVC are deposited in a Voting Trust which expires December 31, 1997,
the Voting Trustees of which are Messrs. Clay, Gardner, Hawkes and Rowland and
Thomas E. Faust, Jr. The Voting Trustees have unrestricted voting rights for
the election of Directors of EVC. All of the outstanding voting trust receipts
issued under said Voting Trust are owned by certain of the officers of Eaton
Vance and BMR who are also officers or officers and Directors of EVC and EV.
As of August 31, 1997, Messrs. Clay, Gardner and Hawkes each owned 24% of such
voting trust receipts, and Messrs. Roland and Faust owned 15% and 13%,
respectively, of such voting trust receipts. Messrs. Dynner, Gardner and
Hawkes, who are officers and/or Trustees of the Trust, and are members of the
EVC, Eaton Vance, BMR and EV organizations. Messrs. Burt, Murphy, O'Connor,
Tittmann and Woodbury and Ms. Sanders, are officers of the Trust and/or the
Portfolio, and are also members of the Eaton Vance, BMR and EV organizations.
Eaton Vance owns all of the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC also owns 22% of the Class A shares
issued by the parent of each Adviser. EVC owns all the stock of Fulcrum
Management, Inc. and MinVen, Inc., which are engaged in precious metal mining
venture investment and management. EVC, Eaton Vance, BMR and EV may also enter
into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, IBT. It is Eaton Vance's opinion that the terms and conditions
of such transactions were not and will not be influenced by existing or
potential custodial or other relationships between the Fund and such banks.
CUSTODIAN
IBT acts as custodian for the Fund and the Portfolio. IBT has the custody
of all cash and securities of the Fund and all securities of the Portfolio
purchased in the United States, maintains the Fund's and the Portfolio's
general ledger and computes the daily net asset value of interests in the
Portfolio and the net asset value of shares of the Fund. In such capacities,
IBT attends to details in connection with the sale, exchange, substitution,
transfer or other dealings with the Fund's and the Portfolio's respective
investments, receives and disburses all funds, and performs various other
ministerial duties upon receipt of proper instructions from the Fund and the
Portfolio, respectively.
Portfolio securities, if any, purchased by the Portfolio in the U.S. are
maintained in the custody of IBT or of other domestic banks or depositories.
Portfolio securities purchased outside of the U.S. are maintained in the
custody of foreign banks and trust companies that are members of IBT's Global
Custody Network, or foreign depositories used by such foreign banks and trust
companies. Each of the domestic and foreign custodial institutions holding
portfolio securities has been approved by the Board of Trustees of the
Portfolio in accordance with regulations under the 1940 Act.
IBT charges fees which are competitive within the industry. These fees for
the Portfolio relate to: (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill
auction rate applied to the Portfolio's average daily collected balances. The
portion of the fee for the Fund related to bookkeeping and pricing services is
based upon a percentage of the Fund's net assets and the portion of the fee
related to financial statement preparation is a fixed amount. Landon T. Clay,
a Director of EVC and an officer, Trustee or Director of other entities in the
Eaton Vance organization, owns approximately 13% of the voting stock of
Investors Financial Services Corp., the holding company parent of IBT.
Management believes that such ownership does not create an affiliated person
relationship between the Fund or the Portfolio and IBT under the 1940 Act. IBT
also provides services in connection with the preparation of shareholder
reports and the electronic filing of such reports with the Commission, for
which it receives a separate fee.
SERVICES FOR ACCUMULATION -- CLASS A SHARES
The following services are voluntary, involve no extra charge, other than
the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.
Intended Quantity Investment -- Statement of Intention. If it is
anticipated that $50,000 or more of Class A shares and shares of other funds
exchangeable for Class A shares and listed under "The Eaton Vance Exchange
Privilege" in the Prospectus will be purchased within a 13-month period, a
Statement of Intention should be signed so that shares may be obtained at the
same reduced sales charge as though the total quantity were invested in one
lump sum. Shares held under Right of Accumulation (see below) as of the date
of the Statement will be included toward the completion of the Statement. The
Statement authorizes the Transfer Agent to hold in escrow sufficient shares
(5% of the dollar amount specified in the Statement) which can be redeemed to
make up any difference in sales charge on the amount intended to be invested
and the amount actually invested. Execution of a Statement does not obligate
the shareholder to purchase or the Fund to sell the full amount indicated in
the Statement, and should the amount actually purchased during the 13-month
period be more or less than that indicated on the Statement, price adjustments
will be made. For sales charges and other information on quantity purchases,
see "How to Buy Shares" in the Prospectus. Any investor considering signing a
Statement of Intention should read it carefully.
Right of Accumulation -- Cumulative Quantity Discount. The applicable
sales charge level for the purchase of Class A shares is calculated by taking
the dollar amount of the current purchase and adding it to the value
(calculated at the maximum current offering price) of the shares the
shareholder owns in his or her account(s) in the Fund and shares of other
funds exchangeable for Class A shares and listed under "The Eaton Vance
Exchange Privilege" in the Prospectus. The sales charge on the shares being
purchased will then be at the rate applicable to the aggregate. For sales
charges on quantity purchases, see "How to Buy Shares" in the Prospectus.
Shares purchased (i) by an individual, his or her spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other
fiduciary of a single trust estate or a single fiduciary account, will be
combined for the purpose of determining whether a purchase will qualify for
the Right of Accumulation and if qualifying, the applicable sales charge
level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information
to permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The
Right of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or
quarterly payments of any permitted amount designated by the shareholder (see
"Eaton Vance Shareholder Services -- Withdrawal Plan" in the Fund's current
Prospectus) based upon the value of the shares held. The checks will be drawn
from share redemptions and hence, although they are a return of principal, may
require the recognition of taxable gain or loss. Income dividends and capital
gains distributions in connection with withdrawal accounts will be credited at
net asset value as of the record date for each distribution. Continued
withdrawals in excess of current income will eventually use up principal,
particularly in a period of declining market prices. A shareholder may not
have a withdrawal plan in effect at the same time he or she has authorized
Bank Automated Investing or is otherwise making regular purchases of Fund
shares. The shareholder, the Transfer Agent or the Principal Underwriter will
be able to terminate the withdrawal plan at any time without penalty.
DETERMINATION OF NET ASSET VALUE
The Trustees of the Portfolio have established the following procedures
for the fair valuation of the Portfolio's assets under normal market
conditions. Marketable securities listed on foreign or U.S. securities
exchanges or in the NASDAQ National Market System generally are valued at
closing sale prices or, if there were no sales, at the mean between the
closing bid and asked prices therefor on the exchange where such securities
are principally traded or on such National Market System (such prices may not
be used, however, where an active over-the-counter market in an exchange
listed security better reflects current market value). Unlisted or listed
securities for which closing sale prices are not available are valued at the
mean between the latest bid and asked prices. An option is valued at the last
sale price as quoted on the principal exchange or board of trade on which such
option or contract is traded, or in the absence of a sale, the mean between
the last bid and asked price. Futures positions on securities or currencies
are generally valued at closing settlement prices. All other securities are
valued at fair value as determined in good faith by or pursuant to procedures
established by the Trustees of the Portfolio.
Short term debt securities with a remaining maturity of 60 days or less
are valued at amortized cost. If securities were acquired with a remaining
maturity of more than 60 days, their amortized cost value will be based on
their value on the sixty-first day prior to maturity. Other fixed income and
debt securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service.
Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, determined on the prior Portfolio Business Day,
which represented that investor's share of the aggregate interests in the
Portfolio on such prior day. Any additions or withdrawals for the current
Portfolio Business Day will then be recorded. Each investor's percentage of
the aggregate interest in the Portfolio will then be recomputed as the
percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the close of Portfolio Valuation
Time on the prior Portfolio Business Day plus or minus, as the case may be,
that amount of any additions to or withdrawals from the investor's investment
in the Portfolio on the current Portfolio Business Day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
the Portfolio Valuation Time on the prior Portfolio Business Day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investment in the Portfolio on the current Portfolio
Business Day by all investors in the Portfolio. The percentage so determined
will then be applied to determine the value of the investor's interest in the
Portfolio for the current Portfolio Business Day. The Fund and Portfolio will
be closed for business and will not price their shares on the following
business holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset
value of the Portfolio's shares are computed as of such times. Occasionally,
events affecting the value of foreign securities may occur between such times
and the close of the Exchange which will not be reflected in the computation
of the Portfolio's net asset value (unless the Portfolio deems that such
events would materially affect its net asset value, in which case an
adjustment would be made and reflected in such computation). Foreign
securities and currency held by the Portfolio will be valued in U.S. dollars;
such values will be computed by the custodian based on foreign currency
exchange rate quotations supplied by Reuters Information Service.
INVESTMENT PERFORMANCE
Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the results. The calculation assumes (i) that all distributions
are reinvested at net asset value on the reinvestment dates during the period,
(ii) the deduction of the maximum sales charge from the initial $1,000
purchase order for Class A shares, (iii) a complete redemption of the
investment, and (iv) the deduction of any CDSC at the end of the period. For
information concerning the total return of the Classes of the Fund, see
Appendix A, Appendix B and Appendix C.
Total return may be compared to relevant indices, such as the Consumer
Price Index and various domestic and foreign securities indices. The Fund's
total return and comparisons with these indices may be used in advertisements
and in information furnished to present or prospective shareholders. The
Fund's performance may differ from that of other investors in the Portfolio,
including the other investment companies. In addition, evaluations of the
Fund's performance or rankings of mutual funds (which include the Fund) made
by independent sources may be used in advertisements and in information
furnished to present or prospective shareholders. Information, charts and
illustrations showing the effect of compounding interest or relating to
inflation and taxes (including their effects on the dollar and the return on
stocks and other investment vehicles) may also be included in advertisements
and materials furnished to present and prospective investors.
Information used in advertisements and in materials furnished to present
or prospective shareholders may include statistics, data and performance
studies prepared by independent organizations or included in various
publications reflecting the investment performance or return achieved by
various classes and types of investments (e.g. common stocks, small company
stocks, long-term corporate bonds, long-term government bonds, intermediate-
term government bonds, U.S. Treasury bills) over various periods of time. This
information may be used to illustrate the benefits of long-term investments in
common stocks. From time to time, information about the portfolio allocation,
portfolio turnover and holdings of the Portfolio may be included in
advertisements and other material furnished to present and prospective
shareholders.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- cost associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the
value of investing as early as possible and regularly, as well as staying
invested. The benefits of investing in equity securities by means of a mutual
fund may also be included (such benefits may include diversification,
professional management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time
periods; and results of diversifying assets among several investments with
varying performance. Information in advertisements and materials furnished to
present and prospective investors may also include quotations (including
editorial comments) and statistics concerning investing in securities, as well
as investing in particular types of securities and the performance of such
securities.
The Trust (or Principal Underwriter) may provide investors with
information on global investing, which may include descriptions, comparisons,
charts and/or illustrations of foreign and domestic equity market
capitalizations; returns obtained by foreign and domestic securities; and the
effects of globally diversifying an investment portfolio (including volatility
analysis and performance information). Such information may be provided for a
variety of countries over varying time periods.
The Trust (or Principal Underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to
investors or prospective investors. Such material or advertisements may also
provide information on the use of investment professionals by such investors.
TAXES
Each series of the Trust is treated as a separate entity for accounting
and tax purposes. The Fund has elected to be treated, and intends to qualify
each year as a regulated investment company ("RIC") under the Code.
Accordingly, the Fund intends to satisfy certain requirements relating to
sources of its income and diversification of its assets and to distribute
substantially all of its ordinary income and net income in accordance with the
timing requirements imposed by the Code, so as to maintain its RIC status and
to avoid paying any federal income or excise tax. Because the Fund invests its
assets in the Portfolio, the Portfolio normally must satisfy the applicable
source of income and diversification requirements in order for the Fund to
also satisfy these requirements. The Portfolio will allocate at least annually
among its investors, including the Fund, the Portfolio's net investment
income, net realized capital gains, and any other items of income, gain, loss,
deduction or credit. The Portfolio will make allocations to the Fund in a
manner intended to comply with the Code and applicable regulations and will
make moneys available for withdrawal at appropriate times and in sufficient
amounts to enable the Fund to satisfy the tax distribution requirements that
apply to the Fund and that must be satisfied in order to avoid federal income
and/or excise tax on the Fund. For purposes of applying the requirements of
the Code regarding qualification as a RIC, the Fund (i) will be deemed to own
its proportionate share of each of the assets of the Portfolio and (ii) will
be entitled to the gross income of the Portfolio attributable to such share.
In order to avoid incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by
December 31 of each calendar year at least 98% of its ordinary income for such
year, at least 98% of its capital gain net income (which is the excess of its
realized capital gains over its realized capital losses), generally computed
on the basis of the one-year period ending on October 31 of such year, after
reduction by (i) any available capital loss carryforwards and (ii) 100% of any
income and capital gains from the prior year (as previously computed) that was
not paid out during such year and on which the Fund paid no federal income
tax. Under current law, provided that the Fund qualifies as a RIC and the
Portfolio is treated as a partnership for Massachusetts and federal tax
purposes, neither the Fund nor the Portfolio should be liable for any income,
corporate excise or franchise tax in the Commonwealth of Massachusetts.
Certain foreign exchange gains and losses realized by the Portfolio and
allocated to the Fund in connection with the Portfolio's investments in
foreign securities and foreign currency related options, futures or forward
contracts or foreign currency may be treated as ordinary income and losses
under special tax rules. Certain options, futures or forward contracts of the
Portfolio may be required to be marked to market (i.e., treated as if closed
out) on the last day of each taxable year, and any gain or loss realized with
respect to these contracts may be required to be treated as 60% long-term and
40% short-term gain or loss or, in the case of certain contracts relating to
foreign currency, as ordinary income or loss. Positions of the Portfolio in
securities and offsetting options, futures or forward contracts may be treated
as "straddles", which are subject to tax rules that may cause deferral of
Portfolio losses, adjustments in the holding periods of Portfolio securities,
and other changes in the short-term or long-term characterization of capital
gains and losses, the effect of which may be to change the amount, timing and
character of the Fund's distributions to shareholders. Certain uses of foreign
currency and foreign currency derivatives such as options, futures, forward
contracts and swaps and investment by the Portfolio in certain "passive
foreign investment companies" may be limited or a tax election may be made, if
available, in order to preserve the Fund's ability to qualify as a RIC or
avoid imposition of a tax on the Fund.
The Portfolio anticipates that it will be subject to foreign taxes on its
income (including, in some cases, capital gains) from foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate
such taxes in some cases. If more than 50% of the Fund's total assets, taking
into account its allocable share of the Portfolio's total assets, at the close
of any taxable year of the Fund consists of stock or securities of foreign
corporations, the Fund may file an election with the Internal Revenue Service
(the "IRS") pursuant to which shareholders of the Fund will be required to (i)
include in ordinary gross income (in addition to dividends and distributions
actually received) their pro rata shares of foreign income taxes paid by the
Portfolio and allocated to the Fund even though not actually received by them,
and (ii) treat such respective pro rata portions as foreign income taxes paid
by them. Shareholders may then deduct such pro rata portions of foreign income
taxes in computing their taxable incomes, or, alternatively, use them as
foreign tax credits, subject to applicable limitations, against their U.S.
income taxes. Shareholders who do not itemize deductions for federal income
tax purposes will not, however, be able to deduct their pro rata portion of
foreign taxes deemed paid by the Fund, although such shareholders will be
required to include their shares of such taxes in gross income. Shareholders
who claim a foreign tax credit for such foreign taxes may be required to treat
a portion of dividends received from the Fund as a separate category of income
for purposes of computing the limitations on the foreign tax credit. Tax-
exempt shareholders will ordinarily not benefit from this election. Each year
that the Fund files the election described above, its shareholders will be
notified of the amount of (i) each shareholder's pro rata share of foreign
income taxes paid by the Portfolio and allocated to the Fund and (ii) the
portion of Fund dividends which represents income from each foreign country.
If the Fund does not make this election, it may deduct its allocated share of
such taxes in computing the income it is required to distribute.
The Portfolio will allocate at least annually to the Fund and its other
investors their respective distributive shares of any net investment income
and net capital gains which have been recognized for federal income tax
purposes (including unrealized gains at the end of the Portfolio's fiscal year
on certain options and futures transactions that are required to be marked-to-
market). Such amounts will be distributed by the Fund to its shareholders in
cash or additional shares, as they elect. Shareholders of the Fund will be
advised of the nature of the distributions.
Distributions by the Fund of the excess of net long-term capital gain over
net short-term capital loss earned by the Portfolio and allocated to the Fund,
taking into account any capital loss carryforwards that may be available, are
taxable to shareholders of the Fund as long-term capital gains, whether
received in cash or in additional shares and regardless of the length of time
their shares have been held. Certain distributions, if declared in October,
November or December and paid the following January, will be taxed to
shareholders as if received on December 31 of the year in which they are
declared.
Any loss realized upon the redemption or exchange of shares of the Fund
with a tax holding period of 6 months or less will be treated as a long-term
capital loss to the extent of any distribution of net long-term capital gains
with respect to such shares. All or a portion of a loss realized upon a
redemption or other disposition of Fund shares may be disallowed under "wash
sale" rules if other Fund shares are purchased (whether through reinvestment
of dividends or otherwise) within 30 days before or after the disposition. Any
disallowed loss will result in an adjustment to the shareholder's tax basis in
some or all of the other shares acquired.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the IRS, as well as
shareholders with respect to whom the Fund has received certain information
from the IRS or a broker, may be subject to "backup" withholding of federal
income tax arising from the Fund's dividends and other distributions as well
as the proceeds of redemption transactions (including repurchases and
exchanges), at a rate of 31%. An individual's TIN is generally his or her
social security number.
Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless
the tax is reduced or eliminated by an applicable tax convention.
Distributions from the excess of the Fund's net long-term capital gain over
its net short-term capital loss received by such shareholders and any gain
from the sale or other disposition of shares of the Fund generally will not be
subject to U.S. federal income taxation, provided that non-resident alien
status has been certified by the shareholder. Different U.S. tax consequences
may arise if: (i) the shareholder is engaged in a trade or business in the
United States, (ii) the shareholder is present in the United States for a
sufficient period of time during a taxable year to be treated as a U.S.
resident, (generally 180 days or more); or (iii) the shareholder fails to
provide any required certifications regarding its status as a non-resident
alien investor. Foreign shareholders should consult their tax advisers
regarding the U.S. and foreign tax consequences of an investment in the Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans, tax-
exempt entities, insurance companies and financial institutions. Shareholders
should consult their own tax advisers with respect to these or other special
tax rules that may apply in their particular situations, as well as the state,
local, and, when applicable, foreign tax consequences of investing in the
Fund.
PRINCIPAL UNDERWRITER
CLASS A SHARES. Class A shares of the Fund may be continuously purchased
at the public offering price through Authorized Firms which have agreements
with the Principal Underwriter. The Trust reserves the right to suspend or
limit the offering of its shares to the public at any time. The public
offering price is the net asset value next computed after receipt of the
order, plus, where applicable, a variable percentage (sales charge) depending
upon the amount of purchase as indicated by the sales charge table set forth
in the Prospectus (see "How to Buy Shares"). Such table is applicable to
purchases of a Fund alone or in combination with purchases of certain other
funds offered by the Principal Underwriter, made at a single time by (i) an
individual, or an individual, his spouse and their children under the age of
twenty-one, purchasing shares for his or their own account, and (ii) a trustee
or other fiduciary purchasing shares for a single trust estate or a single
fiduciary account.
The table is also presently applicable to (1) purchases of Class A shares
pursuant to a written Statement of Intention or (2) purchases of Class A
shares pursuant to the Right of Accumulation and declared as such at the time
of purchase.
Subject to the applicable provisions of the 1940 Act, the Trust may issue
Class A shares at net asset value in the event that an investment company
(whether a regulated or private investment company or a personal holding
company) is merged or consolidated with or acquired by the Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares
for the assets of such investment company. Class A shares may be sold at net
asset value to any officer, director, trustee, general partner or employee of
the Trust, a Portfolio or any investment company for which Eaton Vance or BMR
acts as investment adviser, any investment advisory, agency, custodial or
trust account managed or administered by Eaton Vance or by any parent,
subsidiary or other affiliate of Eaton Vance, or any officer, director or
employee of any parent, subsidiary or other affiliate of Eaton Vance. The
terms "officer," "director," "trustee," "general partner" or "employee" as
used in this paragraph include any such person's spouse and minor children,
and also retired officers, directors, trustees, general partners and employees
and their spouses and minor children. Class A shares may also be sold at net
asset value to registered representatives and employees of Authorized Firms
and to the spouses and children under the age of 21 and beneficial accounts of
such persons.
The Principal Underwriter acts as principal in selling Class A shares
under a Distribution Agreement with the Trust. The expenses of printing copies
of prospectuses used to offer shares to Authorized Firms or investors and
other selling literature and of advertising are borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of the Fund and its Class A
shares under federal and state securities laws are borne by the Class. The
Distribution Agreement is renewable annually by the Board of Trustees of the
Trust (including a majority of the noninterested Trustees), may be terminated
on six months' notice by either party and is automatically terminated upon
assignment. The Principal Underwriter distributes Class A shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold. The Principal Underwriter allows Authorized Firms discounts
from the applicable public offering price which are alike for all Authorized
Firms. The Principal Underwriter may allow, upon notice to all Authorized
Firms with whom it has agreements, discounts up to the full sales charge
during the periods specified in the notice. During periods when the discount
includes the full sales charge, such Authorized Firms may be deemed to be
underwriters as that term is defined in the Securities Act of 1933.
CLASS B AND CLASS C SHARES. Under the Distribution Agreements, the
Principal Underwriter acts as principal in selling Class B and Class C shares.
The expenses of printing copies of prospectuses used to offer shares to
Authorized Firms or investors and other selling literature and of advertising
is borne by the Principal Underwriter. The fees and expenses of qualifying and
registering and maintaining qualifications and registrations of the Fund and
its Class B and Class C shares under federal and state securities laws are
borne by the Class. In addition, each Class B and Class C makes payments to
the Principal Underwriter pursuant to their Distribution Plans as described in
the Prospectus; the provisions of the plan relating to such payments are
included in the Distribution Agreements. The Distribution Agreements are
renewable annually by the Trust's Board of Trustees (including a majority of
their noninterested Trustees who have no direct or indirect financial interest
in the operation of the Distribution Plans or the Distribution Agreements),
may be terminated on sixty days' notice either by such Trustees or by vote of
a majority of the outstanding Class B and Class C shares or on six months'
notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Class B and Class C shares
on a "best efforts" basis under which it is required to take and pay for only
such shares as may be sold. The Trust has authorized the Principal Underwriter
to act as its agent in repurchasing shares at the rate of $2.50 for each
repurchase transaction handled by the Principal Underwriter. The Principal
Underwriter estimates that the expenses incurred by it in acting as repurchase
agent for the Trust will exceed the amounts paid therefor. For the amount paid
by the Trust to the Principal Underwriter for acting as repurchase agent for
Class B shares, see Appendix B.
DISTRIBUTION PLANS
CLASS A SHARES
As described in the Prospectus, in addition to the fees and expenses
described herein, the Trust on behalf of its Class A shares finances
distribution activities and bears expenses associated with the distribution of
shares and the provision of certain personal and account maintenance services
to shareholders pursuant to a distribution plan (the "Plan") designed to meet
the requirements of Rule 12b-1 under the 1940 Act.
The Plan remains in effect from year to year provided such continuance is
approved at least annually by a vote of both a majority of (i) the
noninterested Trustees of the Trust who have no direct or indirect financial
interest in the operation of the Plan or any agreement related to the Plan
(the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in office. The
Plan may be terminated at any time by vote of a majority of the Rule 12b-1
Trustees or by vote of a majority of the outstanding Class A shares of the
Fund. The Plan requires quarterly Trustee review of a written report of the
amount expended under the Plan and the purposes for which such expenditures
were made. The Plan may not be amended to increase materially the payments
described therein without approval of the affected shareholders of Class A
shares and the Trustees. So long as the Plan is in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion
of such Trustees. The Trustees have determined that in their judgment there is
a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
The Plan is intended to compensate the Principal Underwriter for its
distribution services to the Fund by paying the Principal Underwriter monthly
distribution fees in connection with the sale of Class A shares. The quarterly
service fee paid by the Class A shares under the Plan is intended to
compensate the Principal Underwriter for its personal and account maintenance
services and for the payment by the Principal Underwriter of service fees to
Authorized Firms.
CLASS B AND CLASS C SHARES
The Trust has adopted Distribution Plans (the "Plans") on behalf of its
Class B and Class C shares designed to meet the requirements of Rule 12b-1
under the 1940 Act and the sales charge rule of the NASD. The purpose of the
Plans, is to compensate the Principal Underwriter for its distribution
services and facilities provided with respect to Class B and Class C shares.
The Plans provide that the Fund will pay sales commissions and
distribution fees to the Principal Underwriter only after and as a result of
the sale of Class B or Class C shares of the Fund. On each sale of Fund shares
(excluding reinvestment of distributions) the Fund will pay the Principal
Underwriter amounts representing (i) sales commissions equal to 5% of Class B
sales and 6.25% of Class C sales of the amount received by the Fund for each
share sold and (ii) distribution fees calculated by applying the rate of 1%
over the prime rate then reported in The Wall Street Journal to the
outstanding balance of uncovered distribution charges (as described below) of
the Principal Underwriter.
The amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be
accrued on such day as a liability of the Funds respective Class and will
accordingly reduce the Class' net assets upon such accrual, all in accordance
with generally accepted accounting principles. The amount payable on each day
is limited to 1/365 of .75% of a Class' net assets on such day. The level of
a Class' net assets changes each day and depends upon the amount of sales and
redemptions of shares, the changes in the value of the investments held by the
Portfolio, the expenses of the Class, Fund and the Portfolio accrued and
allocated to the Fund and Class on such day, income on portfolio investments
of the Portfolio accrued and allocated to the Fund on such day, and any
dividends and distributions declared on Fund shares. The Trust does not accrue
possible future payments as a liability of a Class or reduce a Class' current
net assets in respect of unknown amounts which may become payable under the
Plans in the future because the standards for accrual of such a liability
under accounting principles have not been satisfied.
The Plans provide that the Class will receive all CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding uncovered distribution charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Trust to the Principal
Underwriter whenever there exist uncovered distribution charges.
In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions
and distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled
to be paid under the Plans since their inception. Payments theretofore paid or
payable under the Plans by the Trust to the Principal Underwriter and CDSCs
theretofore paid or payable to the Principal Underwriter will be subtracted
from such distribution charges; if the result of such subtraction is positive,
a distribution fee (computed at 1% over the prime rate then reported in The
Wall Street Journal) will be computed on such amount and added thereto, with
the resulting sum constituting the amount of outstanding uncovered
distribution charges with respect to such day. The amount of outstanding
uncovered distribution charges of the Principal Underwriter calculated on any
day does not constitute a liability recorded on the financial statements of
the Fund.
The amount of uncovered distribution charges of the Principal Underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of shares, the nature of such sales (i.e., whether
they result from exchange transactions, reinvestments or from cash sales
through Authorized Firms), the level and timing of redemptions of shares upon
which a CDSC will be imposed, the level and timing of redemptions of shares
upon which no CDSC will be imposed (including redemptions of shares pursuant
to the exchange privilege which result in a reduction of uncovered
distribution charges), changes in the level of the net assets of the Class,
and changes in the interest rate used in the calculation of the distribution
fee under the Plans. Periods with a high level of sales of Class shares
accompanied by a low level of early redemptions of Class shares resulting in
the imposition of CDSCs will tend to increase the time during which there will
exist uncovered distribution charges of the Principal Underwriter.
Currently, payments of sales commissions and distribution fees and of
service fees may equal, 1% of a Class' average daily net assets per annum. For
actual payments made by the Fund and the outstanding uncovered distribution
charges of the Principal Underwriter, see Appendix B. The Trust believes that
the combined rate of all these payments may be higher than the rate of
payments made under distribution plans adopted by other investment companies
pursuant to Rule 12b-1. Although the Principal Underwriter will use its own
funds (which may be borrowed from banks) to pay sales commissions and service
fees for Class C sales and sales commissions for Class B sales at the time of
sale, it is anticipated that the Eaton Vance organization will profit by
reason of the operation of the Plans through an increase in the Fund's assets
(thereby increasing the advisory fee payable to BMR by the Portfolio)
resulting from sale of Fund shares and through the amounts paid to the
Principal Underwriter, including CDSCs, pursuant to the Plans. The Eaton Vance
organization may be considered to have realized a profit under the Plans if at
any point in time the aggregate amounts theretofore received by the Principal
Underwriter pursuant to the Plans and from CDSCs have exceeded the total
expenses theretofore incurred by such organization in distributing Class B and
Class C shares of the Fund. Total expenses for this purpose will include an
allocable portion of the overhead costs of such organization and its branch
offices, which costs will include without limitation leasing expense,
depreciation of building and equipment, utilities, communication and postage
expense, compensation and benefits of personnel, travel and promotional
expense, stationery and supplies, literature and sales aids, interest expense,
data processing fees, consulting and temporary help costs, insurance, taxes
other than income taxes, legal and auditing expense and other miscellaneous
overhead items. Overhead is calculated and allocated for such purpose by the
Eaton Vance organization in a manner deemed equitable to the Trust.
The Plans continue in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of
(i) the noninterested Trustees of the Trust who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to
the Plan (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in
office, and the Distribution Agreement contains a similar provision. The Plans
and Distribution Agreements may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by a vote of a majority of the
outstanding voting securities of the applicable Class. The Plans require
quarterly Trustee review of a written report of the amount expended under the
Plans and the purposes for which such expenditures were made. The Plans may
not be amended to increase materially the payments described therein without
approval of the shareholders of the affected Class and the Trustees. So long
as the Plans are in effect, the selection and nomination of the noninterested
Trustees shall be committed to the discretion of such Trustees.
The Trustees of the Trust believe that the Plans will be a significant
factor in the expected growth of the Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its Class B and Class C shareholders.
Payments for sales commissions and distribution fees made to the Principal
Underwriter under the Plans will compensate the Principal Underwriter for its
services and expenses in distributing Class B and Class C shares of the Fund.
Service fee payments made to the Principal Underwriter and Authorized Firms
under the Plans provide incentives to provide continuing personal services to
investors and the maintenance of shareholder accounts. By providing
incentives to the Principal Underwriter and Authorized Firms, the Plans are
expected to result in the maintenance of, and possible future growth in, the
assets of the Fund. Based on the foregoing and other relevant factors, the
Trustees of the Trust have determined that in their judgment there is a
reasonable likelihood that the Plan will benefit the Fund and its Class B and
Class C shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions by
the Portfolio, including the selection of the market and the broker-dealer
firm, are made by the Adviser.
The Adviser places the portfolio security transactions of the Portfolio
and of certain other accounts managed by the Adviser for execution with many
firms. The Adviser uses its best efforts to obtain execution of portfolio
transactions at prices which are advantageous to the Portfolio and (when a
disclosed commission is being charged) at reasonably competitive commission
rates. In seeking such execution, the Adviser will use its best judgment in
evaluating the terms of a transaction, and will give consideration to various
relevant factors, including without limitation the size and type of the
transaction, the general execution and operational capabilities of the broker-
dealer, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition
of the broker-dealer, the value and quality of services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission
or spread, if any. Transactions on stock exchanges and other agency
transactions involve the payment by the Portfolio of negotiated brokerage
commissions. Such commissions vary among different broker-dealer firms, and a
particular broker-dealer may charge different commissions according to such
factors as the difficulty and size of the transaction and the volume of
business done with such broker-dealer. Transactions in foreign securities
usually involve the payment of fixed brokerage commissions, which are
generally higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets,
but the price paid or received by the Portfolio usually includes an
undisclosed dealer markup or markdown. In an underwritten offering the price
paid by the Portfolio includes a disclosed fixed commission or discount
retained by the underwriter or dealer. Although commissions paid on portfolio
transactions will, in the judgment of the Adviser, be reasonable in relation
to the value of the services provided, commissions exceeding those which
another firm might charge may be paid to broker-dealers who were selected to
execute transactions on behalf of the Portfolio and the Adviser's other
clients in part for providing brokerage and research services to the Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the
Portfolio may receive a commission which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that
particular transaction or on the basis of the overall responsibilities which
the Adviser and its affiliates have for accounts over which they exercise
investment discretion. In making any such determination, the Adviser will not
attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the commission should be
related to such services. Brokerage and research services may include advice
as to the value of securities, the advisability of investing in, purchasing,
or selling securities, and the availability of securities or purchasers or
sellers of securities; furnishing analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy and
the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement);
and the "Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealers
which execute portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements. Consistent
with this practice, the Adviser may receive Research Services from broker-
dealer firms with which the Adviser places the portfolio transactions of the
Portfolio and from third parties with which these broker-dealers have
arrangements. These Research Services may include such matters as general
economic and market reviews, industry and company reviews, evaluations of
securities and portfolio strategies and transactions and recommendations as to
the purchase and sale of securities and other portfolio transactions,
financial, industry and trade publications, news and information services,
pricing and quotation equipment and services, and research oriented computer
hardware, software, data bases and services. Any particular Research Service
obtained through a broker-dealer may be used by the Adviser in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
the Adviser in rendering investment advisory services to all or a significant
portion of its clients, or may be relevant and useful for the management of
only one client's account or of a few clients' accounts, or may be useful for
the management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by the
Portfolio is not reduced because the Adviser receives such Research Services.
The Adviser evaluates the nature and quality of the various Research Services
obtained through broker-dealer firms and attempts to allocate sufficient
commissions to such firms to ensure the continued receipt of Research Services
which the Adviser believes are useful or of value to it in rendering
investment advisory services to its clients.
Subject to the requirement that the Adviser shall use its best efforts to
seek to execute portfolio security transactions of the Portfolio at
advantageous prices and at reasonably competitive commission rates or spreads,
the Adviser is authorized to consider as a factor in the selection of any
broker-dealer firm with whom Portfolio orders may be placed the fact that such
firm has sold or is selling shares of the Fund or of other investment
companies sponsored by Eaton Vance. This policy is not inconsistent with a
rule of the NASD, which rule provides that no firm which is a member of the
NASD shall favor or disfavor the distribution of shares of any particular
investment company or group of investment companies on the basis of brokerage
commissions received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by the Adviser or its
affiliates. The Adviser will attempt to allocate in a manner it deems
equitable portfolio security transactions among the Portfolio and the
portfolios of its other investment accounts whenever decisions are made to
purchase or sell securities by the Portfolio and one or more of such other
accounts simultaneously. In making such allocations, the main factors to be
considered are the respective investment objectives of the Portfolio and such
other accounts, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the
Portfolio and such accounts, the size of investment commitments generally held
by the Portfolio and such accounts and the opinions of the persons responsible
for recommending investments to the Portfolio and such accounts. However,
there may be instances when the Portfolio will not participate in a securities
transaction that is allocated among other accounts. While these procedures
could have a detrimental effect on the price or amount of the securities
available to the Portfolio from time to time, it is the opinion of the
Trustees of the Trust and the Portfolio that the benefits available from the
Adviser's organization outweigh any disadvantage that may arise from exposure
to simultaneous transactions.
For the fiscal years ended August 31, 1996 and 1995, the Portfolio paid
brokerage commissions of $2,802,590 and $2,608,520, respectively, with respect
to portfolio transactions. Of this amount, approximately $2,342,231 and
$2,341,272 was paid in respect of portfolio security transactions aggregating
approximately $366,522,257 and $387,659,617, respectively, to firms which
provided some Research Services to the Adviser's organization. For the fiscal
year ended August 31, 1994, the Portfolio paid brokerage commissions of
$4,177,780 with respect to portfolio transactions. All of such amount was paid
in respect of portfolio security transactions aggregating approximately
$814,062,509 to firms which provided some Research Services to the Adviser's
organization (although many such firms may have been selected in any
particular transaction primarily because of their execution capabilities).
OTHER INFORMATION
The Trust is a Massachusetts business trust established in 1989 as the
successor to Eaton Vance Growth Fund, Inc., a Massachusetts corporation. On
August 18, 1992 the Trust changed its name from Eaton Vance Growth Fund to
Eaton Vance Growth Trust. The Fund was reorganized as Class A shares (formerly
EV Traditional Greater China Growth Fund), Class B shares (formerly EV
Marathon Greater China Growth Fund) and Class C shares (formerly EV Classic
Greater China Growth Fund) of Eaton Vance Growth Trust on September 1, 1997,
so information herein prior to such date is for the Fund when it was a
separate series of the Trust and before it became a multiple-class fund. Eaton
Vance, pursuant to its agreement with the Trust, controls the use of the words
"Eaton Vance" or "EV" in the Fund's name and may use the words "Eaton Vance"
and "EV" in other connections and for other purposes.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent
of shareholders to change the name of the Trust or any series or to make such
other changes (such as reclassifying series or classes of shares or
restructuring the Trust) as do not have a materially adverse effect on the
rights or interests of shareholders or if they deem it necessary to conform
the Declaration to the requirements of applicable federal laws or regulations.
The Trust's By-laws provide that the Trust will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with any
litigation or proceeding in which they may be involved because of their
offices with the Trust. However, no indemnification will be provided to any
Trustee or officer for any liability to the Trust or its shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such
liability has been imposed. The Trust's Declaration of Trust contains an
express disclaimer of liability on the part of the Fund shareholders and the
Trust's By-laws provide that the Trust shall assume the defense on behalf of
any Fund shareholder. (The Declaration also contains provisions limiting the
liability of a series or class to that series or class.) Moreover, the Trust's
By-laws also provide for indemnification out of the property of the Fund of
any shareholder held personally liable solely by reason of being or having
been a shareholder for all loss or expense arising from such liability. The
assets of the Fund are readily marketable and will ordinarily substantially
exceed its liabilities. In light of the nature of the Fund's business and the
nature of its assets, management believes that the possibility of the Fund's
liabilities exceeding its assets, and therefore the shareholder's risk of
personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will
call a shareholder's meeting for the election of Trustees. Except for the
foregoing circumstances and unless removed by action of the shareholders in
accordance with the Trust's By-Laws, the Trustees shall continue to hold
office and may appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him
from that office either by a written declaration filed with the Trust's
custodian or by votes cast at a meeting called for that purpose. The By-Laws
further provide that under certain circumstances the shareholders may call a
meeting to remove a Trustee and that the Trust is required to provide
assistance in communicating with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action
of the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding
interests have removed him from that office either by a written declaration
filed with the Portfolio's custodian or by votes cast at a meeting called for
that purpose. The Declaration of Trust further provides that under certain
circumstances the investors may call a meeting to remove a Trustee and that
the Portfolio is required to provide assistance in communicating with
investors about such a meeting.
The Portfolio's Declaration of Trust provides that the Fund and other
entities permitted to invest in the Portfolio (e.g., other U.S. and foreign
investment companies and common and commingled trust funds) will each be
liable for all obligations of the Portfolio. However, the risk of the Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio
itself is unable to meet its obligations. Accordingly, the Trustees of the
Trust believe that neither the Fund nor its shareholders will be adversely
affected by reason of the Fund investing in the Portfolio.
The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any
emergency as determined by the Commission which makes it impracticable for the
Portfolio to dispose of its securities or value its assets, or during any
other period permitted by order of the Commission for the protection of
investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Fund and the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Commission.
FINANCIAL STATEMENTS
The audited financial statements of and the independent auditors' report
for the Fund and the Portfolio appear in the Fund's most recent annual report
to shareholders, the unaudited financial statements of the Fund and the
Portfolio appear in the Fund's most recent semiannual report to shareholders,
both of which are incorporated by reference into this SAI. A copy of the
Fund's most recent semiannual and annual report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the EV Marathon Greater China Growth Fund and Greater China Growth Portfolio
for the fiscal year ended August 31, 1996, as previously filed electronically
with the Commission (Accession No. 0000928816-96-000318) and the unaudited
financial information for the six-months ended February 28, 1997, as
previously filed electronically with the Commission (Accession No.
0000950109-97-003531).
APPENDIX A: CLASS A SHARES
PERFORMANCE INFORMATION
The table below indicates the total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in a
predecessor fund reorganized September 1, 1997 into Class A shares from
October 28, 1992 through February 28, 1997 and for the one-year period ended
February 28, 1997. The Value of Initial Investment reflects the deduction of
the maximum sales charge of 5.75%. Past performance is not indicative of
future results. Investment return and principal value will fluctuate; shares,
when redeemed, may be worth more or less than their original cost.
VALUE OF $1,000 INVESTMENT
[Enlarge/Download Table]
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- ----------------------------
PERIOD DATE INVESTMENT ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
------ ------ ------- ------ ------------- ------------- ------------- -------------
Life of the Fund* 10/28/92 $942.51 $1,651.41 75.22% 13.80% 65.14% 12.25%
1 Year Ended
2/28/97 2/28/96 $942.31 $1,053.73 11.82% 11.82% 5.37% 5.37%
*Investment operations began on October 28, 1992.
APPENDIX B: CLASS B SHARES
FEES AND EXPENSES
MANAGER
As of August 31, 1996, the Fund had net assets of $284,574,696. For the
fiscal years ended August 31, 1996, 1995 and 1994, Eaton Vance earned
management fees of $782,873, $876,239 and $698,780, respectively (equivalent
to 0.25% of the Fund's average daily net assets for each such year).
DISTRIBUTION PLAN
During the fiscal year ended August 31, 1996, the Principal Underwriter
paid to Authorized Firms sales commissions of $533,818 on sales of Fund
shares. During the same period, the Fund made sales commission payments under
the Plan to the Principal Underwriter aggregating $2,348,619 and the Principal
Underwriter received approximately $2,462,891 in CDSCs imposed on early
redeeming shareholders. These sales commissions and CDSC payments reduced
Uncovered Distribution Charges under the Plan. As at August 31, 1996, the
outstanding Uncovered Distribution Charges of the Principal Underwriter
calculated under the Plan amounted to approximately $10,789,000 (which amount
was equivalent to 3.8% of the Fund's net assets on such day). During the
fiscal year ended August 31, 1996, the Fund made service fee payments to the
Principal Underwriter and Authorized Firms aggregating $693,928, of which
$687,456 was paid to Authorized Firms and the balance of which was retained by
the Principal Underwriter.
PRINCIPAL UNDERWRITER
For the fiscal year ended August 31, 1996, the Fund paid the Principal
Underwriter $17,465.00 for repurchase transactions handled by the Principal
Underwriter.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in Class B shares from October 28, 1992
through February 28, 1997 and for the one-year period ended February 28, 1997.
The total return for the period prior to December 28, 1993 reflects the
Portfolio's total return (or that of its predecessor) adjusted to reflect any
applicable Fund CDSC. Total return for this time period has not been adjusted
to reflect the Fund's distribution and/or service fees and certain other
expenses. If such an adjustment were made, the performance would be lower.
Past performance is not indicative of future results. Investment return and
principal vaue will fluctuate; shares, when redeemed, may be worth more or
less than their original cost.
VALUE OF A $1,000 INVESTMENT
[Enlarge/Download Table]
VALUE BEFORE VALUE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING THE DEDUCTING THE DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF CDSC CDSC -------------------------- -------------------------
PERIOD DATE INVESTMENT ON 2/28/97 ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------- --------- ---------- ------------- ------------- ---------- ---------- ---------- ----------
Life of the
Fund 10/28/92 $1,000 $1,742.09 $1,722.09 74.21% 13.64% 72.21% 13.34%
1 Year Ended
2/28/97 2/28/96 $1,000 $1,112.55 $1,062.55 11.26% 11.26% 6.26% 6.26%
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at July 31, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As
of July 31, 1997, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville,
FL was the record owner of approximately 32% of the outstanding shares, which
it held on behalf of its customers who are the beneficial owners of such
shares, and as to which they had voting power under certain limited
circumstances. To the knowledge of the Trust, no other person owned of record
or beneficially 5% or more of the Fund's outstanding shares as of such date.
APPENDIX C: CLASS C SHARES
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in a predecessor fund reorganized
September 1, 1997 into Class C shares from October 28, 1992 through February
28, 1997 and for the one-year period ended February 28, 1997. The total return
for the period prior to June 7, 1993 reflects the Portfolio's total return (or
that of its predecessor) adjusted to reflect any applicable Fund CDSC. Total
return for such prior period has not been adjusted to reflect the Fund's
distribution and/or service fees and certain other expenses. If such an
adjustment were made, the performance would be lower. Past performance is not
indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their
original cost.
VALUE OF A $1,000 INVESTMENT
[Enlarge/Download Table]
VALUE OF INVEST- VALUE OF INVEST- TOTAL RETURN BEFORE TOTAL RETURN AFTER
MENT BEFORE DE- MENT AFTER DE- DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF DUCTING THE CDSC DUCTING THE CDSC ------------------------- -------------------------
PERIOD DATE INVESTMENT ON 2/28/97 ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------- --------- ---------- ------------- ------------- ---------- ---------- ---------- ----------
Life of
the Fund 10/28/92 $1,000 $1,707.67 $1,707.67 70.77% 13.12% 70.77% 13.12%
1 Year
Ended
2/28/97 2/28/96 $1,000 $1,107.83 $1,097.83 10.78% 10.78% 9.78% 9.78%
APPENDIX D
CHINA REGION COUNTRIES
The information set forth in this Appendix has been extracted from various
government and private publications. The Trust's Board of Trustees make no
representation as to the accuracy of the information, nor has the Board of
Trustees attempted to verify it.
PEOPLE'S REPUBLIC OF CHINA
China is the world's third largest country occupying a region of 9.6
million square kilometers.China is the world's most populous nation,
consisting of more than one-fifth of the human race. The estimated population
is approximately 1.3 billion.
In 1949, the Communist Party established the People's Republic of China.
The Communist government engaged in numerous campaigns to industrialize the
country with various programs. The failure of the Communist Party to achieve
substantive economic reform eventually led to political domination by the
army. In the 1970's, the Chinese government, which had remained isolated from
the world, opened its doors by encouraging foreign investment and expertise
inside its borders.
In 1989, a growing dissatisfaction with the Communist government led to
anti-government student protests culminating in what is known as the Tiananmen
Square incident. The government's use of the military to suppress a peaceful
demonstration resulted in world-wide criticism. Currently, the leadership
under Deng Xiaoping remains committed to basic economic reforms but continues
to reject liberalization from the domination of the Communist Party in the
political decision-making process. Investment in China still entails
significant political risk of nationalization or expropriation.
Over the past decade, China has achieved annual growth in real gross
domestic product (GDP) averaging in excess of 10%. GDP in 1995 had increased
to over 4 times the GDP in 1980 in real terms.
The economy in China consists of three sectors: state, cooperative, and
private. The state sector, though decreasing from 76% of GDP in 1980 to
approximately 50% in 1991, continues to constitute the bulk of the economy. In
recent years, however, the economy has been significantly restructured through
the abolition of the commune system in rural areas and the relaxing of
government authority in the day to day operations in both agricultural and
industrial enterprises. As the government assumes more of a regulatory and
supervisory role and less of a direct management role, market forces have been
allowed to operate. This has resulted in increased productivity and rising
incomes.
In 1990, industry accounted for 45.8% of China's National Income. In the
first three decades under Communist rule, China placed great emphasis on heavy
industry. Since the reform program began in 1978, a much greater emphasis has
been placed on light industry. Considerable industrial growth has come from
industrial enterprises in rural townships which are engaged in the processing
and assembly of consumer goods. These operations are concentrated in southern
China, where a major light industrial base has developed. Industrial output
has grown rapidly and is increasingly important to the Chinese economy.
China's current industrial policy also places emphasis on high-technology
industries supported by foreign technology, such as micro-electronics and
telecommunications. However, overstocking and poor economic results continue
to plague Chinese industry. Continued growth has been hampered by problems of
access to raw materials and energy supplies.
Inflationary pressures are a major concern in the Chinese economy. In
light of the on-going reforms of price subsidies and continued growth,
relatively high inflation should be expected. In addition, persistent fiscal
deficits have been a macroeconomic management problem in China in recent
years. The deficit for 1995 was 70 billion RMB.
Textiles and garments together form the single largest export category,
representing 25% of total export values. China's trade balance has fluctuated
over the last five years. In 1995, China's foreign trade yielded a surplus of
U.S. $17.60 billion. Hong Kong is the leading destination for Chinese exports,
accounting for over 40% of total export volume. Hong Kong is also a major re-
export center for Chinese goods. Other large export markets for China include
Japan, the United States, and Germany. Over the past few years, China's
imports have continued to expand and diversify. Hong Kong, Japan and the
United States are China's top three suppliers. Other major suppliers include
Germany and Italy.
China has traditionally adopted a policy of self-reliance when financing
development; overseas borrowings have been minimal. The country has remained a
conservative borrower but, since the early 1980s, has been making greater use
of foreign capital and financing, including government-assisted facilities and
project and trade financing. The primary sources of foreign capital for China,
in order of importance, are: (1) International Monetary Fund and World Bank
loans and credits; (2) government low interest loans and credits; and (3)
commercial loans and credits.
There is centralized control and unified management of foreign exchange in
China. The renminbi has been devalued progressively in recent years,
depreciating by almost 70% against the U.S. dollar between 1981 and 1990.
There currently are two officially recognized exchanges in China, the
Shanghai Securities Exchange ("SHSE"), which commenced trading on December 19,
1990, and the Shenzhen Stock Exchange ("SZSE"), which commenced trading on
July 3, 1991. "B" shares are offered exclusively for investment by foreign
investors, and their total market capitalization in December 1996 was over $3
billion. A number of organized securities markets exist in other cities in
China, but these are primarily over-the-counter markets. China has not yet
promulgated a national securities law. At the local level, however, many
cities and provinces have promulgated securities rules and regulations.
HONG KONG
As a trade entrepot and finance center, Hong Kong's viability has been
inexorably linked to mainland China since the establishment of the Colony in
1841. Hong Kong remains China's largest trade partner and its leading foreign
investor. In 1995, imports from China amounted to $69.8 billion, exports and
re-exports to $57.9 billion. In recent years large numbers of Hong Kong based
companies have set up factories in the southern province of Guangdong, where
it is estimated that Hong Kong companies employ between 2.5 and 3 million
workers. There also has been considerable growth in Chinese investment in Hong
Kong over the last decade and particularly in the last five years. In contrast
to Japanese investment, Chinese investment in Hong Kong typically involves the
purchase of stakes in existing companies. This has traditionally been in the
banking and import/export sectors. Recently, investment in property,
manufacturing and infrastructure projects has increased. In view of the
growing economic interaction between Hong Kong and Southern China, it is
increasingly meaningful to consider the concept of a Greater Hong Kong economy
consisting of Hong Kong and Guangdong Province, with a combined population of
over 75 million. To sustain the growth of the Guangdong economy, the Hong Kong
government in 1989 unveiled PADS, the Port and Airport Development Strategy.
The project, estimated to cost $21 billion, is designed to allow Hong Kong's
cargo handling capacity to increase by four times between 1988 and 2011 and
its air traffic handling capacity to increase from 15 million passengers in
1988 to 50 million in 2011.
In the past, political considerations have hindered closer economic
integration between Hong Kong and China. It was largely in response to the
United Nations embargo on trade with China in the 1950s and 1960s that Hong
Kong developed a significant manufacturing base. In the last several years,
however, there has been an improvement in relations. The Basic Law, the
outline for Hong Kong's government post 1997, calls for Hong Kong's capitalist
system to remain intact for an additional fifty years after 1997 and sets out
details for the integration of Hong Kong into China after 1997. This
integration process will directly affect the value of Hong Kong investments.
In the last two decades there has been a structural change in Hong Kong's
economy, with growth in the services sector outpacing manufacturing growth.
With more and more labor intensive manufacturing relocating to Southern China,
Hong Kong has developed its services sector, which in 1995 contributed 81.7%
of GDP.
The Stock Exchange of Hong Kong Ltd. ("HKSE"), commenced trading on April
2, 1986. The HKSE, with a total market capitalization as of November, 1996 of
approximately H.K. $3,406 billion (approximately U.S. $440 billion), is now
the second largest stock market in Asia, measured by market capitalization,
behind only that of Japan. As of that date, 575 companies and 1,219 securities
were listed on the Hong Kong Stock Exchange.
There are no regulations governing foreign investment in Hong Kong. There
are no exchange control regulations and investors have total flexibility in
the movement of capital and the repatriation of profits. Funds invested in
Hong Kong can be repatriated at will; dividends and interest are freely
remittable.
TAIWAN
The basic geopolitical fact about Taiwan is that it sits under the shadow
of mainland China and under the threat of reunification, whether peaceful or
by military means. Taiwan is dependent on its close relationship with the
United States and its very successful diplomacy and public relations campaign
which, ever since Madame Chiang Kai-Shek's days in the 1940s has sustained a
high level of sympathy in Washington for the Nationalist regime. Taiwan also
has close relations with South Africa, from which it buys essential raw
materials such as coal, and also with Israel, with whom it has had military as
well as trade links. Taiwan remains a free capitalist enclave with some very
successful entrepreneurial and export-oriented companies. The government's
role in the economy is relatively small.
Nevertheless, economic integration between the Chinese communities of
China and Taiwan has increased in recent years. China has low labor costs,
inexpensive land, natural resources and less rigid environmental rules. Taiwan
has capital, technology and trained entrepreneurs. Over 30 percent of Taiwan's
trade is with mainland China and the total investment from Taiwan to China may
approach US $5 billion or even US $10 billion. A shortage of skilled labour,
the high cost of labour and the strong New Taiwan dollar, has impelled many
Taiwanese businesspeople to shift their production to Thailand, the
Philippines, and Malaysia as well as China. Taiwan has over US $90 billion of
foreign exchange reserves. However, Chinese military exercises in 1996 suggest
that there could be a renewed cold war across the Taiwan Straits, a cut off of
business and cultural links, and a potential military conflict.
Between 1960 and 1994, Taiwan's GNP grew from less than $2 billion to over
$240 billion. The economic growth has been accompanied by a transformation of
domestic production from labor intensive to capital intensive industries in
the 1970s and finally to higher technology industries in the 1980s. The Taiwan
Stock Exchange Corp. is viewed as a highly priced and highly volatile
securities market with very weak regulations and poor accounting standards.
Many listed companies may be technically bankrupt.
Taiwan has a purely Chinese culture and way of life which affects the
legal and commercial systems. Legal contracts or agreements may not be
enforceable. Even more than in China, Taiwan depends on the personal contact
and trust between the two individuals involved. The legal system is
undeveloped.
KOREA
Political volatility has characterized the history of South Korea
(referred to as Korea throughout this section) during the past forty years,
while at the same time an extraordinary economic boom has occurred. Rigid
discipline has been characteristic of the military government under President
Park during the 1960s and 1970s, which were the most successful decades in
economic terms particularly in the growth of Korea's exports and in the per
capita income. It is important to remember how completely the cities and
transport system of the southern part of the Korean peninsula had been
destroyed in the civil war of the 1950s. The effort of reconstruction was,
therefore, enormous. Living standards in the 1960s were extremely low. The
threat from North Korea has exerted a continuous military pressure on the
South in the past forty years which is probably unique to any country in the
world, even including West Germany or Taiwan. Seoul is only 30 kilometers from
the demilitarized zone and, therefore, lives in a continuous state of tension
and fear of an imminent invasion. This very real threat is also translated
into a very high percentage of military spending in the national budget. If
Korea is compared with Japan, the Koreans have had to spend ten times more of
their national income on defense than the Japanese and yet have succeeded in
recording higher rates of economic growth.
Inflation in Korea has been higher than in Japan or Taiwan. In the 1970s,
Korea experienced an annual average inflation rate of nearly 15 percent.
Beginning in 1982, however, the tight monetary policy succeeded in bringing
this annual consumer price index down to single digits until 1990 when the
rate jumped again to 8.6 percent.
THAILAND
Thailand is unique in South East Asia in that it has escaped the colonial
experience and maintained its freedom and independence. The monarchy plays a
key role in maintaining the country's political stability and independence.
Nevertheless, since the absolute monarchy was ended in 1932 there have been
twenty-one coup d'etats, of which twelve have been successful. Thailand in the
1990s may remain democratic but the King and the army will continue to play a
role.
Thailand has a free and independent peasant population which has, on the
whole, enjoyed a higher standard of living than their neighbours and,
therefore, the communist movement has never made much headway among the rural
people. On the other hand again, Thailand's extraordinary economic growth in
the 1980s (averaging 10 percent per annum) has put great strains not only on
the urban environment because of traffic jams and pollution, but also on the
social and family system. Many rural families have been forced to send their
teenage children to the cities to find employment. The contrast of living
standards between Bangkok and the north east provinces (an estimated per
capital income would be perhaps US $2,500 per annum for the former and less
than US $500 per annum for the latter) must eventually create social tensions
and potential unrest. Buddhism must also be counted as a major factor of
political stability.
Thailand's economy has been the fastest growing in the world for the past
three years. The take-off really began in 1986-7 with the flood of new foreign
investment into the country, largely from Japan and Taiwan. There has been a
large shift away from agriculture towards manufacturing. As recently as 1980,
50 percent of Thailand's exports consisted of rice and tapioca and other
agricultural products. By 1990, 75 percent of the total volume of exports were
manufactured goods, mainly from the newly established assembly plants in
Bangkok and the south. This has resulted in large changes in employment and
moves of populations.
It is surprising, considering the very high rate of economic growth that
the economy has experienced, that prices, as measured by the consumer price
index, have been kept under control. The last serious bout of inflation in
Thailand occurred during the two oil crises, first in 1973-4 when the CPI
touched 24 percent and then again in 1980-1 when there was a resurgence of
inflation to nearly 20 percent. In the later 1980s, and thanks largely to a
more stable oil price, inflation has been held in single digits and has not
exceeded 6 percent. Nevertheless, the boom of the past three years,
particularly in Bangkok, has led to a rapid escalation of real estate values
and rents.
MALAYSIA
The central dilemma in assessing Malaysia's political risk is the
perennial question of relations between the Malay and Chinese communities
representing as they do about 60 percent and 30 percent of the population
respectively. Since the 1969 anti-Chinese riots in Kuala Lumpur the country
has been unruffled by any serious inter-racial violence and during this period
a great deal has been accomplished in transforming the economy and in
transferring the wealth of the country from foreign and Chinese hands into the
hands of the bumiputra (or the sons of the soil), which is the dominant Malay
majority. The success of this New Economic Policy is unquestioned and has
given a great deal of legitimacy to the continued run of the United Malay
National Organisation (UMNO) under its successive prime ministers and most
recently under Dr. Mahathir Mohammed who has now held power for more than a
decade. This economic success has also done much to defuse the threat from the
Islamic fundamentalists who have tended to get co-opted into the ruling party.
The Chinese community has also done well in economic terms although the
political disunity in the Malay Chinese Association (MCA) has left them
somewhat leaderless in the political sphere.
Malaysia has a kingship which is shared on a five-year revolving basis
among the sultans of the various states of the federation. Malaysia's
relations with its neighbours are good. Singapore, remains the largest
investor in the country. Malaysia, along with Singapore, experienced a sharp
recession in 1985-6 owing to an excessive tight monetary policy in both
countries. Since 1987 Malaysia has, however, returned to the path of high
growth and low inflation. The change in the past five years has also been
accompanied by an accelerated shift into manufacturing and away from the old
dependence on the plantation sector. This manufacturing growth has been led by
investment from Japan and Taiwan and notable national projects such as the
Proton car. Malaysia is attempting to move up market into the new product
areas such as electronics, car assembly and consumer goods. It has a literate
and trainable workforce.
As manufactured goods assume a larger importance in the composition of
exports compared with crude oil, rubber and palm oil, Malaysia's trade
position should gradually become steadier. For an investor, Malaysia remains
vulnerable to external shocks either in terms of commodity prices or in a fall
in export demand in its principal markets.
SINGAPORE
"The silent success", in the words of a Singapore government minister, of
this region is based on a high literacy rate and a well-educated and trainable
workforce. The investment in human capital has proven to be more important to
a lasting economic growth success story than the availability of finance or
technology. Singapore is the de facto financial centre of the Association of
South East Asian Nations (ASEAN) region. Singapore is a small Chinese island
surrounded by a sea of Muslims. Singapore is aiming its investment at Johore
in Malaysia and Batam Island in Indonesia. This is the so-called growth
triangle.
One aspect of political risk is the handover of political power from one
generation to another. Although Lee Kwan Yew stepped down as Prime Minister in
1990, he continues to wield a large influence and power behind the scenes. His
son, Lee Hsien Loong may not take up the post of Prime Minister for three to
five years. In any case, the question of dynastic succession in a
parliamentary democracy, even within a limited Confucian Chinese democracy,
is, to say the least, a questionable one. Many of the elder Lee's policies,
such as imposing the Mandarin Chinese language on the Singapore educational
system, have aroused fierce opposition among the older, anti-communist
generation of Singapore Chinese. The tight control of the media and the
suppression of all political opposition or criticism of the government, the
People's Action Party or the Prime Minister himself, has also aroused
criticism both at home and internationally.
The Singapore economy has been characterized by the highest degree of
government involvement and intervention outside of the socialist world.
Nevertheless, the growth rate has been quite impressive, averaging around 7-8
percent, except during the 1985-6 recession, and even more impressive has been
the tight control of inflation which, along with that of Japan, has remained
extremely low at below 3 percent for the past decade. Being a small island
state it is very sensitive to developments in its two main neighbours,
Indonesia and Malaysia, with their large commodity-based economies. Thus,
Singapore runs a regular trade deficit of around US $5 billion per annum.
Singapore's foreign reserves held by the Monetary Authority of Singapore (MAS)
and the Government Investment Corporation of Singapore (GICS) are estimated to
be in excess of US $50 billion.
INDONESIA
There have been only two rulers of Indonesia since independence was gained
from the Dutch in 1948 -- Sukarno and Suharto. However, independence and the
1965 revolution were unusually violent episodes in the life of any country.
The stability which Indonesia has enjoyed during the past twenty-five years
under Suharto should, therefore, be placed against this background.
The question of monarchical or presidential succession remains perhaps the
major political risk confronted by the foreign investor as so many aspects of
the business life of the country relate directly to Suharto or his immediate
family. The role of the army in Indonesia is a great deal more clear cut.
There have been no attempted military coups since 1966. The army remains
wholly in support of Suharto.
The huge Indonesian archipelago will have, by the year 2000, a population
of over 200 million. Fundamentalism is on the rise, as also in Malaysia, and
politicians with fundamentalist Islamic beliefs and supporters are likely to
take a more active role. However, the social question, which one cannot
ignore, concerns the role of the minority and non-Muslim peoples in Indonesia,
in particular the Chinese community in Java. Although the total Chinese
population is less than 5 million, or around 3 percent of the total, 80
percent of the commerce and much of the capital wealth remains in the hands of
this small but tight-knit Chinese community.
Indonesia began the 1980s principally as an oil exporter. During the 1970s
it had a high rate of inflation but also a very rapid economic growth on the
back of the oil boom. The fall in oil prices in the early 1980s, which became
precipitate in the spring of 1986, therefore, forced a review of their
priorities. Reducing inflation, diversifying the economy away from oil and
maintaining a stable growth in the economy were selected as the main
objectives. Inflation was brought from 20 percent, at the beginning of the
decade, to around 6 percent in 1989-90. Economic growth, having fallen to 2.5
percent in 1985 regained the level of 7.4 percent by 1990. The rupiah, which
had undergone a 30 percent once-and-for-all evaluation in the autumn of 1985,
had stabilized on a "crawling peg" system with an annual devaluation of around
5 percent. The trade surplus continued at a healthy US $4-5 billion annually
and the inflow of foreign capital more than offset Indonesia's foreign debt
position. Therefore, it is possible to conclude that the good macroeconomic
management, which was achieved by the small group of technocrats employed by
Suharto to direct the economy, had been very successful in reducing the
economic risk of the country. The future path of the Indonesian economy will,
therefore, depend as much on the development of low wage manufacturing and the
inflow of Japanese capital, on the liberalization of the banking system and
the capital market, as on the price of basic commodities.
THE PHILIPPINES
The question most investors raise is whether the Philippines is capable of
responsible government and economic planning which would give it a GNP growth
rate approaching that of its Asian tiger neighbours. Many observers dismiss
this prospect out of hand citing the endemic problems of corruption, political
in-fighting and the lack of Confucian work ethic present in North Asia.
However, there is no doubt that the Philippines possesses enormous natural
advantages and it would be wrong to generalize about the whole archipelago of
7,000 islands from the political life of Manila alone. The island of Cebu, for
example, has seen a successful economic transformation in the past twenty
years. Manufacturing investment has grown and has begun to replace agriculture
as a principal source of employment. The Philippines has a very high rate of
literacy and the work ethic cannot be doubted by anyone who has employed
Filipino domestic workers overseas. Their earnings are an important source of
remittance back to the Philippines each year. The Filipino population in the
United States is now the largest Asian ethnic group in that country
approaching 2 million, mainly in California. Both natural resources,
therefore, and an intelligent, hardworking population favour the country.
Unfortunately, the political system has never been able to maintain the long-
term stability for its promise to be fulfilled.
APPENDIX E
[LOGO]
EATON VANCE
MUTUAL FUNDS
INVEST IN ONE OF THE WORLD'S
FASTEST GROWING ECONOMIES
EATON VANCE
GREATER
CHINA
GROWTH FUNDS
[GRAPHIC OMITTED]
EV TRADITIONAL GREATER CHINA GROWTH FUND ("A")
EV MARATHON GREATER CHINA GROWTH FUND ("B")
EV CLASSIC GREATER CHINA GROWTH FUND ("C")
GLOBAL MANAGEMENT-GLOBAL DISTRIBUTION
[LOGO]
Lloyd George Management
(Bermuda) Limited
CHINA: ONE OF THE WORLD'S
FASTEST GROWING ECONOMIES
The People's Republic of China ("China") and the surrounding countries of the
China region have become one of the most exciting and potentially profitable
areas for investors seeking capital appreciation. In recent years, in fact,
China has undergone remarkable change, having embraced economic reforms that
have turned it into one of the world's most spectacularly growing economies.
Leading China's transformation from central planning toward a market economy are
the "overseas" Chinese - those living outside China - who supply capital and
management expertise to complement the low-cost labor and land resources of
mainland China. Eaton Vance estimates that 75% of all trade in the China region
goes through firms controlled by overseas Chinese. By far, the largest part of
foreign contracted investment (presently about $90.5 billion annually) is coming
from overseas Chinese. It is this direct foreign investment - with its
technology, management skills and export potential - that is transforming
China's economy, leading many to believe that China will assume leadership in
Asia within 20 years.
FOREIGN INVESTMENT IS SOARING IN
THE GREATER CHINA REGION
Growth of Foreign Investment 1990-1995 ($US billions)
(horizontal bar chart)
95 38
94 34
93 27
92 11
91 4
90 3
Source: Lloyd George Management
SIGNIFICANT GROWTH POTENTIAL
* With 1.2 billion people, China houses 25% of the world's population and is
forecast to become the world's largest economy early in the 21st century.
* The Greater China region has registered annual growth of 7.3% in Gross
Domestic Product (GDP) during the past six years.
* China's savings rate is 40% of Gross National Product.
* China's international trade now accounts for approximately 40% of its total
economy.
* China's exports have been rising since 1988 and are forecast to be over U.S.
$125 billion at year-end 1995.
Lloyd George Management; The Wall Street Journal.
GREATER CHINA AND
CHINA'S SPECIAL ECONOMIC ZONES
In addition to low-cost labor and a wealth of resources, China offers another
attraction for foreign investment. In 1978, precisely to attract foreign
investment, China designated five Special Economic Zones where overseas
investors can receive special investment incentives and tax concessions.
In addition, 14 coastal cities are designated "open cities," and certain Open
Economic Zones have been established in coastal areas. Shanghai has established
the Pudong New Area. There are 27 High and New Technology Industrial Development
Zones where preferential treatment is given to enterprises confirmed as
technology-related.
China's plans call for further development of the designated special investment
areas during the remainder of the decade.
"On a scale that the rest of the world is just starting to comprehend,
China is extending its Industrial Revolution."
- The Wall Street Journal, March, 1995
[MAPS OMITTED]
KEEP IN MIND, FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OF,
OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
THE CHINA REGION STOCK MARKETS
Over the past 20 years, the performance of the China region stock markets has
generally been better than those in the United States and Europe. In the past
five years, these newly emerging securities markets have demonstrated
significant growth in market capitalization, in the numbers of listed securities
and the volume of transactions.
THE GROWTH OF THE
CHINA REGION'S EMERGING MARKETS
Percent change in market capitalization 1985-1995
(HORIZONTAL BAR CHART)
Indonesia 83,250%
Philippines 9,500
Thailand 7,545
Korea 2,388
Taiwan 1,602
Hong Kong 878
Malaysia 586
Singapore 472
Source: Lloyd George Management
"China has exploded into a global export power."
- The Wall Street Journal, November, 1995
[GRAPHIC OMITTED]
THE GROWTH IN NUMBER
OF LISTED DOMESTIC COMPANIES 1986-1995
1986 1995
South Korea 355 721
Malaysia 233 529
Hong Kong 248 518
Thailand 98 416
Taiwan 130 347
China -- 323
Indonesia 24 238
Singapore 122 212
Philippines 130 205
Source: International Finance Corporation, Emerging Stock Markets Factbook 1996
ABOUT RISK
Of course, while Eaton Vance believes that the opportunities for long-term
capital appreciation are excellent, investors should consider carefully the
risks involved in committing a portion of their assets to the Greater China
Growth Funds. Such risks, for example, may include fluctuations in foreign
exchange rates, political or economic instability in the country in which the
security's issuer is located, and the possible imposition of exchange controls
or other laws or restrictions. In addition, foreign securities markets may be
less liquid, more volatile and subject to less government supervision than those
in the United States. Further, there is no guarantee that the economy or stock
market of China will continue to grow as they have in the past, or that Greater
China Growth Funds will benefit from such growth.
THE OPINIONS AND STATISTICS QUOTED IN THIS PUBLICATION ARE FROM SOURCES BELIEVED
TO BE RELIABLE BUT CANNOT BE GUARANTEED AS TO ACCURACY OR CORRECTNESS.
EV GREATER
CHINA GROWTH FUNDS
HOW THE EATON VANCE FUNDS WORK
While the allure of the greater China region is powerful, capturing the
investment opportunity is challenging. The investment objective of EV Greater
China Growth Funds is long-term capital appreciation through investment in the
equity securities of companies that, in the opinion of the investment adviser,
will benefit from the economic development and growth of China. The Funds invest
in interests in the Greater China Growth Portfolio. The Portfolio invests
primarily in equities of companies traded on the securities markets in the China
region, consisting of Hong Kong, China (including the two stock exchanges in
China itself), Singapore, South Korea, Indonesia, Taiwan, Malaysia, Thailand and
the Philippines. It may invest in common and preferred stocks of companies that
provide goods or services to, or from within, the People's Republic of China, or
have manufacturing or other operations in China.
"China is committed to a policy of growth and has ambitions to be
a dominant economic power in Asia within a decade."
- Lloyd George Management
[Graphic Omitted]
HANDS-ON EXPERIENCE IN
THE CHINA REGION
To be successful, any international portfolio, be it a start-up portfolio or a
billion-dollar institutional account, requires in-depth knowledge of markets,
products, management styles and, to the extent possible, a keen sense of
economic and political trends - past, current and future.
Lloyd George Management, the Portfolio's investment adviser, features a group of
highly qualified and experienced investment professionals. Individually and
collectively, they have extensive hands-on experience in securities markets
around the world, including the management of several regional mutual funds
focusing on emerging markets. There are relatively few advisers dedicated to the
emerging markets of the China region.
Based in Hong Kong, and with offices in London and Mumbai (formerly Bombay),
Lloyd George Management is ideally situated to monitor the pulse of the China
region, select the securities for the Portfolio and manage its assets on a
day-to-day basis.
A DIVERSE PORTFOLIO
TEN LARGEST HOLDINGS AS OF 7/31/96*
Hutchinson Whampoa (Hong Kong) ................................... 5.2%
Cheung Kong Holdings Ltd. (Hong Kong) ............................ 5.0
Hong Kong & Shanghai Banking Corp. (Hong Kong) ................... 4.8
New World Development (Hong Kong) ................................ 3.6
Sun Hung Kai Properties Ltd. (Hong Kong) ......................... 2.7
Electricity Generating (Thailand) ................................ 2.6
Siam Commercial Bank (Thailand) .................................. 2.5
National Mutual Ltd. (Hong Kong) ................................. 2.4
Korea Exchange Bank (Korea) ...................................... 2.3
Korea Electric Power Corp. (Korea) ............................... 2.2
* by market value
GEOGRAPHIC DISTRIBUTION 7/31/96*
Hong Kong ....................................................... 44.5%
Thailand ........................................................ 11.3
Malaysia ........................................................ 10.4
Korea ........................................................... 7.9
Singapore ....................................................... 7.8
Taiwan .......................................................... 6.7
Philippines ..................................................... 6.5
Indonesia ....................................................... 1.9
China ........................................................... 0.9
Cash & New Subscriptions ........................................ 2.1
* by market value
SECTOR DISTRIBUTION 7/31/96*
Industrial/Manufacturing .......................................... 24.1%
Banks ............................................................. 21.0
Diversified Trading ............................................... 18.2
Properties ........................................................ 15.0
Utilities ......................................................... 4.6
Telecommunications ................................................ 4.4
Transportation .................................................... 2.7
Consumer/Retail ................................................... 2.4
Other ............................................................. 5.5
Cash & New Subscriptions .......................................... 2.1
* by market value
THE BENEFITS OF GLOBAL INVESTING
When you invest globally, you diversify not just by industry and company, but
also by country and continent. That added diversification can help reduce
volatility and risk.
Growth opportunities are everywhere. There are a number of countries worldwide
that are growing faster than the United States as a result of a much changed
political landscape, falling trade barriers, increased foreign investment, and a
freer flow of capital across once-restricted borders. As the global market
continued to expand, the U.S. portion has continued to shrink from 70% of the
world's total market capitalization in 1969 to 41% at the end of 1995.* To
ignore non-U.S. markets is to ignore over half of the total world market.
The growth rates experienced by other countries are naturally reflected in the
performance of their stock markets, whose returns have outpaced those of the
U.S. over the last several years. As evidenced by the table, the United States
stock market has not been the leader based on 10 year average annual returns
ending December 31, 1995.
*Source: Morgan Stanley Capital International
AVERAGE ANNUAL STOCK MARKET RETURNS
FOR THE 10 YEARS ENDED DECEMBER 31, 1995
(horizontal bar chart)
Hong Kong 23.83%
Belgium 20.67
Singapore/Malaysia 20.21
Sweden 19.43
Netherlands 19.33
Switzerland 17.06
France 15.30
United Kingdom 15.02
United States 14.82
Denmark 13.70
Japan 12.82
Germany 10.66
Italy 7.78
Source: Lipper Analytical Services, Inc.
"The World Bank forecasts that for the next decade Asia's developing
economies will keep racing ahead by nearly 8% a year,
on average-roughly three times the pace of GDP
growth in the U.S., Europe and Japan."
-Fortune, October, 1995
GLOBAL MANAGEMENT - GLOBAL DISTRIBUTION
EATON VANCE IS THE FUNDS' SPONSOR AND ADMINISTRATOR
In 1992, Eaton Vance joined forces with Lloyd George Management to harness the
investment potential of today's global markets.
With a history dating to 1924, Eaton Vance is a Boston-based investment
management firm. Lloyd George Management is an international investment adviser
with offices in Hong Kong, London and Mumbai.
Together, the firms manage over $18 billion in assets and offer individual and
institutional investors a roster of mutual funds focusing on international
equities, domestic equities, and on tax-free, government and corporate bonds.
Eaton Vance Distributors, Inc. markets these funds both within the United States
and offshore.
IT PAYS TO SEEK PROFESSIONAL ADVICE
You have crucial investment goals - your children's education, retirement,
financial independence. Or all three. Meeting those goals requires time,
objectivity and investment savvy. Most people do not hesitate to consult a
professional for advice in other important areas of their lives. With your
financial future at stake, why not seek the help of a professional investment
representative!
YOUR REPRESENTATIVE CAN HELP YOU CONSIDER SEVERAL FACTORS
BEFORE MAKING AN INVESTMENT RECOMMENDATION
* Short- and long-term financial goals * Investment time frame
* Tolerance for investment risk * Other investments you may already own
Your professional investment representative is knowledgeable about financial
markets, as well as the wide range of investment opportunities available. Your
representative can help you decide when to buy, sell or persevere with your
investments. With your professional investment representative, you have someone
you can depend on for tailored financial advice - today, tomorrow and in the
years to come. Talk to your financial adviser to learn how you may benefit from
Eaton Vance's overseas expertise.
SHAREHOLDER BENEFITS
* Investment minimum, $1,000; subsequent investments of $50 or more.
* Dividends and capital gains distributions may be taken in cash, or reinvested
at net asset value in additional shares automatically.
* Free exchange of your shares for those of other Eaton Vance Funds (with the
same distribution plan) with the ease of a phone call. The exchange privilege
may be changed or discontinued at any time.
* Bank draft investing for automatic monthly or quarterly investments from a
bank checking account.
* Tax-sheltered retirement plans. Purchase shares of the Funds in an Individual
Retirement Account, 401(k) Plan, Pension or Profit-Sharing Plan or a 403(b)
Retirement Plan.
* Systematic withdrawal plans for automatic periodic withdrawals from a fund
account.
Please see a prospectus for more information about any of these services.
[Graphic Omitted]
ASK YOUR INVESTMENT ADVISER HOW EV TRADITIONAL, MARATHON, OR CLASSIC GREATER
CHINA GROWTH FUND MIGHT FIT INTO YOUR PORTFOLIO.
EV TRADITIONAL GREATER CHINA GROWTH FUND (EVCGX) CUSIP: 277902201
EV MARATHON GREATER CHINA GROWTH FUND (EMCGX) CUSIP: 277902300
EV CLASSIC GREATER CHINA GROWTH FUND (ECCGX) CUSIP: 277902409
For more complete information about any of the EV Greater China Growth Funds or
any other Eaton Vance Fund, including distribution plans, charges and expenses,
please write or call your financial adviser for a prospectus, as well as for
details of the performance of EV Traditional, Marathon or Classic Greater China
Growth Fund. Read the prospectus(es) carefully before you invest or send money.
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(C) Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
2-179-8/96 CGCB
[Logo]
EATON VANCE
================
Mutual Funds
EATON VANCE
GREATER CHINA
GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 1, 1997
EATON VANCE GREATER
CHINA GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
--------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EATON VANCE GREATER CHINA GROWTH FUND
ADMINISTRATOR OF GREATER CHINA GROWTH PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF GREATER CHINA GROWTH PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
CGSAI
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
September 1, 1997
EATON VANCE GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information provides general information
about Eaton Vance Growth Fund (the "Fund") and Growth Portfolio (the
"Portfolio"). This Statement of Additional Information is sometimes referred
to herein as the "SAI."
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
PART I
Additional Information about Investment Policies .................. 1
Investment Restrictions ........................................... 3
Trustees and Officers ............................................. 4
Investment Adviser and Administrator .............................. 7
Custodian ......................................................... 9
Services for Accumulation -- Class A Shares ....................... 9
Service for Withdrawal ............................................ 10
Determination of Net Asset Value .................................. 10
Investment Performance ............................................ 11
Taxes ............................................................. 12
Principal Underwriter ............................................. 14
Service Plan -- Class A Shares .................................... 15
Distribution Plans -- Class B and Class C Shares .................. 15
Portfolio Security Transactions ................................... 17
Other Information ................................................. 18
Independent Accountants ........................................... 20
Financial Statements .............................................. 20
Appendix A: Class A Shares ........................................ a-1
Appendix B: Class B Shares ........................................ b-1
Appendix C: Class C Shares ........................................ c-1
--------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED SEPTEMBER 1, 1997, AS SUPPLEMENTED
FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT
OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS,
A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS
AND PHONE NUMBER).
This SAI provides information about the Fund and the Portfolio.
Capitalized terms used in this SAI and not otherwise defined have the meanings
given them in the Prospectus. The Fund is subject to the same investment
policies as those of the Portfolio. The Fund currently seeks to achieve its
objective by investing in the Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
FOREIGN SECURITIES. 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 United States 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. Furthermore, economies of
particular countries or areas of the world may differ favorably or unfavorably
from the economy of the United States. It is anticipated that in most cases
the best available market for foreign securities will be on exchanges or in
over-the-counter markets located outside of the United States. Foreign stock
markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign
issuers (particularly those located in developing countries) may be less
liquid and more volatile than securities of comparable U.S. companies. In
addition, foreign brokerage commissions are generally higher than commissions
on securities traded in the United States and may be non-negotiable. In
general, there is less overall governmental supervision and regulation of
foreign securities markets, broker-dealers, and issuers than in the United
States.
FOREIGN CURRENCY TRANSACTIONS. Because investments in companies whose
principal business activities are located outside of the United States will
frequently involve currencies of foreign countries, and because assets of the
Portfolio may temporarily be held in bank deposits in foreign currencies
during the completion of investment programs, the value of the assets of the
Portfolio as measured in U.S. dollars may be affected favorably or unfavorably
by changes in foreign currency exchange rates and exchange control
regulations. Currency exchange rates can also be affected unpredictably by
intervention by U.S. or foreign governments or central banks, or the failure
to intervene, or by currency controls or political developments in the U.S. or
abroad. The Portfolio may conduct its foreign currency exchange transactions
on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market or through entering into swaps, forward contracts,
options or futures on currency. On spot transactions, foreign exchange dealers
do not charge a fee for conversion, but they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to the Portfolio at one rate, while offering a lesser rate of
exchange should the Portfolio desire to resell that currency to the dealer.
FORWARD FOREIGN CURRENCY EXCHANGE TRANSACTIONS. The Portfolio may enter into
forward foreign currency exchange contracts in several circumstances. First,
when the Portfolio enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when the Portfolio anticipates
the receipt in a foreign currency of dividend or interest payments on such a
security which it holds, the Portfolio may desire to "lock in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such dividend or
interest payment, as the case may be. By entering into a forward contract for
the purchase or sale, for a fixed amount of dollars, of the amount of foreign
currency involved in the underlying transactions, the Portfolio will attempt
to protect itself against an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
Additionally, when management of the Portfolio believes that the currency
of a particular foreign country may suffer a substantial decline against the
U.S. dollar, it may enter into a forward contract to sell, for a fixed amount
of dollars, the amount of foreign currency approximating the value of some or
all of the securities held by the Portfolio denominated in such foreign
currency. The precise matching of the forward contract amounts and the value
of the securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a consequence of
market movements in the value of those securities between the date on which
the contract is entered into and the date it matures. The precise projection
of short-term currency market movements is not possible, and short-term
hedging provides a means of fixing the dollar value of only a portion of the
Portfolio's foreign assets.
SPECIAL RISKS ASSOCIATED WITH CURRENCY TRANSACTIONS. Transactions in forward
contracts are subject to the risk of governmental actions affecting trading in
or the prices of currencies underlying such contracts, which could restrict or
eliminate trading and could have a substantial adverse effect on the value of
positions held by the Portfolio. In addition, the value of such positions
could be adversely affected by a number of other complex political and
economic factors applicable to the countries issuing the underlying
currencies.
Furthermore, unlike trading in most other types of instruments, there is
no systematic reporting of last sale information with respect to the foreign
currencies underlying forward contracts, futures contracts and options. As a
result, the available information on which the Portfolio's trading systems
will be based may not be as complete as the comparable data on which the
Portfolio makes investment and trading decisions in connection with securities
and other transactions. Moreover, because the foreign currency market is a
global, twenty-four hour market, events could occur on that market which will
not be reflected in the forward, futures or options markets until the
following day, thereby preventing the Portfolio from responding to such events
in a timely manner.
Settlements of over-the-counter forward contracts or of the exercise of
foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires parties to such contracts to
accept or make delivery of such currencies in conformity with any United
States or foreign restrictions and regulations regarding the maintenance of
foreign banking relationships, fees, taxes or other charges.
Unlike currency futures contracts and exchange-traded options, forward
contracts are not traded on contract markets regulated by the Commodity
Futures Trading Commission (the "CFTC") or (with the exception of certain
foreign currency options) the Commission. To the contrary, such instruments
are traded through financial institutions acting as market-makers. In an over-
the-counter trading environment, many of the protections associated with
transactions on exchanges will not be available. For example, there are no
daily price fluctuation limits, and adverse market movements could therefore
continue to an unlimited extent over a period of time. There is no limit on
the amount of potential losses on forward contracts to which the Portfolio is
a party.
In addition, over-the-counter transactions can only be entered into with a
financial institution willing to take the opposite side, as principal, of the
Portfolio's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Portfolio.
Where no such counterparty is available, it will not be possible to enter into
a desired transaction. There also may be no liquid secondary market in the
trading of over-the-counter contacts, and the Portfolio may be unable to close
out forward contracts entered into until their exercise, expiration or
maturity. This in turn could limit the Portfolio's ability to realize profits
or to reduce losses on open positions and could result in greater losses.
Furthermore, over-the-counter transactions are not backed by the guarantee
of an exchange's clearing corporation. The Portfolio will therefore be subject
to the risk of default by, or the bankruptcy of, the financial institution
serving as its counterparty. One or more of such institutions also may decide
to discontinue its role as market-maker in a particular currency, thereby
restricting the Portfolio's ability to enter into desired hedging
transactions. The Portfolio will enter into over-the-counter transactions only
with parties whose creditworthiness has been reviewed and found satisfactory
by an Adviser.
FUTURES CONTRACTS ON STOCK INDICES. Entering into a derivative instrument
involves a risk that the applicable market will move against the Portfolio's
position and that the Portfolio will incur a loss. This loss may exceed the
amount of the initial investment made or the premium received by the
Portfolio. Derivative instruments may sometimes increase or leverage the
Portfolio's exposure to a particular market risk. Leverage enhances the
Portfolio's exposure to the price volatility of derivative instruments it
holds. The Portfolio's success in using derivative instruments to hedge
portfolio assets depends on the degree of price correlation between the
derivative instruments and the hedged asset. Imperfect correlation may be
caused by several factors, including temporary price disparities among the
trading markets for the derivative instrument, the assets underlying the
derivative instrument and the Portfolio's assets. During periods of market
volatility, a commodity exchange may suspend or limit trading in an exchange-
traded derivative instrument, which may make the contract temporarily illiquid
and difficult to price. Commodity exchanges may also establish daily limits on
the amount that the price of a futures contract or futures can vary from the
previous day's settlement price. Once the daily limit is reached, no trades
may be made that day at a price beyond the limit. This may prevent the
Portfolio from closing out positions and limiting its losses. Certain
provisions of the Code limit the extent to which the Portfolio may purchase
and sell derivative instruments. The Portfolio will engage in transactions in
futures contracts and related options only to the extent such transactions are
consistent with the requirements of the Code for maintaining the qualification
of the Fund as a regulated investment company ("RIC") for federal income tax
purposes.
To the extent that the Portfolio enters into futures contracts and options
thereon traded on an exchange regulated by the CFTC, in each case that are not
for bona fide hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums required to establish these positions (excluding the
amount by which options are "in-the-money") may not exceed 5% of the
liquidation value of the Portfolio's investments, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into.
ASSET COVERAGE REQUIREMENTS. Transactions using forward contracts, futures
contracts and options thereon (other than options that the Portfolio has
purchased) expose the Portfolio to an obligation to another party. The
Portfolio will not enter into any such transactions unless it owns either (1)
an offsetting ("covered") position in securities, currencies, forward
contracts or futures contracts, or (2) cash or liquid securities (such as
readily marketable common stock and money market instruments) with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. The Portfolio will comply with Commission guidelines
regarding cover for these instruments and, if the guidelines so require, set
aside cash or liquid securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account maintained by the
Fund's custodian cannot be sold while the position in the corresponding
futures contract or option is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of the
Portfolio's assets to cover or segregated accounts could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.
The Portfolio may enter into futures contracts, and options on futures
contracts, traded on an exchange regulated by the CFTC and on foreign
exchanges, but, with respect to foreign exchange-traded futures contracts and
options on such futures contracts, only if the Investment Adviser determined
that trading on each such foreign exchange does not subject the Portfolio to
risks, including credit and liquidity risks, that are materially greater then
the risks associated with trading on CFTC-regulated exchanges.
REPURCHASE AGREEMENTS. The Portfolio may purchase U.S. Government securities
and concurrently enter into repurchase agreements with the seller under which
the seller agrees to repurchase such securities at the Portfolio's cost plus
interest within a specified time (normally one day). While repurchase
agreements involve certain risks not associated with direct investments in
U.S. Government securities, the Portfolio follows procedures designed to
minimize such risks. These procedures include effecting repurchase
transactions only with large, well-capitalized banks. In addition, the
Portfolio's repurchase agreements will provide that the value of the
collateral underlying the repurchase agreement will always be at least equal
to the repurchase price, including any accrued interest earned on the
repurchase agreement. In the event of a default or bankruptcy by a selling
bank, the Portfolio will seek to liquidate such collateral. However, the
exercise of the Portfolio's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from any sale upon a
default of the obligation to repurchase are less than the repurchase price,
the Portfolio could suffer a loss.
PORTFOLIO TURNOVER. For the fiscal years ended August 31, 1996 and 1995, the
portfolio turnover rates of the Portfolio were 62% and 84%, respectively.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities, which as
used in this SAI means the lesser of (a) 67% of the shares of the Fund present
or represented by proxy at a meeting if the holders of more than 50% of the
shares are present or represented at the meeting or (b) more than 50% of
shares of the Fund. Accordingly, the Fund may not:
(1) With respect to 75% of its total assets, purchase the securities of
any issuer if such purchase at the time thereof would cause more than 5% of
its total assets (taken at market value) to be invested in the securities of
such issuer, or purchase securities of any issuer if such purchase at the time
thereof would cause more than 10% of the total voting securities of such
issuer to be held by the Fund or Portfolio, except obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
except securities of other investment companies;
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchase and sales of
securities);
(4) Underwrite or participate in the marketing of securities of others;
(5) Make an investment in any one industry if such investment would cause
investments in such industry to exceed 25% of the Fund's total assets, at
market value at the time of such investment (other than securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities);
(6) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate;
(7) Purchase or sell commodities or commodity contracts for the purchase
or sale of physical commodities; or
(8) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments (b) entering into repurchase
agreements or (c) lending portfolio securities.
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest all of its investable assets in an open-end management
investment company with substantially the same investment objective, policies
and restrictions as the Fund.
Each Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by each Fund;
such restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of a Portfolio.
The Fund will not issue bonds, debentures or senior equity securities, and
this policy will not be changed unless authorized by a vote of the
shareholders of the Fund.
The Fund and the Portfolio have adopted the following investment policies
which may be changed by the Trust with respect to the Fund without approval by
the Fund's shareholders or with respect to the Portfolio without approval of
the Fund or its other investors. As a matter of nonfundamental policy, the
Fund and the Portfolio will not: (a) purchase or retain in its portfolio any
securities issued by an issuer any of whose officers, directors, trustees or
security holders is an officer or trustee of the Trust or the Portfolio or is
a member, officer, director or trustee of any investment adviser of the Trust
or the Portfolio, if after the purchase of the securities of such issuer by
the Fund or the Portfolio one or more of such persons owns beneficially more
than 1/2 of 1% of the shares or securities or both (all taken at market value)
of such issuer and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or securities
or both (all taken at market value); (b) sell or contract to sell any security
which it does not own unless by virtue of its ownership of other securities it
has at the time of sale a right to obtain securities equivalent in kind and
amount to the securities sold and provided that if such right is conditional
the sale is made upon the same conditions; or (c) invest more than 15% of net
assets in investments which are not readily marketable, including restricted
securities and repurchase agreements maturing in more than seven days.
Restricted securities for the purposes of this limitation do not include
securities eligible for resale pursuant to Rule 144A of the Securities Act of
1933 and commercial paper issued pursuant to Section 4(2) of said Act that the
Board of Trustees of the Trust or the Portfolio, or their delegate, determines
to be liquid.
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, such percentage limitation shall be
determined immediately after and as a result of the Fund's or the Portfolio's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances,
will not compel the Fund or the Portfolio, as the case may be, to dispose of
such security or other asset. Notwithstanding the foregoing, the Fund and
Portfolio must always be in compliance with the borrowing policies set forth
above.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Unless otherwise noted,
the business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Investment Adviser, BMR,
a wholly-owned subsidiary of Eaton Vance Management ("Eaton Vance"); of Eaton
Vance's parent, Eaton Vance Corp. ("EVC"); and of BMR's and Eaton Vance's
trustee, Eaton Vance, Inc. ("EV"). Eaton Vance and EV are both wholly-owned
subsidiaries of EVC. Those Trustees who are "interested persons" of the Trust
or the Portfolio as defined in the 1940 Act by virtue of their affiliation with
BMR, Eaton Vance, EVC or EV, are indicated by an asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (55), President and Trustee*
President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.
DONALD R. DWIGHT (66), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company); Chairman of the Board of Newspapers of New England, Inc. Director
or Trustee of various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (62), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee
Formerly Director of Fiduciary Company Incorporated. Director or Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (67), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
M. DOZIER GARDNER (64), Vice President
Vice Chairman of BMR, Eaton Vance, EVC and EV, and Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
WILLIAM D. BURT (59), Vice President
Vice President of Eaton Vance, BMR and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994). Mr. Burt was elected Vice
President of the Trust on June 19, 1995.
BARCLAY TITTMANN (65), Vice President
Vice President of Eaton Vance, BMR and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993). Mr. Tittmann was
elected Vice President of the Trust on June 19, 1995.
THOMAS E. FAUST, JR. (39), Vice President of the Portfolio
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Faust was elected Vice
President of the Portfolio on March 18, 1996.
JAMES L. O'CONNOR (52), Treasurer
Vice President of BMR, Eaton Vance, and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (56), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of
Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and was Executive
Vice President of Neuberger & Berman Management, Inc., a mutual fund
management company. Officer of various investment companies managed by Eaton
Vance or BMR. Mr. Dynner was elected Secretary of the Trust and the
Portfolio on June 23, 1997.
JANET E. SANDERS (61), Assistant Treasurer and Assistant Secretary
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Trust and the Portfolio on March 27, 1995.
ERIC G. WOODBURY (40), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Woodbury was elected Assistant
Secretary of the Trust and the Portfolio on June 19, 1995.
Messrs. Hayes (Chairman), Reamer and Thorndike are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
purpose of the Special Committee is to consider, evaluate and make
recommendations to the full Board of Trustees concerning (i) all contractual
arrangements with service providers to the Fund and the Portfolio, including
investment advisory (Portfolio only), administrative, transfer agency,
custodial and fund accounting and distribution services, and (ii) all other
matters in which Eaton Vance or its affiliates has any actual or potential
conflict of interest with the Fund, the Portfolio or investors therein.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio is comprised of four Trustees who are not "interested persons" as
that term is defined under the 1940 Act ("noninterested Trustees"). The
Committee has four-year staggered terms, with one member rotating off the
Committee to be replaced by another noninterested Trustee. The purpose of the
Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee
of the Board of Trustees of the Trust and of the Portfolio. The Audit
Committee's functions include making recommendations to the Trustees regarding
the selection of the independent accountants, and reviewing matters relative
to trading and brokerage policies and practices, accounting and auditing
practices and procedures, accounting records, internal accounting controls,
and the functions performed by the custodian, transfer agent and dividend
disbursing agent of the Trust and of the Portfolio.
Trustees of the Portfolio who are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual fees
in accordance with the terms of a Trustees Deferred Compensation Plan (the
"Trustees" Plan"). Under the Trustees' Plan, an eligible Trustee may elect to
have his deferred fees invested by the Portfolio in the shares of one or more
funds in the Eaton Vance Family of Funds, and the amount paid to the Trustees
under the Trustees' Plan will be determined based upon the performance of such
investments. Deferral of Trustees' fees in accordance with the Trustees' Plan
will have a negligible effect on the Portfolio's assets, liabilities, and net
income per share, and will not obligate the Portfolio to retain the services
of any Trustee or obligate the Portfolio to pay any particular level of
compensation to the Trustee. Neither the Portfolio nor the Fund has a
retirement plan for its Trustees.
The fees and expenses of the noninterested Trustees of the Trust and the
Portfolio are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) During the fiscal year ended August 31, 1996, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees from the Trust and the Portfolio,
and, for the year ended September 30, 1996, earned the following compensation
in their capacities as Trustees of the funds in the Eaton Vance fund complex
(1):
[Enlarge/Download Table]
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
---- ------------- -------------- ------------
Donald R. Dwight ........................ $2,165 $1,542(3) $142,500(5)
Samuel L. Hayes, III .................... 1,992 1,687(4) 153,750(6)
Norton H. Reamer ........................ 1,978 1,645 142,500
John L. Thorndike ....................... 2,004 1,729 147,500
Jack L. Treynor ......................... 2,146 1,683 147,500
------------
(1) The Eaton Vance fund complex consists of 228 registered investment
companies or series thereof.
(2) The Trust consisted of twelve Funds as of August 31, 1996.
(3) Includes $578 of deferred compensation.
(4) Includes $570 of deferred compensation.
(5) Includes $42,500 of deferred compensation.
(6) Includes $37,500 of deferred compensation.
INVESTMENT ADVISER AND ADMINISTRATOR
The Portfolio engages BMR as its investment adviser pursuant to an
Investment Advisory Agreement. BMR or Eaton Vance acts as investment adviser
to investment companies and various individual and institutional clients with
combined assets under management of approximately $20 billion.
Eaton Vance, its affiliates and its predecessor companies have been
managing assets of individuals and institutions since 1924 and managing
investment companies since 1931. They maintain a large staff of experienced
fixed-income and equity investment professionals to service the needs of their
clients. The fixed-income division focuses on all kinds of taxable investment-
grade and high-yield securities, tax-exempt investment-grade and high-yield
securities, and U.S. Government securities. The equity division covers stocks
ranging from blue chip to emerging growth companies.
Eaton Vance and its affiliates act as adviser to over 150 mutual funds,
and individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features
an experienced team of investment professionals that began working together in
the mid-1980s. Lloyd George analysts cover East Asia, the India subcontinent,
Russia and Eastern Europe, Latin America, Australia and New Zealand from
offices in Hong Kong, London and Mumbai. Together Eaton Vance and Lloyd George
manage over $21 billion in assets. Eaton Vance mutual funds are distributed by
the Principal Underwriter both within the United States and offshore.
The Principal Underwriter believes that an investment professional can
provide valuable services to you to help you reach your investment goals.
Meeting investment goals requires time, objectivity and investment savvy.
Before making an investment recommendation, a representative can help you
carefully consider your short- and long-term financial goals, your tolerance
for investment risk, your investment time frame, and other investments you may
already own. Your professional investment representatives are knowledgeable
about financial markets, as well as the wide range of investment opportunities
available. A representative can provide you with tailored financial advice and
help you decide when to buy, sell or persevere with your investments.
BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the
Portfolio investment research, advice and supervision, furnishes an investment
program and determines what securities will be purchased, held or sold by the
Portfolio and what portion, if any, of the Portfolio's assets will be held
uninvested. The Investment Advisory Agreement requires BMR to pay the salaries
and fees of all officers and Trustees of the Portfolio who are members of the
BMR organization and all personnel of BMR performing services relating to
research and investment activities. The Portfolio is responsible for all
expenses not expressly stated to be payable by BMR under the Investment
Advisory Agreement, including, without implied limitation, (i) expenses of
maintaining the Portfolio and continuing its existence, (ii) registration of
the Portfolio under the 1940 Act, (iii) commissions, fees and other expenses
connected with the acquisition, holding and disposition of securities and
other investments, (iv) auditing, accounting and legal expenses, (v) taxes and
interest, (vi) governmental fees, (vii) expenses of issue, sale and redemption
of interests in the Portfolio, (viii) expenses of registering and qualifying
the Portfolio and interests in the Portfolio under federal and state
securities laws and of preparing and printing registration statements or other
offering statements or memoranda for such purposes and for distributing the
same to investors, and fees and expenses of registering and maintaining
registrations of the Portfolio and of the Portfolio's placement agent as
broker-dealer or agent under state securities laws, (ix) expenses of reports
and notices to investors and of meetings of investors and proxy solicitations
therefor, (x) expenses of reports to governmental officers and commissions,
(xi) insurance expenses, (xii) association membership dues, (xiii) fees,
expenses and disbursements of custodians and subcustodians for all services to
the Portfolio (including without limitation safekeeping of funds, securities
and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax
capital account balances), (xiv) fees, expenses and disbursements of transfer
agents, dividend disbursing agents, investor servicing agents and registrars
for all services to the Portfolio, (xv) expenses for servicing the accounts of
investors, (xvi) any direct charges to investors approved by the Trustees of
the Portfolio, (xvii) compensation and expenses of Trustees of the Portfolio
who are not members of BMR's organization, and (xviii) such non-recurring
items as may arise, including expenses incurred in connection with litigation,
proceedings and claims and any legal obligation of the Portfolio to indemnify
its Trustees, officers and investors with respect thereto, to the extent not
covered by insurance.
For a description of the compensation that the Portfolio pays BMR under
the Investment Advisory Agreement, see the Fund's current Prospectus. As of
August 31, 1996, the Portfolio had net assets of $146,731,890. For the fiscal
year ended August 31, 1996, the Portfolio paid BMR advisory fees of $897,686
(equivalent to 0.625% of the Portfolio's average daily net assets for such
year). For the fiscal year ended August 31, 1995, the Portfolio paid BMR
advisory fees of $786,194 (equivalent to 0.625% of the Portfolio's average
daily net assets for such year). For the period from the Portfolio's start of
business, August 2, 1994, to the fiscal year ended August 31, 1994, the
Portfolio paid BMR advisory fees of $64,233 (equivalent to 0.61% (annualized)
of the Portfolio's average daily net assets for such period). Prior to the
close of business on August 1, 1994 (when the Fund transferred substantially
all of its assets to the Portfolio in exchange for an interest in the
Portfolio), the Fund retained Eaton Vance as its investment adviser. For the
period from September 1, 1993 to August 1, 1994, the Fund paid Eaton Vance
advisory fees of $777,308 (equivalent to 0.63% (annualized) of the Fund's
average daily net assets for such period).
The Investment Advisory Agreement with BMR remains in effect from year to
year for so long as such continuance is approved at least annually (i) by the
vote of a majority of the noninterested Trustees of the Portfolio cast in
person at a meeting specifically called for the purpose of voting on such
approval and (ii) by the Board of Trustees of the Portfolio or by vote of a
majority of the outstanding voting securities of the Portfolio. The Agreement
may be terminated at any time without penalty on sixty days' written notice by
the Board of Trustees of either party, or by vote of the majority of the
outstanding voting securities of the Portfolio, and the Agreement will
terminate automatically in the event of its assignment. The Agreement provides
that BMR may render services to others. The Agreement also provides that BMR
shall not be liable for any loss incurred in connection with the performance
of its duties, or action taken or omitted under that Agreement, in the absence
of willful misfeasance, bad faith, gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
thereunder, or for any losses sustained in the acquisition, holding or
disposition of any security or other investment.
As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Fund, but currently receives no compensation for providing administrative
services to the Fund. Under its Administrative Services Agreement with the
Fund, Eaton Vance has been engaged to administer the Fund's affairs, subject
to the supervision of the Trustees of the Trust, and shall furnish for the use
of the Fund office space and all necessary office facilities, equipment and
personnel for administering the affairs of the Fund.
The Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) its pro
rata share of the Trust's registration under the 1940 Act, (iii) commissions,
fees and other expenses connected with the purchase or sale of securities and
other investments, (iv) auditing, accounting and legal expenses, (v) taxes and
interest, (vi) governmental fees, (vii) expenses of issue, sale, repurchase
and redemption of shares, (viii) expenses of registering and qualifying the
Fund and its shares under federal and state securities laws and of preparing
and printing prospectuses for such purposes and for distributing the same to
shareholders and investors, and fees and expenses of registering and
maintaining registrations of the Fund and of the Fund's principal underwriter,
if any, as broker-dealer or agent under state securities laws, (ix) expenses
of reports and notices to shareholders and of meetings of shareholders and
proxy solicitations therefor, (x) expenses of reports to governmental officers
and commissions, (xi) insurance expenses, (xii) association membership dues,
(xiii) fees, expenses and disbursements of custodians and subcustodians for
all services to the Fund (including without limitation safekeeping of funds,
securities and other investments, keeping of books and accounts and
determination of net asset values), (xiv) fees, expenses and disbursements of
transfer agents, dividend disbursing agents, shareholder servicing agents and
registrars for all services to the Fund, (xv) expenses for servicing
shareholder accounts, (xvi) any direct charges to shareholders approved by the
Trustees of the Trust, (xvii) compensation and expenses of Trustees of the
Trust who are not members of the Eaton Vance organization, and (xviii) such
non-recurring items as may arise, including expenses incurred in connection
with litigation, proceedings and claims and any legal obligation of the Trust
to indemnify its Trustees and officers with respect thereto, to the extent not
covered by insurance.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. BMR and Eaton Vance are both
Massachusetts business trusts, and EV is the trustee of BMR and Eaton Vance.
The Directors of EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and
Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and
John G. L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is
vice chairman and Mr. Hawkes is president and chief executive officer, of EVC,
BMR, Eaton Vance and EV. All of the issued and outstanding shares of Eaton
Vance and of EV are owned by EVC. All of the issued and outstanding shares of
BMR are owned by Eaton Vance. All shares of the outstanding Voting Common
Stock of EVC are deposited in a Voting Trust, which expires December 31, 1997,
the Voting Trustees of which are Messrs. Clay, Gardner, Hawkes, Rowland and
Thomas E. Faust, Jr. The Voting Trustees have unrestricted voting rights for
the election of Directors of EVC. All of the outstanding voting trust receipts
issued under said Voting Trust are owned by certain of the officers of BMR and
Eaton Vance who are also officers or officers and Directors of EVC and EV. As
of August 31, 1997, Messrs. Clay, Gardner and Hawkes each owned 24% of such
voting trust receipts, and Messrs. Rowland and Faust owned 15% and 13%,
respectively, of such voting trust receipts. Messrs. Hawkes and Dynner are
officers or Trustees of the Trust and the Portfolio and are members of the
EVC, Eaton Vance, BMR and EV organizations. Messrs. Austin, Burt, Faust,
Murphy, O'Connor, Tittmann and Woodbury, and Ms. Sanders are officers of the
Trust and/or the Portfolio and all are also members of the BMR, Eaton Vance
and EV organizations.
Eaton Vance owns all of the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC also owns 22% of the Class A shares of
Lloyd George Management (B.V.I.) Limited, a registered investment adviser. EVC
owns all the stock of Fulcrum Management, Inc. and MinVen, Inc., which are
engaged in the development of precious metal mining venture investment and
management. EVC, BMR, Eaton Vance and EV may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, IBT. It is Eaton Vance's opinion that the terms and conditions
of such transactions were not and will not be influenced by existing or
potential custodial or other relationships between the Fund or the Portfolio
and such banks.
CUSTODIAN
IBT acts as custodian for the Trust and the Portfolio. IBT has the custody
of all cash and securities representing the Fund's interest in the Portfolio,
has custody of all the Portfolio's assets, maintains the general ledger of the
Portfolio and the Fund, and computes the daily net asset value of interests in
the Portfolio and the net asset value of shares of the Fund. In such capacity
it attends to details in connection with the sale, exchange, substitution,
transfer or other dealings with the Portfolio's investments, receives and
disburses all funds, and performs various other ministerial duties upon
receipt of proper instructions from the Trust and the Portfolio. IBT charges
fees which are competitive within the industry. A portion of the fee relates
to custody, bookkeeping and valuation services and is based upon a percentage
of Fund and Portfolio net assets and a portion of the fee relates to activity
charges, primarily the number of portfolio transactions. These fees are then
reduced by a credit for cash balances of the particular investment company at
the custodian equal to 75% of the 91-day, U.S. Treasury Bill auction rate
applied to the particular investment company's average daily collected
balances for the week. Landon T. Clay, a Director of EVC and an officer,
Trustee or Director of other entities in the Eaton Vance organization, owns
approximately 13% of the voting stock of Investors Financial Services Corp.,
the holding company parent of IBT. Management believes that such ownership
does not create an affiliated person relationship between the Trust or the
Portfolio and IBT under the 1940 Act.
IBT also provides services in connection with the preparation of
shareholder reports and the electronic filing of such reports with the
Commission for which it receives a separate fee.
SERVICES FOR ACCUMULATION -- CLASS A SHARES
The following services are voluntary, involve no extra charge, other than
the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.
Intended Quantity Investment -- Statement of Intention. If it is
anticipated that $50,000 or more of Class A shares and shares of other funds
exchangeable for Class A shares and listed under "The Eaton Vance Exchange
Privilege" in the Prospectus will be purchased within a 13-month period, a
Statement of Intention should be signed so that shares may be obtained at the
same reduced sales charge as though the total quantity were invested in one
lump sum. Shares held under Right of Accumulation (see below) as of the date
of the Statement will be included toward the completion of the Statement. The
Statement authorizes the Transfer Agent to hold in escrow sufficient shares
(5% of the dollar amount specified in the Statement) which can be redeemed to
make up any difference in sales charge on the amount intended to be invested
and the amount actually invested. Execution of a Statement does not obligate
the shareholder to purchase or the Fund to sell the full amount indicated in
the Statement, and should the amount actually purchased during the 13-month
period be more or less than that indicated on the Statement, price adjustments
will be made. For sales charges and other information on quantity purchases,
see "How to Buy Shares" in the Prospectus. Any investor considering signing a
Statement of Intention should read it carefully.
Right of Accumulation -- Cumulative Quantity Discount. The applicable
sales charge level for the purchase of Class A Fund shares is calculated by
taking the dollar amount of the current purchase and adding it to the value
(calculated at the maximum current offering price) of the shares the
shareholder owns in his or her account(s) in the Fund and shares of other
funds exchangeable for Class A shares and listed under "The Eaton Vance
Exchange Privilege" in the Prospectus. The sales charge on the shares being
purchased will then be at the rate applicable to the aggregate. For sales
charges on quantity purchases, see "How to Buy Shares" in the Prospectus.
Shares purchased (i) by an individual, his or her spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other
fiduciary of a single trust estate or a single fiduciary account, will be
combined for the purpose of determining whether a purchase will qualify for
the Right of Accumulation and if qualifying, the applicable sales charge
level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information
to permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The
Right of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or
quarterly payments of any permitted amount designated by the shareholder (see
"Eaton Vance Shareholder Services -- Withdrawal Plan" in the Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, although they are a return of principal, may require
the recognition of taxable gain or loss. Income dividends and capital gain
distributions in connection with withdrawal plan accounts will be credited at
net asset value as of the record date for each distribution. Continued
withdrawals in excess of current income will eventually use up principal,
particularly in a period of declining market prices. A shareholder may not
have a withdrawal plan in effect at the same time he or she has authorized
Bank Automated Investing or is otherwise making regular purchases of Fund
shares. Either the shareholder, the Transfer Agent or the Principal
Underwriter will be able to terminate the withdrawal plan at any time without
penalty.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Portfolio is determined by IBT
(as agent and custodian for the Portfolio) in the manner described under
"Valuing Fund Shares" in the Prospectus. The Fund and the Portfolio will be
closed for business and will not price their respective shares or interests on
the following business holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Trustees of the Portfolio have established the following procedures
for the fair valuation of the Portfolio's assets under normal market
conditions. Securities listed on foreign or U.S. securities exchanges or in
the NASDAQ National Market System generally are valued at closing sale prices
or, if there were no sales, at the mean between the closing bid and asked
prices therefor on the exchange where such securities are principally traded
or on such National Market System. Unlisted or listed securities for which
closing sale prices are not available are valued at the mean between the
latest bid and asked prices. An option is valued at the last sale price as
quoted on the principal exchange or board of trade on which such option or
contract is traded, or in the absence of a sale, at the mean between the last
bid and asked prices. Futures positions on securities or currencies are
generally valued at closing settlement prices. Short-term debt securities with
a remaining maturity of 60 days or less are valued at amortized cost. If
securities were acquired with a remaining maturity of more than 60 days, their
amortized cost value will be based on their value on the sixty-first day prior
to maturity. Other fixed income and debt securities, including listed
securities and securities for which price quotations are available, will
normally be valued on the basis of valuations furnished by a pricing service.
All other securities are valued at fair value as determined in good faith by
or at the direction of the Trustees.
Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, determined on the prior Portfolio Business Day,
which represented that investor's share of the aggregate interests in the
Portfolio on such prior day. Any additions or withdrawals for the current
Portfolio Business Day will then be recorded. Each investor's percentage of
the aggregate interest in the Portfolio will then be recomputed as a
percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the Portfolio Valuation Time on
the prior Portfolio Business Day plus or minus, as the case may be, that
amount of any additions to or withdrawals from the investor's investment in
the Portfolio on the current Portfolio Business Day and (ii) the denominator
of which is the aggregate net asset value of the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, the amount of the net additions to or withdrawals from the aggregate
investment in the Portfolio on the current Portfolio Business Day by all
investors in the Portfolio. The percentage so determined will then be applied
to determine the value of the investor's interest in the Portfolio for the
current Portfolio Business Day.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset
value of the Portfolio's share are computed as of such times. Occasionally,
events affecting the value of foreign securities may occur between such times
and the close of the Exchange which will not be reflected in the computation
of the Portfolio's net asset value (unless the Portfolio deems that such
events would materially affect its net asset value, in which case an
adjustment would be made and reflected in such computation). Foreign
securities and currency held by the Portfolio will be valued in U.S. dollars;
such values will be computed by the custodian based on foreign currency
exchange rate quotations supplied by Reuters Information Service.
INVESTMENT PERFORMANCE
Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period,
(ii) the deduction of the maximum sales charge from the initial $1,000
purchase order for Class A shares, (iii) a complete redemption of the
investment, and (iv) the deduction of any CDSC at the end of the period. For
information concerning the total return of the Classes of the Fund, see
Appendix A, Appendix B and Appendix C.
The Fund's total return may be compared to relevant indices, such as the
Consumer Price Index and various domestic securities indices. The Fund's total
return and comparisons with these indices may be used in advertisements and in
information furnished to present or prospective shareholders. The Fund's
performance may differ from that of other investors in the Portfolio,
including any other investment companies. In addition, evaluations of the
Fund's performance or rankings of mutual funds (which include the Fund) made
by independent sources may be used in advertisements and in information
furnished to present or prospective shareholders. Information, charts and
illustrations showing the effect of compounding interest or relating to
inflation and taxes (including their effects on the dollar and the return on
stocks and other investment vehicles) may also be included in advertisements
and material furnished to present and prospective investors.
Information used in advertisements and in materials furnished to present
or prospective shareholders may include statistics, data and performance
studies prepared by independent organizations reflecting the investment
performance or return achieved by various classes and types of investments
(e.g., common stocks, small company stocks, long-term corporate bonds, long-
term government bonds, intermediate-term government bonds, U.S. Treasury
bills) over various periods of time. This information may be used to
illustrate the benefits of long-term investments in common stocks. Information
about the portfolio allocation, portfolio turnover and holdings of the
Portfolio may be included in advertisements and other material furnished to
present and prospective shareholders.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- costs associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the
value of investing as early as possible and regularly, as well as staying
invested. The benefits of investing in equity securities by means of a mutual
fund may also be included (such benefits may include diversification,
professional management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time
periods; and results of diversifying assets among several investments with
varying performance. Information in advertisements and materials furnished to
present and prospective investors may also include quotations (including
editorial comments) and statistics concerning investing in securities, as well
as investing in particular types of securities and the performance of such
securities.
The Trust (or Principal Underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to
investors or prospective investors. Such material or advertisements may also
provide information on the use of investment professionals by such investors.
TAXES
Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund has elected to be treated, has qualified, and
intends to qualify each year as a RIC under the Code. Accordingly, the Fund
intends to satisfy certain requirements relating to sources of its income and
diversification of its assets and to distribute substantially all of its
ordinary income and net income in accordance with the timing requirements
imposed by the Code, so as to maintain its RIC status and to avoid paying any
federal income or excise tax. The Fund so qualified for its fiscal year ended
August 31, 1996. Because the Fund invests its assets in the Portfolio, the
Portfolio normally must satisfy the applicable source of income and
diversification requirements in order for the Fund to also satisfy these
requirements. The Portfolio will allocate at least annually among its
investors, including the Fund, the Portfolio's net investment income, net
realized capital gains, and any other items of income, gain, loss, deduction
or credit. The Portfolio will make allocations to the Fund in a manner
intended to comply with the Code and applicable regulations and will make
moneys available for withdrawal at appropriate times and in sufficient amounts
to enable the Fund to satisfy the tax distribution requirements that apply to
the Fund and that must be satisfied in order to avoid federal income and/or
excise tax on the Fund. For purposes of applying the requirements of the Code
regarding qualification as a RIC, the Fund (i) will be deemed to own its
proportionate share of each of the assets of the Portfolio and (ii) will be
entitled to the gross income of the Portfolio attributable to such share.
In order to avoid incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by
December 31 of each calendar year at least 98% of its ordinary income (not
including tax-exempt income) for such year, and at least 98% of the capital
gain net income which is the excess of its realized capital gains over its
realized capital losses, generally computed on the basis of the one-year
period ending on October 31 of such year, after reduction by (i) any available
capital loss carryforwards and 100% of any income from the prior year (as
previously computed) that was not paid out during such year and on which the
Fund paid no federal income tax. Under current law, provided that the Fund
qualifies as a RIC and the Portfolio is treated as a partnership for
Massachusetts and federal tax purposes, neither the Fund nor the Portfolio
should be liable for any income, corporate excise or franchise tax in the
Commonwealth of Massachusetts.
Certain foreign exchange gains and losses realized by the Portfolio in
connection with investments in foreign securities and forward contracts may be
treated as ordinary income and losses under special tax rules. Certain forward
contracts of the Portfolio may be required to be "marked to market" (i.e.,
treated as if closed out) on the last day of each taxable year, and any gain
or loss realized with respect to these contracts generally will be treated as
ordinary income or loss. Certain options and futures contracts are also
subject to these mark to market rules, except that gains or losses on these
contracts, in connection with a marking to market or an actual disposition,
will generally be treated as 60% long-term and 40% short-term capital gain or
loss. Positions of the Portfolio in securities and offsetting options, futures
or forward contracts may be treated as "straddles," which are subject to tax
rules that may cause deferral of Portfolio losses, adjustments in the holding
periods of Portfolio securities, and other changes in the short-term or long-
term characterization of capital gains and losses, the effect of which may be
to change the amount, timing and character of the Fund's distributions to
shareholders. The Portfolio intends to limit its options and futures
transactions and its activities in foreign currency and related forward
contracts to the extent necessary to preserve the Fund's ability to qualify as
a RIC.
The Portfolio may be subject to foreign withholding or other foreign
taxes with respect to income (possibly including, in some cases, capital
gains) on certain foreign securities. These taxes may be reduced or eliminated
under the terms of an applicable U.S. income tax treaty. As it is not expected
that more than 50% of the value of the total assets of the Fund, taking into
account its allocable share of the Portfolio's total assets, at the close of
any taxable year of the Fund will consist of securities issued by foreign
corporations, the Fund will not be eligible to pass through to shareholders
their proportionate share of any foreign taxes paid by the Portfolio and
allocated to the Fund, with the result that shareholders will not include in
income, and will not be entitled to take any foreign tax credits or deductions
for, foreign taxes paid by the Portfolio and allocated to the Fund. Certain
uses of foreign currency and investments by the Portfolio in the stock of
certain "passive foreign investment companies" may be limited or a tax
election may be made, if available, in order to preserve the Fund's
qualification as a RIC and/or to avoid imposition of a tax on the Fund.
A portion of distributions made by the Fund which are derived from
dividends received by the Portfolio from domestic corporations and allocated
to the Fund may qualify for the dividends-received deduction for corporations.
The dividends-received deduction for corporate shareholders is reduced to the
extent the shares of the Fund with respect to which the dividends are received
are treated as debt-financed under the federal income tax law and is
eliminated if the shares are deemed to have been held for less than a minimum
period, generally 46 days. Receipt of certain distributions qualifying for the
deduction may result in reduction of the tax basis of the corporate
shareholder's shares or increase liability, if any, for the corporate
alternative minimum tax.
Distributions of the excess of net long-term capital gain over net short-
term capital loss (including any capital losses carried forward from prior
years) earned by the Portfolio and allocated to the Fund are taxable to
shareholders of the Fund as long-term capital gains, whether received in cash
or in additional shares and regardless of the length of time their shares have
been held. Certain distributions declared in October, November or December and
paid the following January will be taxed to shareholders as if received on
December 31 of the year in which they are declared.
Any loss realized upon the redemption or exchange of shares of the Fund
with a tax holding period of 6 months or less will be treated as a long-term
capital loss to the extent of any distribution of net long-term capital gains
with respect to such shares. In addition, all or a portion of a loss realized
on a redemption or other disposition of Fund shares may be disallowed under
"wash sale" rules if other Fund shares are acquired (whether through
reinvestment of dividends or otherwise) within a period beginning 30 days
before and ending 30 days after the date of such redemption or other
disposition. Any disallowed loss will result in an adjustment to the
shareholder's tax basis in some or all of the other shares acquired.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and
other retirement plans and persons investing through IRAs or such plans should
consult their tax advisers for more information. Amounts paid by the Fund to
individuals and certain other shareholders who have not provided the Fund with
their correct taxpayer identification number ("TIN") and certain
certifications required by the Internal Revenue Service (the "IRS"), as well
as shareholders with respect to whom the Fund has received certain information
from the IRS or a broker, may be subject to "backup" withholding of federal
income tax arising from the Fund's dividends and other distributions as well
as the proceeds of redemption transactions (including repurchases and
exchanges) at a rate of 31%. An individual's TIN is generally his or her
social security number.
Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless
the tax is reduced or eliminated by an applicable tax convention.
Distributions from the excess of the Fund's net long-term capital gain over
its net short-term capital loss received by such shareholders and any gain
from the sale or other disposition of shares of the Fund generally will not be
subject to U.S. federal income taxation, provided that non-resident alien
status has been certified by the shareholder. Different U.S. tax consequences
may arise if: (i) the shareholder is engaged in a trade or business in the
United States; (ii) the shareholder is present in the United States for a
sufficient period of time during a taxable year to be treated as a U.S.
resident, (generally 180 days or more); or (iii) the shareholder fails to
provide any required certifications regarding its status as a non-resident
alien investor. Foreign shareholders should consult their tax advisers
regarding the U.S. and foreign tax consequences of an investment in the Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans, tax-
exempt entities, insurance companies and financial institutions. Shareholders
should consult their own tax advisers with respect to special tax rules that
may apply in their particular situations, as well as the state, local and,
where applicable, foreign tax consequences of investing in the Fund.
PRINCIPAL UNDERWRITER
CLASS A SHARES. Class A shares of the Fund may be continuously purchased
at the public offering price through Authorized Firms which have agreements
with the Principal Underwriter. The Trust reserves the right to suspend or
limit the offering of its shares to the public at any time. The public
offering price is the net asset value next computed after receipt of the
order, plus, where applicable, a variable percentage (sales charge) depending
upon the amount of purchase as indicated by the sales charge table set forth
in the Prospectus (see "How to Buy Shares"). Such table is applicable to
purchases of a Fund alone or in combination with purchases of certain other
funds offered by the Principal Underwriter, made at a single time by (i) an
individual, or an individual, his spouse and their children under the age of
twenty-one, purchasing shares for his or their own account, and (ii) a trustee
or other fiduciary purchasing shares for a single trust estate or a single
fiduciary account. The table is also presently applicable to (1) purchases of
Class A shares pursuant to a written Statement of Intention; or (2) purchases
of Class A shares pursuant to the Right of Accumulation and declared as such
at the time of purchase.
Subject to the applicable provisions of the 1940 Act, the Trust may issue
Class A shares at net asset value in the event that an investment company
(whether a regulated or private investment company or a personal holding
company) is merged or consolidated with or acquired by the Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares
for the assets of such investment company. Class A shares may be sold at net
asset value to any officer, director, trustee, general partner or employee of
the Trust, a Portfolio or any investment company for which Eaton Vance or BMR
acts as investment adviser, any investment advisory, agency, custodial or
trust account managed or administered by Eaton Vance or by any parent,
subsidiary or other affiliate of Eaton Vance, or any officer, director or
employee of any parent, subsidiary or other affiliate of Eaton Vance. The
terms "officer," "director," "trustee," "general partner" or "employee" as
used in this paragraph include any such person's spouse and minor children,
and also retired officers, directors, trustees, general partners and employees
and their spouses and minor children. Class A shares may also be sold at net
asset value to registered representatives and employees of Authorized Firms
and to the spouses and children under the age of 21 and beneficial accounts of
such persons.
The Principal Underwriter acts as principal in selling Class A shares
under a Distribution Agreement with the Trust. The expenses of printing copies
of prospectuses used to offer shares to Authorized Firms or investors and
other selling literature and of advertising are borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of the Fund and its Class A
shares under federal and state securities laws are borne by the Class. The
Distribution Agreement is renewable annually by the Board of Trustees of the
Trust (including a majority of the noninterested Trustees), may be terminated
on six months' notice by either party and is automatically terminated upon
assignment. The Principal Underwriter distributes Class A shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold. The Principal Underwriter allows Authorized Firms discounts
from the applicable public offering price which are alike for all Authorized
Firms. The Principal Underwriter may allow, upon notice to all Authorized
Firms with whom it has agreements, discounts up to the full sales charge
during the periods specified in the notice. During periods when the discount
includes the full sales charge, such Authorized Firms may be deemed to be
underwriters as that term is defined in the Securities Act of 1933. For the
amount of sales charges for sales of Class A shares paid to the Principal
Underwriter (and Authorized Firms), see Appendix A.
The Trust has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the Principal Underwriter. The Principal Underwriter estimates that
the expenses incurred by it in acting as repurchase agent for the Trust will
exceed the amounts paid therefor. For the amount paid by the Trust to the
Principal Underwriter for acting as repurchase agent, see Appendix A.
CLASS B AND CLASS C SHARES. Under the Distribution Agreements, the
Principal Underwriter acts as principal in selling Class B and Class C shares.
The expenses of printing copies of prospectuses used to offer shares to
Authorized Firms or investors and other selling literature and of advertising
is borne by the Principal Underwriter. The fees and expenses of qualifying and
registering and maintaining qualifications and registrations of the Fund and
its Class B and Class C shares under federal and state securities laws are
borne by the Class. In addition, each Class B and Class C makes payments to
the Principal Underwriter pursuant to their Distribution Plans as described in
the Prospectus; the provisions of the plan relating to such payments are
included in the Distribution Agreements. The Distribution Agreements are
renewable annually by the Trust's Board of Trustees (including a majority of
their noninterested Trustees who have no direct or indirect financial interest
in the operation of the Distribution Plans or the Distribution Agreements),
may be terminated on sixty days' notice either by such Trustees or by vote of
a majority of the outstanding Class B and Class C shares or on six months'
notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Class B and Class C shares
on a "best efforts" basis under which it is required to take and pay for only
such shares as may be sold. The Trust has authorized the Principal Underwriter
to act as its agent in repurchasing shares at the rate of $2.50 for each
repurchase transaction handled by the Principal Underwriter. The Principal
Underwriter estimates that the expenses incurred by it in acting as repurchase
agent for the Trust will exceed the amounts paid therefor.
SERVICE PLAN -- CLASS A SHARES
The Trust on behalf of its Class A shares has adopted a Service Plan (the
"Plan") designed to meet the service fee requirements of the sales charge rule
of the National Association of Securities Dealers, Inc. (the "NASD").
(Management believes service fee payments are not distribution expenses
governed by Rule 12b-1 under the 1940 Act, but has chosen to have the Plan
approved as if that Rule were applicable.) The following supplements the
discussion of the Plan contained in the Prospectus.
The Plan remains in effect from year to year provided such continuance is
approved by a vote of both a majority of (i) the noninterested Trustees who
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to it (the "Plan Trustees") and (ii) all of the
Trustees then in office, cast in person at a meeting (or meetings) called for
the purpose of voting on this Plan. The Plan may be terminated any time by
vote of the Plan Trustees or by a vote of a majority of the outstanding Class
A shares of the Fund. The Plan has been approved by the Board of Trustees of
the Trust, including the Plan Trustees.
Under the Plan, an officer of the Trust shall provide to the Trustees for
their review, and the Trustees shall review at least quarterly, a written
report of the amount expended under the Plan and the purposes for which such
expenditures were made. The Plan may not be amended to increase materially the
payments described herein without approval of the affected shareholders of
Class A shares, and all material amendments of the Plan must also be approved
by the Trustees of the Trust in the manner described above. So long as the
Plan is in effect, the selection and nomination of Trustees who are not
interested persons of the Trust shall be committed to the discretion of the
Trustees who are not such interested persons. The Trustees have determined
that in their judgment there is a reasonable likelihood that the Plan will
benefit the Fund and its Class A shareholders. For the service fees paid under
the Plan, see Appendix A.
DISTRIBUTION PLANS -- CLASS B AND CLASS C SHARES
The Trust has adopted Distribution Plans (the "Plans") on behalf of its
Class B and Class C shares designed to meet the requirements of Rule 12b-1
under the 1940 Act and the sales charge rule of the NASD. The purpose of the
Plans is to compensate the Principal Underwriter for its distribution services
and facilities provided with respect to Class B and Class C shares.
The Plans provide that the Fund will pay sales commissions and
distribution fees to the Principal Underwriter only after and as a result of
the sale of Class B or Class C shares of the Fund. On each sale of Fund shares
(excluding reinvestment of distributions) the Fund will pay the Principal
Underwriter amounts representing (i) sales commissions equal to 5% of Class B
sales and 6.25% of Class C sales of the amount received by the Fund for each
share sold and (ii) distribution fees calculated by applying the rate of 1%
over the prime rate then reported in The Wall Street Journal to the
outstanding balance of uncovered distribution charges (as described below) of
the Principal Underwriter.
The amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be
accrued on such day as a liability of the respective Class and will
accordingly reduce the net assets of the Class upon such accrual, all in
accordance with generally accepted accounting principles. The amount payable
on each day is limited to 1/365 of .75% of the net assets of the Class on
such day. The level of net assets changes each day and depends upon the amount
of sales and redemptions of shares, the changes in the value of the
investments held by the Portfolio, the expenses of the Class, the Fund and the
Portfolio accrued and allocated to the Fund and Class on such day, income on
portfolio investments of the Portfolio accrued and allocated to the Fund on
such day, and any dividends and distributions declared on Fund shares. The
Trust does not accrue possible future payments as a liability of a Class or
reduce current net assets in respect of unknown amounts which may become
payable under the Plans in the future because the standards for accrual of
such a liability under accounting principles have not been satisfied.
The Plans provide that the Fund will receive all CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding uncovered distribution charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Trust to the Principal
Underwriter whenever there exist uncovered distribution charges.
In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions
and distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled
to be paid under the Plans since their inception. Payments theretofore paid or
payable under the Plans by the Trust to the Principal Underwriter and CDSCs
theretofore paid or payable to the Principal Underwriter will be subtracted
from such distribution charges; if the result of such subtraction is positive,
a distribution fee (computed at 1% over the prime rate then reported in The
Wall Street Journal) will be computed on such amount and added thereto, with
the resulting sum constituting the amount of outstanding uncovered
distribution charges with respect to such day. The amount of outstanding
uncovered distribution charges of the Principal Underwriter calculated on any
day does not constitute a liability recorded on the financial statements of
the Fund.
The amount of uncovered distribution charges of the Principal Underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of shares, the nature of such sales (i.e., whether
they result from exchange transactions, reinvestments or from cash sales
through Authorized Firms), the level and timing of redemptions of shares upon
which a CDSC will be imposed, the level and timing of redemptions of shares
upon which no CDSC will be imposed (including redemptions of shares pursuant
to the exchange privilege which result in a reduction of uncovered
distribution charges), changes in the level of the net assets of the Class,
and changes in the interest rate used in the calculation of the distribution
fee under the Plans. Periods with a high level of sales of Class shares
accompanied by a low level of early redemptions of Class shares resulting in
the imposition of CDSCs will tend to increase the time during which there will
exist uncovered distribution charges of the Principal Underwriter.
Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of average daily net assets per annum. The Trust
believes that the combined rate of all these payments may be higher than the
rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the Principal Underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions and
service fees for Class C sales and sales commissions for Class B sales at the
time of sale, it is anticipated that the Eaton Vance organization will profit
by reason of the operation of the Plans through an increase in the Fund's
assets (thereby increasing the advisory fee payable to BMR by the Portfolio)
resulting from sale of shares and through the amounts paid to the Principal
Underwriter, including CDSCs, pursuant to the Plans. The Eaton Vance
organization may be considered to have realized a profit under the Plans if at
any point in time the aggregate amounts theretofore received by the Principal
Underwriter pursuant to the Plans and from CDSCs have exceeded the total
expenses theretofore incurred by such organization in distributing Class B and
Class C shares of the Fund. Total expenses for this purpose will include an
allocable portion of the overhead costs of such organization and its branch
offices, which costs will include without limitation leasing expense,
depreciation of building and equipment, utilities, communication and postage
expense, compensation and benefits of personnel, travel and promotional
expense, stationery and supplies, literature and sales aids, interest expense,
data processing fees, consulting and temporary help costs, insurance, taxes
other than income taxes, legal and auditing expense and other miscellaneous
overhead items. Overhead is calculated and allocated for such purpose by the
Eaton Vance organization in a manner deemed equitable to the Trust.
The Plans continue in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of
(i) the noninterested Trustees of the Trust who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to
the Plan (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in
office, and the Distribution Agreement contains a similar provision. The Plans
and Distribution Agreements may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by a vote of a majority of the
outstanding voting securities of the applicable Class. The Plans require
quarterly Trustee review of a written report of the amount expended under the
Plans and the purposes for which such expenditures were made. The Plans may
not be amended to increase materially the payments described therein without
approval of the shareholders of the affected Class and the Trustees. So long
as the Plans are in effect, the selection and nomination of the noninterested
Trustees shall be committed to the discretion of such Trustees.
The Trustees of the Trust believe that the Plans will be a significant
factor in the expected growth of the Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its Class B and Class C shareholders.
Payments for sales commissions and distribution fees made to the Principal
Underwriter under the Plans will compensate the Principal Underwriter for its
services and expenses in distributing Class B shares of the Fund. Service fee
payments made to the Principal Underwriter and Authorized Firms under the
Plans provide incentives to provide continuing personal services to investors
and the maintenance of shareholder accounts. By providing incentives to the
Principal Underwriter and Authorized Firms, the Plans are expected to result
in the maintenance of, and possible future growth in, the assets of the Fund.
Based on the foregoing and other relevant factors, the Trustees of the Trust
have determined that in their judgment there is a reasonable likelihood that
the Plan will benefit the Fund and its Class B and Class C shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions of
the Portfolio, including the selection of the market and the broker-dealer
firm, are made by BMR. BMR is also responsible for the execution of
transactions for all other accounts managed by it.
BMR places the security transactions of the Portfolio and of all other
accounts managed by it for execution with many broker-dealer firms. BMR uses
its best efforts to obtain execution of portfolio transactions at prices which
are advantageous to the Portfolio and at reasonably competitive spreads or
(when a disclosed commision is being charged) at reasonably competitive
commission rates. In seeking such execution, BMR will use its best judgment in
evaluating the terms of a transaction, and will give consideration to various
relevant factors, including without limitation the size and type of the
transaction, the general execution and operational capabilities of the broker-
dealer, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition
of the broker-dealer, [the value and quality of services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission
or spread, if any. Transactions on United States stock exchanges and other
agency transactions involve the payment by the Portfolio of negotiated
brokerage commissions. Such commissions vary among different broker-dealer
firms, and a particular broker-dealer may charge different commissions
according to such factors as the difficulty and size of the transaction and
the volume of business done with such broker-dealer. Transactions in foreign
securities usually involve the payment of fixed brokerage commissions, which
are generally higher than those in the United States. There is generally no
stated commission in the case of securities traded in the over-the-counter
markets, but the price paid or received by the Portfolio usually includes an
undisclosed dealer markup or markdown. In an underwritten offering the price
paid by the Portfolio often includes a disclosed fixed commission or discount
retained by the underwriter or dealer.] Although spreads or commissions paid
on portfolio security transactions will, in the judgment of BMR, be reasonable
in relation to the value of the services provided, commissions exceeding those
which another firm might charge may be paid to broker-dealers who were
selected to execute transactions on behalf of the Portfolio and BMR's other
clients in part for providing brokerage and research services to BMR. For the
fiscal years ended August 31, 1996 and 1995 and for the period from the
Portfolio's start of business, August 2, 1994 to the fiscal year ended August
31, 1994, the Portfolio paid brokerage commissions of $231,498, $272,785 and
$33,546, respectively, on portfolio security transactions, of which
approximately $203,868, $221,260 and $27,546, respectively, was paid in
respect of portfolio security transactions aggregating approximately
$143,902,804, $140,204,754 and $13,421,460, respectively, to firms which
provided some Research Services to Eaton Vance, (although many of such firms
may have been selected in any particular transaction primarly because of their
execution capabilities).
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the
Portfolio may receive a commission which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if BMR determines in good faith that such compensation was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that
particular transaction or on the basis of the overall responsibilities which
BMR and its affiliates have for accounts over which they exercise investment
discretion. In making any such determination, BMR will not attempt to place a
specific dollar value on the brokerage and research services provided or to
determine what portion of the commission should be related to such services.
Brokerage and research services may include advice as to the value of
securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement); and the
"Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-
dealer firms which execute portfolio transactions for the clients of such
advisers and from third parties with which these broker-dealers have
arrangements. Consistent with this practice, BMR receives Research Services
from many broker-dealer firms with which BMR places the Portfolio transactions
and from third parties with which these broker-dealers have arrangements.
These Research Services include such matters as general economic and market
reviews, industry and company reviews, evaluations of securities and portfolio
strategies and transactions and recommendations as to the purchase and sale of
securities and other portfolio transactions, financial, industry and trade
publications, news and information services, pricing and quotation equipment
and services, and research oriented computer hardware, software, data bases
and services. Any particular Research Service obtained through a broker-dealer
may be used by BMR in connection with client accounts other than those
accounts which pay commissions to such broker-dealer. Any such Research
Service may be broadly useful and of value to BMR in rendering investment
advisory services to all or a significant portion of its clients, or may be
relevant and useful for the management of only one client's account or of a
few clients' accounts, or may be useful for the management of merely a segment
of certain clients' accounts, regardless of whether any such account or
accounts paid commissions to the broker-dealer through which such Research
Service was obtained. The advisory fee paid by the Portfolio is not reduced
because BMR receives such Research Services. BMR evaluates the nature and
quality of the various Research Services obtained through broker-dealer firms
and attempts to allocate sufficient commissions to such firms to ensure the
continued receipt of Research Services which BMR believes are useful or of
value to it in rendering investment advisory services to its clients.
Subject to the requirement that BMR shall use its best efforts to seek to
execute Portfolio security transactions at advantageous prices and at
reasonably competitive commission rates or spreads, BMR is authorized to
consider as a factor in the selection of any broker-dealer firm with whom
Portfolio orders may be placed the fact that such firm has sold or is selling
shares of the Fund or of other investment companies sponsored by BMR or Eaton
Vance. This policy is not inconsistent with a rule of the NASD, which rule
provides that no firm which is a member of the NASD shall favor or disfavor
the distribution of shares of any particular investment company or group of
investment companies on the basis of brokerage commissions received or
expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates.
Whenever decisions are made to buy or sell securities by the Portfolio and one
or more of such other accounts simultaneously, BMR will allocate the security
transactions (including "hot" issues) in a manner which it believes to be
equitable under the circumstances. As a result of such allocations, there may
be instances where the Portfolio will not participate in a transaction that is
allocated among other accounts. If an aggregated order cannot be filled
completely, allocations will generally be made on a pro rata basis. An order
may not be allocated on a pro rata basis where, for example: (i) consideration
is given to portfolio managers who have been instrumental in developing or
negotiating a particular investment; (ii) consideration is given to an account
with specialized investment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
BMR reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies could have a
detrimental effect on the price or amount of the securities available to the
Portfolio from time to time, it is the opinion of the Trustees of the Trust
and the Portfolio that the benefits from the BMR organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions.
OTHER INFORMATION
The Trust is a Massachusetts business trust established in 1989 as the
successor to Eaton Vance Growth Fund, Inc., a Massachusetts corporation. On
August 18, 1992, the Trust changed its name from Eaton Vance Growth Fund to
Eaton Vance Growth Trust. The Fund was reorganized as Class A shares (formerly
EV Traditional Growth Fund), Class B shares (formerly EV Marathon Growth Fund)
and Class C shares (formerly EV Classic Growth Fund) of Eaton Vance Growth
Fund on September 1, 1997, so information herein prior to such date is for the
Fund when it was a separate series of the Trust and before it became a
multiple-class fund. Eaton Vance, pursuant to its agreement with the Trust,
controls the use of the words "Eaton Vance" or "EV" in the Fund's name and may
use the words "Eaton Vance" and "EV" in other connections and for other
purposes.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent
of shareholders to change the name of the Trust or any series or to make such
other changes (such as reclassifying series or classes of shares or
restructuring the Trust) as do not have a materially adverse effect on the
financial interests of shareholders or if they deem it necessary to conform
the Declaration to the requirements of applicable federal laws or regulations.
The Trust's By-laws provide that the Trust will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with any
litigation or proceeding in which they may be involved because of their
offices with the Trust. However, no indemnification will be provided to any
Trustee or officer for any liability to the Trust or its shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such
liability has been imposed. The Trust's Declaration of Trust contains an
express disclaimer of liability on the part of the Fund shareholders and the
Trust's By-laws provide that the Trust shall assume the defense on behalf of
any Fund shareholders. (The Declaration also contains provisions limiting the
liability of a series or class to that series or class). Moreover, the Trust's
By-laws also provide for indemnification out of the property of the Fund of
any shareholder held personally liable solely by reason of being or having
been a shareholder for all loss or expense arising from such liability. The
assets of the Fund are readily marketable and will ordinarily substantially
exceed its liabilities. In light of the nature of the Fund's business and the
nature of its assets, management believes that the possibility of the Fund's
liabilities exceeding its assets, and therefore the shareholder's risk of
personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will
call a shareholder's meeting for the election of Trustees. Except for the
foregoing circumstances and unless removed by action of the shareholders in
accordance with the Trust's By-laws, the Trustees shall continue to hold
office and may appoint successor Trustees.
The Trust's By-laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him
from that office either by a written declaration filed with the Trust's
custodian or by votes cast at a meeting called for that purpose. The By-laws
further provide that under certain circumstances the shareholders may call a
meeting to remove a Trustee and that the Trust is required to provide
assistance in communicating with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action
of the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with
the Portfolio's custodian or by votes cast at a meeting called for that
purpose. The Declaration of Trust further provides that under certain
circumstances the investors may call a meeting to remove a Trustee and that
the Portfolio is required to provide assistance in communicating with
investors about such a meeting.
The Portfolio's Declaration of Trust provides that the Fund and other
entities permitted to invest in the Portfolio (e.g., other U.S. and foreign
investment companies, and common and commingled trust funds) will each be
liable for all obligations of the Portfolio. However, the risk of the Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio
itself is unable to meet its obligations. Accordingly, the Trustees of the
Trust believe that neither the Fund nor its shareholders will be adversely
affected by reason of the Fund investing in the Portfolio.
The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any
emergency as determined by the Commission which makes it impracticable for the
Portfolio to dispose of its securities or value its assets, or during any
other period permitted by order of the Commission for the protection of
investors.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts,
are the independent accountants for the Fund and the Portfolio, providing
audit services, tax return preparation, and assistance and consultation with
respect to the preparation of filings with the Commission.
FINANCIAL STATEMENTS
The audited financial statements of and the report of independent
accountants for the Fund and the Portfolio appear in the Fund's most recent
annual report to shareholders, the unaudited financial statements of the Fund
and the Portfolio appear in the Fund's most recent semiannual report to
shareholders, both of which are incorporated by reference into this SAI. A
copy of the Fund's semiannual and annual report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the EV Traditional Growth Fund and Growth Portfolio for the fiscal year ended
August 31, 1996, as previously filed electronically with the Commission
(Accession No. 0000950156-96-000841), and for the six-months ended February
28, 1997, as previously filed electronically with the Commission (Accession
No. 0000950109-97-003401).
APPENDIX A: CLASS A SHARES
FEES AND EXPENSES
SERVICE PLAN
During the fiscal year ended August 31, 1996, the Fund made service fee
payments under the Plan aggregating $122,884, of which $76,642 was paid to
Authorized Firms and the balance of which was retained by the Principal
Underwriter.
PRINCIPAL UNDERWRITER
The total sales charges paid in connection with sales of Class A shares
during the fiscal years ended August 31, 1996, 1995 and 1994, were $17,636,
$24,651 and $61,320, respectively, of which $2,826, $3,924 and $7,156,
respectively, was received by the Principal Underwriter. For the fiscal years
ended August 31, 1996, 1995 and 1994, Authorized Firms received $14,810,
$20,727 and $54,164, respectively, from the total sales charges.
For the fiscal year ended August 31, 1996, the Fund paid the Principal
Underwriter $634.00 for repurchase transactions handled by the Principal
Underwriter (being $2.50 for each repurchase transaction handled by the
Principal Underwriter).
BROKERAGE COMMISSIONS
During the period from September 1, 1993 to August 1, 1994 (when the Fund
transferred its assets to the Portfolio in exchange for an interest in the
Portfolio), the Fund paid brokerage commissions of $275,173 on portfolio
security transactions of which approximately $261,973 was paid in respect of
portfolio security transactions aggregating approximately $174,390,224 to
firms which provided some Research Services to Eaton Vance. During the fiscal
year ended August 31, 1993 the Fund paid brokerage commissions of $279,600 on
portfolio security transactions of which approximately $258,744 was paid in
respect of portfolio security transactions aggregating approximately
$172,838,057 to firms which provided some research services to Eaton Vance
(although many of such firms may have been selected in any particular
transaction primarily because of their execution capabilities).
PERFORMANCE INFORMATION
The table below indicates the cumulative and average total return on a
hypothetical investment of $1,000 in Class A shares covering the one-, five-
and ten-year periods ended February 28, 1997. The "Value of Initial
Investment" reflects the deduction of the maximum sales charge of 5.75%. Past
performance is not indicative of future results. Investment return and
principal value will fluctuate; shares, when redeemed, may be worth more or
less than their original cost.
VALUE OF A $1,000 INVESTMENT
[Enlarge/Download Table]
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ------------------------ -------------------------
PERIOD DATE INVESTMENT ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------------------------------------- ----------- ------------ ----------- ----------- ----------- ------------ ---------
10 Years Ended
2/28/97 2/28/87 $942.70 $2,546.91 170.18% 10.45% 154.69% 9.80%
5 Years Ended
2/28/97 2/28/92 $942.04 $1,518.36 61.18% 10.02% 51.84% 8.71%
1 Year Ended
2/28/97 2/28/96 $942.71 $1,134.42 20.34% 20.34% 13.44% 13.44%
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of July 31, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of Class A and
of the Fund. To the knowledge of the Trust, no person owned of record or
beneficially 5% or more of the Fund's outstanding Class A shares as of such
date.
APPENDIX B: CLASS B SHARES
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in a predecessor fund reorganized
September 1, 1997 into Class B shares covering the one-, five- and ten-year
periods ended February 28, 1997. The total return for the period prior to
September 13, 1994 reflects the Portfolio's total return (or that of its
predecessor) adjusted to reflect any applicable Fund CDSC. The total return
for such prior period has not been adjusted to reflect the Fund's distribution
and/or service fees and certain other expenses. If such an adjustment were
made, the performance would be lower. Past performance is not indicative of
future results. Investment return and principal value will fluctuate; shares,
when redeemed, may be worth more or less than their original cost. Information
presented with two asterisks (**) includes the effect of subsidizing expenses.
Return would have been lower without subsidies.
VALUE OF A $1,000 INVESTMENT
[Enlarge/Download Table]
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE AFTER DEDUCTING DEDUCTING
DEDUCTING DEDUCTING THE CDSC THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 2/28/97 ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
-------------- ---------- ---------- ---------- ---------- ------------ ------------ ------------ ------------
Ended
2/28/97 2/28/87 $1,000 $2,648.13 $2,648.13 164.81% 10.23% 164.81% 10.23%
5 Years
Ended
2/28/97** 2/28/92 $1,000 $1,579.75 $1,559.75 57.98% 9.58% 55.98% 9.30%
1 Year
Ended
2/28/97 2/28/96 $1,000 $1,189.47 $1,139.47 18.95% 18.95% 13.95% 13.95%
APPENDIX C: CLASS C SHARES
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in a predecessor fund reorganized
September 1, 1997 into Class C shares for the one-, five- and ten-year periods
ended February 28, 1997. The total return for the period prior to November 7,
1994 reflects the Portfolio's total return (or that of its predecessor)
adjusted to reflect any applicable Fund CDSC. The total return for such prior
period has not been adjusted to reflect the Fund's distribution and/or service
fees and certain other expenses. If such an adjustment were made, the
performance would be lower. Past performance is not indicative of future
results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost. Information
presented with two asterisks (**) includes the effect of subsidizing expenses.
Return would have been lower without subsidies.
VALUE OF A $1,000 INVESTMENT
[Enlarge/Download Table]
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE AFTER DEDUCTING DEDUCTING
DEDUCTING DEDUCTING THE CDSC THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 2/28/97 ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
-------------- ---------- ---------- ---------- ---------- ------------ ------------ ------------ ------------
10 Years
Ended
2/28/97 2/28/87 $1,000 $2,534.08 $2,534.08 153.41% 9.74% 153.41% 9.74%
5 Years
Ended
2/28/97** 2/28/92 $1,000 $1,511.69 $1,511.69 51.17% 8.62% 51.17% 8.62%
1 Year
Ended
2/28/97 2/28/96 $1,000 $1,157.66 $1,147.66 15.77% 15.77% 14.77% 14.77%
[Logo]
EATON VANCE
================
Mutual Funds
EATON VANCE GROWTH FUND
--------------------------------------------------------------------------------
STATEMENT OF
ADDITIONAL INFORMATION
SEPTEMBER 1, 1997
EATON VANCE
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
--------------------------------------------------------------------------------
INVESTMENT ADVISER OF GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
FUND ADMINISTRATOR
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand LLP, One Post Office Square, Boston, MA 02109
GFSAI
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
September 1, 1997
EATON VANCE INFORMATION AGE FUND
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND
EATON VANCE WORLDWIDE HEALTH SCIENCES
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information provides general information
about the Funds listed above and their corresponding Portfolios. This
Statement of Additional Information is sometimes referred to herein as the
"SAI."
TABLE OF CONTENTS
[Enlarge/Download Table]
Page
Additional Information about Investment Policies ............................................................ 1
Investment Restrictions ..................................................................................... 6
Trustees and Officers ....................................................................................... 9
Management of the Funds and the Portfolios .................................................................. 11
Custodian ................................................................................................... 15
Services for Accumulation -- Class A Shares ................................................................. 16
Service for Withdrawal ...................................................................................... 16
Determination of Net Asset Value ............................................................................ 17
Investment Performance ...................................................................................... 17
Taxes ....................................................................................................... 19
Principal Underwriter ....................................................................................... 21
Service Plan -- Class A Shares (Eaton Vance Worldwide Developing Resources Fund) ............................ 22
Distribution Plan -- Class A Shares (Eaton Vance Information Age and Worldwide Health Sciences Funds) ....... 23
Distribution Plans -- Class B (all Funds) and Class C Shares (Eaton Vance Information Age Fund) ............. 23
Portfolio Security Transactions ............................................................................. 25
Other Information ........................................................................................... 26
Independent Certified Public Accountants .................................................................... 28
Financial Statements ........................................................................................ 29
Appendix A: Class A Shares .................................................................................. a-1
Appendix B: Class B Shares .................................................................................. b-1
Appendix C: Class C Shares .................................................................................. c-1
Appendix D: Statistical Information (Eaton Vance Worldwide Health Sciences Fund) ............................ d-1
Although each Fund offers only its shares of beneficial interest, it is
possible that a Fund (or Class) might become liable for a misstatement or
omission in this Statement of Additional Information regarding another Fund
(or Class) because the Funds use this combined Statement of Additional
Information. The Trustees of the Trust have considered this factor in
approving the use of a combined Statement of Additional Information.
THIS COMBINED STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED SEPTEMBER 1, 1997, AS SUPPLEMENTED
FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS COMBINED
STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH
PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON
VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR
ADDRESS AND PHONE NUMBER).
This SAI provides information about the Funds and the Portfolios.
Capitalized terms used in this SAI and not otherwise defined have the meanings
given them in the Prospectus. The Funds are subject to the same investment
policies as those of the Portfolios. Each Fund currently seeks to achieve its
objective by investing in its corresponding Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
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 a Portfolio,
political or financial instability or diplomatic and other developments which
could affect such investments. Further, economies of particular countries or
areas of the world may differ favorably or unfavorably from the economy of the
United States. It is anticipated that in most cases the best available market
for foreign securities will be on exchanges or in over-the-counter markets
located outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. companies. In addition, foreign brokerage
commissions are generally higher than commissions on securities traded in the
United States and may be non-negotiable. In general, there is less overall
governmental supervision and regulation of foreign securities markets, broker-
dealers, and issuers than in the United States. In some countries delayed
settlements are customary, which increases the risk of loss.
Depository receipts are not necessarily denominated in the same currency
as the securities into which they may be converted. American Depository
Receipts ("ADRs") are receipts typically issued by a U.S. banking institution
evidencing ownership of the underlying securities; European Depository
Receipts ("EDRs") are receipts evidencing a similar arrangement with a
European banking institution. Generally ADRs, in registered form, are designed
for use in U.S. securities markets and EDRs, in bearer form, are designed for
use in European securities markets. Such securities may or may not be listed
on a foreign securities exchange.
Foreign Currency Transactions. Because investments in companies whose
principal business activities are located outside of the United States will
frequently involve currencies of foreign countries, and because assets of a
Portfolio may temporarily be held in bank deposits in foreign currencies
during the completion of investment programs, the value of the assets of a
Portfolio as measured in U.S. dollars may be affected favorably or unfavorably
by changes in foreign currency exchange rates and exchange control
regulations. Currency exchange rates can also be affected unpredictably by
intervention by U.S. or foreign governments or central banks, or the failure
to intervene, or by currency controls or political developments in the U.S. or
abroad. A Portfolio may conduct its foreign currency exchange transactions on
a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through entering into swaps, forward contracts, options or
futures on currency. On spot transactions, foreign exchange dealers do not
charge a fee for conversion, but they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to a Portfolio at one rate, while offering a lesser rate of exchange
should the Portfolio desire to resell that currency to the dealer.
Emerging Companies. The investment risk associated with emerging companies is
higher than that normally associated with larger, older companies due to the
greater business risks associated with small size, the relative age of the
company, limited product lines, distribution channels and financial and
managerial resources. Further, there is typically less publicly available
information concerning smaller companies than for larger, more established
ones. The securities of small companies are often traded only over-the-counter
and may not be traded in the volumes typical of trading on a national
securities exchange. As a result, in order to sell this type of holding, a
Portfolio may need to discount the securities from recent prices or dispose of
the securities over a long period of time. The prices of this type of security
may be more volatile than those of larger companies which are often traded on
a national securities exchange.
Currency Swaps. Currency swaps require maintenance of a segregated account
described under "Asset Coverage for Derivative Investments" below. Each
Portfolio will not enter into any currency swap unless the credit quality of
the unsecured senior debt or the claims-paying ability of the other party
thereto is considered to be investment grade by the Adviser. If there is a
default by the other party to such a transaction, the Portfolio will have
contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid in comparison with the markets for other similar
instruments which are traded in the interbank market.
Forward Foreign Currency Exchange Transactions. Each Portfolio may enter into
forward foreign currency exchange contracts in several circumstances. First,
when the Portfolio enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when the Portfolio anticipates
the receipt in a foreign currency of dividend or interest payments on such a
security which it holds, the Portfolio may desire to "lock in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such dividend or
interest payment, as the case may be. By entering into a forward contract for
the purchase or sale, for a fixed amount of dollars, of the amount of foreign
currency involved in the underlying transactions, the Portfolio will attempt
to protect itself against an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
Additionally, when management of a Portfolio believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the securities held by the Portfolio denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of a Portfolio's
foreign assets. The Developing Resources Portfolio will not enter into forward
contracts or maintain a net exposure to such contracts where the consummation
of the contracts would obligate the Portfolio to deliver an amount of foreign
currency in excess of the value of the securities held by the Developing
Resources Portfolio or other assets denominated in that currency. In addition,
the Developing Resources Portfolio generally will not enter into a forward
contract with a term of greater than one year.
Special Risks Associated With Currency Transactions. Transactions in forward
contracts, as well as futures and options on foreign currencies, are subject
to the risk of governmental actions affecting trading in or the prices of
currencies underlying such contracts, which could restrict or eliminate
trading and could have a substantial adverse effect on the value of positions
held by the Portfolio. In addition, the value of such positions could be
adversely affected by a number of other complex political and economic factors
applicable to the countries issuing the underlying currencies.
Furthermore, unlike trading in most other types of instruments, there is
no systematic reporting of last sale information with respect to the foreign
currencies underlying forward contracts, futures contracts and options. As a
result, the available information on which a Portfolio's trading systems will
be based may not be as complete as the comparable data on which the Portfolio
makes investment and trading decisions in connection with securities and other
transactions. Moreover, because the foreign currency market is a global,
twenty-four hour market, events could occur on that market which will not be
reflected in the forward, futures or options markets until the following day,
thereby preventing a Portfolio from responding to such events in a timely
manner.
Settlements of over-the-counter forward contracts or of the exercise of
foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires parties to such contracts to
accept or make delivery of such currencies in conformity with any United
States or foreign restrictions and regulations regarding the maintenance of
foreign banking relationships, fees, taxes or other charges.
Unlike currency futures contracts and exchange-traded options, options on
foreign currencies and forward contracts are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) the Securities and Exchange Commission (the "Commission"). To the
contrary, such instruments are traded through financial institutions acting as
market-makers. (Foreign currency options are also traded on the Philadelphia
Stock Exchange subject to Commission regulation). In an over-the-counter
trading environment, many of the protections associated with transactions on
exchanges will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements could therefore continue to
an unlimited extent over a period of time. Although the purchaser of an option
cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, an option writer could lose
amounts substantially in excess of its initial investment due to the margin
and collateral requirements associated with such option positions. Similarly,
there is no limit on the amount of potential losses on forward contracts to
which a Portfolio is a party.
In addition, over-the-counter transactions can only be entered into with a
financial institution willing to take the opposite side, as principal, of a
Portfolio's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Portfolio.
Where no such counterparty is available, it will not be possible to enter into
a desired transaction. There also may be no liquid secondary market in the
trading of over-the-counter contacts, and a Portfolio may be unable to close
out options purchased or written, or forward contracts entered into, until
their exercise, expiration or maturity. This in turn could limit a Portfolio's
ability to realize profits or to reduce losses on open positions and could
result in greater losses.
Furthermore, over-the-counter transactions are not backed by the guarantee
of an exchange's clearing corporation. A Portfolio will therefore be subject
to the risk of default by, or the bankruptcy of, the financial institution
serving as its counterparty. One or more of such institutions also may decide
to discontinue its role as market-maker in a particular currency, thereby
restricting a Portfolio's ability to enter into desired hedging transactions.
A Portfolio will enter into over-the-counter transactions only with parties
whose creditworthiness has been reviewed and found satisfactory by an Adviser.
The purchase and sale of exchange-traded foreign currency options,
however, are subject to the risks of the availability of a liquid secondary
market described above, as well as the risks regarding adverse market
movements, margining of options written, the nature of the foreign currency
market, possible intervention by governmental authorities and the effect of
other political and economic events. In addition, exchange-traded options on
foreign currencies involve certain risks not presented by the over-the-counter
market. For example, exercise and settlement of such options must be made
exclusively through the Options Clearing Corporation ("OCC"), which has
established banking relationships in applicable foreign countries for this
purpose. As a result, the OCC may, if it determines that foreign governmental
restrictions or taxes would prevent the orderly settlement of foreign currency
option exercises, or would result in undue burdens on the OCC or its clearing
member, impose special procedures for exercise and settlement, such as
technical changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.
Risks Associated With Derivative Instruments. Entering into a derivative
instrument involves a risk that the applicable market will move against a
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of
the initial investment made or the premium received by a Portfolio. Derivative
instruments may sometimes increase or leverage a Portfolio's exposure to a
particular market risk. Leverage enhances the Portfolio's exposure to the
price volatility of derivative instruments it holds. A Portfolio's success in
using derivative instruments to hedge portfolio assets depends on the degree
of price correlation between the derivative instruments and the hedged asset.
Imperfect correlation may be caused by several factors, including temporary
price disparities among the trading markets for the derivative instrument, the
assets underlying the derivative instrument and the Portfolio assets. Over-
the-counter ("OTC") derivative instruments involve an enhanced risk that the
issuer or counterparty will fail to perform its contractual obligations. Some
derivative instruments are not readily marketable or may become illiquid under
adverse market conditions. In addition, during periods of market volatility, a
commodity exchange may suspend or limit trading in an exchange-traded
derivative instrument, which may make the contract temporarily illiquid and
difficult to price. Commodity exchanges may also establish daily limits on the
amount that the price of a futures contract or futures option can vary from
the previous day's settlement price. Once the daily limit is reached, no
trades may be made that day at a price beyond the limit. This may prevent a
Portfolio from closing out positions and limiting its losses. The staff of the
Commission takes the position that certain purchased OTC options, and assets
used as cover for written OTC options, are subject to a Portfolio's 15% limit
on illiquid investments. A Portfolio's ability to terminate OTC derivative
instruments may depend on the cooperation of the counterparties to such
contracts. For thinly traded derivative instruments, the only source of price
quotations may be the selling dealer or counterparty. In addition, certain
provisions of the Code limit the extent to which the Portfolio may purchase
and sell derivative instruments. A Portfolio will engage in transactions in
futures contracts and related options only to the extent such transactions are
consistent with the requirements of the Code for maintaining the qualification
of its corresponding Fund as a regulated investment company for federal income
tax purposes. See "Taxes."
The Developing Resources Portfolio does not intend to write a covered
option on any security if after such transaction more than 15% of its net
assets, as measured by the aggregate value of the securities underlying all
covered calls and puts written by the Portfolio, would be subject to such
options. The Developing Resources Portfolio will only write a put option on a
security which it intends to ultimately acquire for its portfolio.
Each Portfolio may enter into futures contracts, and options on futures
contracts, traded on an exchange regulated by the CFTC and on foreign
exchanges, but, with respect to foreign exchange-traded futures contracts and
options on such futures contracts, only if a Portfolio's Adviser determines
that trading on each such foreign exchange does not subject the Portfolio to
risks, including credit and liquidity risks, that are materially greater than
the risks associated with trading on CFTC-regulated exchanges.
In order to hedge its current or anticipated portfolio positions, a
Portfolio may use futures contracts on securities held in its Portfolio or on
securities with characteristics similar to those of the securities held by the
Portfolio. If, in the opinion of a Portfolio's Adviser, there is a sufficient
degree of correlation between price trends for the securities held by the
Portfolio and futures contracts based on other financial instruments,
securities indices or other indices, the Portfolio may also enter into such
futures contracts as part of its hedging strategy.
A Portfolio may purchase call and put options, subject to the Asset
Coverage Requirements set forth above. A Portfolio may only write a put option
on a security that it intends to acquire for its investment portfolio.
Repurchase Agreements. Under a repurchase agreement a Portfolio buys a
security at one price and simultaneously promise to sell that same security
back to the seller at a higher price. At no time will a Portfolio commit more
than 15% of its net assets to repurchase agreements which mature in more than
seven days and other illiquid securities. A Portfolio's repurchase agreements
will provide that the value of the collateral underlying the repurchase
agreement will always be at least equal to the repurchase price, including any
accrued interest earned on the repurchase agreement, and will be marked to
market daily.
Reverse Repurchase Agreements. Each Portfolio may enter into reverse
repurchase agreements. Under a reverse repurchase agreement, a Portfolio
temporarily transfers possession of a portfolio instrument to another party,
such as a bank or broker-dealer, in return for cash. At the same time, the
Portfolio agrees to repurchase the instrument at an agreed upon time (normally
within seven days) and price, which reflects an interest payment. The
Portfolio expects that it will enter into reverse repurchase agreements when
it is able to invest the cash so acquired at a rate higher than the cost of
the agreement, which would increase the income earned by the Portfolio. The
Portfolio could also enter into reverse repurchase agreements as a means of
raising cash to satisfy redemption requests without the necessity of selling
portfolio assets.
When a Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to
another party or the securities in which the proceeds may be invested would
affect the market value of the Portfolio's assets. As a result, such
transactions may increase fluctuations in the market value of the Portfolio's
assets. While there is a risk that large fluctuations in the market value of
the Portfolio's assets could affect the Portfolio's net asset value, this risk
is not significantly increased by entering into reverse repurchase agreements,
in the opinion of an Adviser. Because reverse repurchase agreements may be
considered to be the practical equivalent of borrowing funds, they constitute
a form of leverage. If a Portfolio reinvests the proceeds of a reverse
repurchase agreement at a rate lower than the cost of the agreement, entering
into the agreement will lower the Portfolio's yield.
While an Adviser does not consider reverse repurchase agreements to
involve a traditional borrowing of money, reverse repurchase agreements will
be included within the aggregate limitation on "borrowings" contained in the
Portfolio's investment restriction (1) set forth below.
Lending Portfolio Securities. If the relevant Adviser decides to make
securities loans, each of the Information Age and Health Sciences Portfolio
may seek to increase its income by lending portfolio securities to broker-
dealers or other institutional borrowers. The financial condition of the
borrower will be monitored by an Adviser on an ongoing basis. The Portfolio
would continue to receive the equivalent of the interest or dividends paid by
the issuer on the securities loaned and would also receive a fee, or all or a
portion of the interest on investment of the collateral. The Portfolio would
have the right to call a loan and obtain the securities loaned at any time on
up to five business days' notice. The Portfolio would not have the right to
vote any securities having voting rights during the existence of a loan, but
could call the loan in anticipation of an important vote to be taken among
holder of the securities or the giving or holding of their consent on a
material matter affecting the investment. Securities lending involves
administrative expenses, including finders' fees. If an Adviser decides to
make securities loans, it is intended that the value of the securities loaned
would not exceed 1/3 of a Portfolio's total assets.
Asset Coverage Requirements. Transactions involving reverse repurchase
agreements, currency swaps, forward contracts, futures contracts and options
(other than options that the Portfolio has purchased) expose a Portfolio to an
obligation to another party. A Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies or other options, futures contracts or forward
contracts, or (2) cash or liquid securities with a value sufficient at all
times to cover its potential obligations not covered as provided in (1) above.
(Only the net obligations of a swap will be covered.) Each Portfolio will
comply with Commission guidelines regarding cover for these instruments and,
if the guidelines so require, set aside cash or liquid securities in a
segregated account with its custodian in the prescribed amount. The securities
in the segregated account will be marked to market daily.
Assets used as cover or held in a segregated account maintained by the
Portfolio's custodian cannot be sold while the position requiring coverage or
segregation is outstanding unless they are replaced with other appropriate
assets. As a result, the commitment of a large portion of a Portfolio's assets
to segregated accounts or to cover could impede portfolio management or the
Portfolio's ability to meet redemption requests or other current obligations.
Asset-Related Securities. The Developing Resources Portfolio's investment
adviser, BMR, will evaluate the creditworthiness of the issuer of an asset-
related security. If the asset-related security is backed by a bank letter of
credit or other similar facility, BMR may take such backing into consideration
in determining the creditworthiness of the issuer.
While the market prices for an asset-related security and the related
natural resource asset generally are expected to move in the same direction,
there may not be perfect correlation in the two price movements. Asset-
related securities may not necessarily be secured by a security interest in or
claim on the underlying natural resource asset.
The Developing Resources Portfolio may invest in asset-related securities
without limit when it has the option to put such securities to the issuer or a
stand-by bank or broker and receive the principal amount or redemption price
thereof less transaction costs on no more than seven days notice or when the
Portfolio has the right to convert or exchange such securities into a readily
marketable security in which it could otherwise invest upon not less than
seven days notice.
The asset-related securities in which the Developing Resources Portfolio
may invest may bear interest or pay preferred dividends at below market (or
even relatively nominal) rates. The Developing Resources Portfolio's holdings
of such securities therefore may not generate appreciable current income, and
the return from such securities primarily will be from any profit on the sale,
maturity or conversion thereof at a time when the price of the related asset
is higher than it was when the Portfolio purchased such securities. As an
example, assume gold is selling at a market price of $300 per ounce and an
issuer sells a $1,000 face amount gold related note with a seven year
maturity, payable at maturity at the greater of either $1,000 in cash or the
then market price of three ounces of gold. If at maturity, the market price of
gold is $400 per ounce, the amount payable on the note would be $1,200.
Certain asset-related securities may be payable at maturity in cash at the
stated principal amount, or at the option of the holder, directly in a stated
amount of the asset to which it is related. In such instance the Developing
Resources Portfolio may sell the asset-related security in the secondary
market, to the extent one exists, prior to the maturity if the value of the
stated amount of the asset exceeds the stated principal amount and thereby
realize the appreciation in the underlying asset.
Metals Investments. In making direct investments in bullion or metals, the
Developing Resources Portfolio normally will not take possession of the
bullion or metals, but instead will obtain receipts or certificates
representing ownership. In the event the Developing Resources Portfolio does
take possession, the bullion or metals would be delivered to and held by a
non-affiliated sub-custodian in a segregated account. When it purchases
bullion or metals, either by purchasing receipts or certificates or by having
a sub-custodian physically hold such metals, the Portfolio will pay for the
metals only upon actual receipt. Although the Developing Resources Portfolio
would incur storage, shipping and other costs by owning bullion or metals,
such costs should be minimized by the use of receipts or certificates.
Leverage Through Borrowing. The Developing Resources Portfolio will not
always borrow money for additional investments. The Portfolio's willingness to
borrow money, and the amount it will borrow, will depend on many factors, the
most important of which are market conditions and interest rates.
The 1940 Act requires the Developing Resources Portfolio to maintain
continuous asset coverage of not less than 300% with respect to its
borrowings. This allows the Developing Resources Portfolio to borrow for
leverage purposes an amount equal to as much as 50% of the value of its net
assets (not including such borrowings). If such asset coverage should decline
to less than 300% due to market fluctuations or other reasons, the Developing
Resources Portfolio may be required to sell some of its portfolio holdings
within three days in order to reduce the Portfolio's debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell such holdings at that time. The practice of leveraging to
enhance investment return may be viewed as a speculative activity. Leveraging
will exaggerate any increase or decrease in the market value of the securities
held by the Portfolio. Money borrowed for leveraging will be subject to
interest costs which may or may not exceed the income from the investments
acquired with the borrowed funds. The Developing Resources Portfolio may also
be required to maintain minimum average balances in connection with such
borrowing or to pay a commitment or other fee to maintain a line of credit;
either of these requirements will increase the cost of borrowing over the
stated interest rate.
Convertible Securities. The Developing Resources Portfolio may from time to
time invest a portion of its assets in debt securities and preferred stocks
which are convertible into, or carry the right to purchase, common stock or
other equity securities. The debt security or preferred stock (such as
Canadian special warrants) may itself be convertible into or exchangeable for
equity securities, or the purchase right may be evidenced by warrants attached
to the security or acquired as part of a unit with the security. Convertible
securities may be purchased for their appreciation potential when they yield
more than the underlying securities at the time of purchase or when they are
considered to present less risk of principal loss than the underlying
securities. Generally speaking, the interest or dividend yield of a
convertible security is somewhat less than that of a non-convertible security
of similar quality issued by the same company.
Warrants. Warrants are an option to purchase equity securities at a specific
price valid for a specific period of time. They do not represent ownership of
the securities, but only the right to buy them. The prices of warrants do not
necessarily move parallel to the prices of the underlying securities. Warrants
may become valueless if not sold or exercised prior to their expiration.
(Canadian special warrants issued in private placements prior to a public
offering are not considered warrants for purposes of the Portfolio's
investment restrictions).
Portfolio Turnover. A Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity
of one year or less). A 100% annual turnover rate would occur, for example, if
all the securities in the portfolio were replaced once in a period of one
year. A high turnover rate (100% or more) necessarily involves greater
expenses to a Portfolio. A Portfolio engages in portfolio trading (including
short-term trading) if it believes that a transaction including all costs will
help in achieving its investment objective either by increasing income or by
enhancing the Portfolio's net asset value. High portfolio turnover may also
result in the realization of substantial net short-term capital gains. For
the portfolio turnover rate of each Portfolio in prior fiscal years, see
"Supplementary Data" in the "Financial Statements".
INVESTMENT RESTRICTIONS
The following investment restrictions of the Funds are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Funds' outstanding voting securities, which as
used in this SAI means the lesser of (a) 67% of the shares of the Fund present
or represented by proxy at a meeting if the holders of more than 50% of the
shares are present or represented at the meeting or (b) more than 50% of the
shares of the Fund.
With respect to the the Information Age Fund, the Developing Resources
Fund and the Health Sciences Fund, a Fund may not:
(1) Borrow money or issue senior securities except as permitted by the
United States Investment Company Act of 1940, as amended (the "1940 Act");
(2) Purchase any securities on margin (but the Fund may obtain such short-
term credits as may be necessary for the clearance of purchases and sales of
securities); or
(3) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities;
With respect to the Information Age Fund and the Health Sciences Fund, a
Fund may not:
(4) With respect to 75% of its total assets, invest more than 5% of its
total assets (taken at current value) in the securities of any one issuer, or
invest in more than 10% of the outstanding voting securities of any one
issuer, except obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and except securities of other investment
companies.
(5) Underwrite securities of other issuers; or
(6) Invest in real estate including interests in real estate limited
partnerships (although it may purchase and sell securities which are secured
by real estate and securities of companies which invest or deal in real
estate) or in commodities or commodity contracts for the purchase or sale of
physical commodities.
With respect to the Information Age Fund, the Fund may not:
(7) Concentrate its investments in any particular industry, but, if deemed
appropriate for the Fund's objective, up to 25% of the value of its assets may
be invested in securities of companies in any one industry (although more than
25% may be invested in securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities).
With respect to the Health Sciences Fund, the Fund may not:
(8) Invest in the securities of any one industry, except the medical
research and health care industry (and except securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities) if as a result 25%
or more of the Fund's total assets would be invested in the securities of such
industry.
With respect to the Developing Resources Fund, the Fund may not:
(9) Underwrite securities issued by other persons, except insofar as it
may technically be deemed to be an underwriter under the Securities Act of
1933 in selling or disposing of a portfolio security;
(10) Purchase or sell real estate, although it may purchase and sell
securities which are secured by interests in real estate or interests therein
and securities of issuers (including real estate investment trusts) which
invest or deal in real estate or interests therein.
In addition, the Developing Resources Fund will:
(11) During normal market conditions the Fund will invest at least 25% of
its total assets in the natural resource group of industries, except when such
percentage is reduced as a result of a decrease in value of the assets so
invested or during such times when management believes that the assets so
invested should be redeployed for defensive purposes or during such times when
management believes that the assets so invested should be redeployed in
obligations or other securities, the principal amount, redemption terms or
conversion terms of which are related to the market price of some natural
resource asset such as gold bullion; the Fund may invest more than 25% of its
total assets in any industry in the natural resource group of industries; and
the Fund may invest up to 25% of its total assets, taken at market value at
the time of each investment, in any other industry. For the purposes of this
policy, an investment by the Fund in gold or silver bullion, other precious
metals, strategic metals, or gold or silver coins, or in securities issued by
companies deemed by the Fund's investment adviser to be engaged in the natural
resource investment sector (as from time to time described in the Fund's
Prospectus), shall be considered as an investment in the natural resource
group of industries; and
(12) The Fund may purchase and sell commodities and commodities contracts
(including without limitation futures contracts and options on futures
contracts) of all types and kinds.
Notwithstanding the investment policies and restrictions of the Developing
Resources Fund; the Fund may invest its assets in an open-end management
investment company (a Portfolio) with substantially the same investment
objectives, policies and restrictions as the Fund; moreover, subject to
Trustee approval the Fund may invest its investable assets in other open-end
management investment companies in the same group of investment companies with
the same investment adviser as the Portfolio (or an affiliate) if, with
respect to such assets, the other companies' permitted investments are
substantially the same as those of the Fund.
Notwithstanding the investment policies and restrictions of the
Information Age Fund and the Health Sciences Fund, each Fund may invest its
assets in an open-end management company with substantially the same
investment objective, policies and restrictions as the Fund. Notwithstanding
the investment policies and restrictions of the Information Age Portfolio and
the Health Sciences Portfolio, each Portfolio may invest part of its assets in
another investment company consistent with the 1940 Act.
Each Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by each Fund;
such restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of a Portfolio.
The following non-fundamental investment policies of the Funds are
substantially similar to such policies of their respective Portfolios and may
be changed by the respective Trustees of the Portfolios without Fund or
Portfolio investor approval.
With respect to each of the Information Age Fund and the Health Sciences Fund,
a Fund may not: (a) invest more than 15% of its net assets in investments
which are not readily marketable, including restricted securities and
repurchase agreements with a maturity longer than seven days. Restricted
securities for the purposes of this limitation do not include securities
eligible for resale pursuant to Rule 144A under the Securities Act and
commercial paper issued pursuant to Section 4(2) of said Act that the Trustees
of the Trust, or their delegate, determine to be liquid; (b) purchase any
securities if at the time of such purchase, permitted borrowings under
investment restriction (1) above exceed 5% of the value of the Fund's total
assets, as the case may be (Information Age Fund only); (c) purchase an option
on a security if, after such transaction, more than 5% of its net assets,
measured by the aggregate of all premiums paid for all such options held by
the Portfolio, would be so invested (Health Sciences Fund only); or (d)
purchase or retain in its portfolio any securities issued by an issuer any of
whose officers, directors, trustees or security holders is an officer or
Trustee of the Trust or of the Portfolio or is a member, officer, director or
trustee of any investment adviser of the Fund or the Portfolio if after the
purchase of the security of such issuer by the Fund or the Portfolio one or
more of such persons owns beneficially more than 1/2 of 1% of the shares or
securities or both (all taken at market value) of such issuer and such persons
owning more than 1/2 of 1% of such shares or securities together own
beneficially more than 5% of such shares or securities or both (all taken at
market value). Neither the Portfolio nor the Fund intends to make short sales
of securities during the coming year.
With respect to the Developing Resources Fund, the Fund may not: (a) invest
more than 15% of its net assets in investments which are not readily
marketable, including restricted securities and repurchase agreements with a
maturity longer than seven days. Restricted securities for the purposes of
this limitation do not include securities eligible for resale pursuant to Rule
144A under the Securities Act and commercial paper issued pursuant to Section
4(2) of said Act that the Trustees of the Trust, or their delegate, determines
to be liquid; (b) make short sales of securities, unless at all times when a
short sale position is open the Fund either owns an equal amount of such
securities or owns securities convertible into or exchangeable for securities
of the same issue as, and equal in amount to, the securities sold short; (c)
purchase securities of any issuer (other than securities or obligations issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if such purchase, at the time thereof, would cause more
than 10% of the total outstanding voting securities of such issuer to be held
by the Fund; this restriction will not apply (i) during periods when
management of the Fund anticipates significant economic, political or
financial instability or (ii) to investments in certificates of deposit,
bankers' acceptances or time deposits of banking and thrift institutions; (d)
invest for the purpose of gaining control of a company's management; (e)
purchase warrants if, as a result of such purchase, more than 5% of the Fund's
net assets, as the case may be (taken at current value), would be invested in
warrants, and the value of such warrants which are not listed on the New York
or American Stock Exchange may not exceed 2% of the Fund's net assets; this
policy does not apply to or restrict warrants acquired by the Fund in units or
attached to securities, inasmuch as such warrants are deemed to be without
value; (f) purchase an option on a security if, after such transaction, more
than 5% of its net assets, as measured by the aggregate of all premiums paid
for all such options held by it, would be so invested; (g) purchase or retain
in its portfolio any securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the Trust
or the Portfolio or is a member, officer, director or trustee of any
investment adviser of the Trust or the Portfolio, if after the purchase of the
securities of such issuer by the Fund or the Portfolio one or more of such
persons owns beneficially more than 1/2 of 1% of the shares or securities or
both (all taken at current value) of such issuer and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more
than 5% of such shares or securities or both (all taken at current value).
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, or describes a policy regarding
quality standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, assets or other circumstances or any
subsequent rating change made by a rating service will not compel the Fund or
the Portfolio, as the case may be, to dispose of such security or other asset.
Notwithstanding the foregoing, under normal circumstances the Developing
Resources Fund and Portfolio will maintain at least 65% of its total assets in
natural resource related investments or in asset-related securities, the
Information Age Fund and Portfolio will maintain at least 65% of its total
assets in securities of information age companies, and the Health Sciences
Fund and Portfolio will maintain at least 65% of its total assets in
securities of health science companies. Moreover, the Fund and the Portfolio
must always be in compliance with the borrowing policies set forth above.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolios are listed
below. Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Unless otherwise noted,
the business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of BMR, a wholly-owned
subsidiary of Eaton Vance; of Eaton Vance's parent, Eaton Vance Corp. ("EVC");
and of BMR's and Eaton Vance's trustee, Eaton Vance, Inc. ("EV"). Eaton Vance
and EV are both wholly-owned subsidiaries of EVC. The business address of
Lloyd George is 3808 One Exchange Square, Central, Hong Kong. Those Trustees
who are "interested persons" of the Trust or the Portfolios, as defined in the
1940 Act, by virtue of their affiliation with an Adviser, Eaton Vance, EVC or
EV, are indicated by an asterisk(*).
TRUSTEES OF THE TRUST AND THE PORTFOLIOS
JAMES B. HAWKES (55), President and Trustee*
President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.
HON. EDWARD K.Y. CHEN (52), Trustee of Information Age Portfolio
President of Lingnan College in Hong Kong. Professor and Director of Centre of
Asian Studies at the University of Hong Kong from 1979-1995. Director of
First Pacific Company and a Board Member of the Mass Transit Railway
Corporation. Member of the Executive Council of the Hong Kong Goverment
since 1992 and Chairman of the Consumer Council since 1991.
Address: President's Office, Lingnan College, Tuen Mun, Hong Kong
DONALD R. DWIGHT (66), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company); Chairman of the Board of Newspapers of New England, Inc. Director
or Trustee of various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
HON. ROBERT LLOYD GEORGE (44), Trustee and Vice President of Information Age
Portfolio
Chairman and Chief Executive Officer of LGM. Chairman and Chief Executive
Officer of the Advisers.
Address: 3808 One Exchange Square, Central, Hong Kong
SAMUEL L. HAYES, III (62), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02134
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee
Former Director of Fiduciary Company Incorporated. Director or Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (67), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIOS
WILLIAM D. BURT (58), Vice President of the Trust and Developing Resources
Portfolio
Vice President of BMR, Eaton Vance and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994).
WILLIAM CHISHOLM (36), Vice President of the Portfolios
Senior Trust Officer of The Bank of Nova Scotia Trust Company (Cayman)
Limited.
Address: The Bank of Nova Scotia Trust Company (Cayman) Ltd., The Bank of Nova
Scotia Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands,
British West Indies.
M. DOZIER GARDNER (63), Vice President of the Trust and Developing Resources
Portfolio
Vice Chairman of BMR, Eaton Vance, EVC and EV, and a Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
SAMUEL D. ISALY (52), Vice President of Health Sciences Portfolio
President of Mehta and Isaly Asset Management, Inc. since 1989; Senior Vice
President of S.G. Warburg & Co., Inc. from 1986 through 1989; and President
of Gramercy Associates, a health care industry consulting firm, from 1983
through 1986.
Address: Mehta and Isaly Asset Management, Inc., 41 Madison Avenue, 40th
Floor, New York, NY 10010-2202
VIREN MEHTA (47), Vice President of Health Sciences Portfolio
Chairman of Mehta and Isaly Asset Management, Inc. since 1989; Analyst of S.G.
Warburg & Co., Inc. from 1987 through 1989; Analyst of Wood MacKenzie &
Company Inc. from 1986 through 1987; and Manager of Merck & Co. from 1963
through 1986.
Address: Mehta and Isaly Asset Management, Inc., 41 Madison Avenue, 40th
Floor, New York, NY 10010-2202
MICHEL NORMANDEAU (45), Vice President of the Portfolios
Assistant Manager - Trust Services, The Bank of Nova Scotia Trust Company
(Cayman) Limited.
Address: The Bank of Nova Scotia Trust Company (Cayman) Ltd., The Bank of Nova
Scotia Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands,
British West Indies.
RAYMOND O'NEILL (34), Vice President of the Portfolios
Managing Director of IBT Trust and Custodian Services (Ireland) Limited since
January, 1995. Vice President, Atlantic Corporate Management Limited,
Warwick, Bermuda (1991-1994). Officer, The Bank of Bermuda Limited,
Hamilton, Bermuda (1987-1991).
Address: Earlsfort Terrace, Dublin 2, Ireland.
DUNCAN W. RICHARDSON (39), Vice President of Information Age Portfolio
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
BARCLAY TITTMANN (65), Vice President of Developing Resources Portfolio
Vice President of BMR, Eaton Vance and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993).
JAMES L. O'CONNOR (52), Treasurer
Vice President of BMR, Eaton Vance and EV. Officer of various other investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (56), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of
Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and was Executive
Vice President of Neuberger & Berman Management, Inc., a mutual fund
management company. Officer of various investment companies managed by Eaton
Vance or BMR. Mr. Dynner was elected Secretary of the Trust and the
Portfolios on June 23, 1997.
JANET E. SANDERS (61), Assistant Treasurer and Assistant Secretary
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Trust on March 27, 1995.
ERIC G. WOODBURY (40), Assistant Secretary
Vice President of BMR, Eaton Vance and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Woodbury was elected Assistant
Secretary of the Trust on June 19, 1995.
Messrs. Hayes (Chairman), Reamer and Thorndike are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolios. The
purpose of the Special Committee is to consider, evaluate and make
recommendations to the full Board of Trustees concerning (i) all contractual
arrangements with service providers to the Funds and the Portfolios, including
investment advisory (Portfolio only), administrative, transfer agency,
custodial and fund accounting and distribution services, and (ii) all other
matters in which Eaton Vance or its affiliates has any actual or potential
conflict of interest with the Funds, the Portfolios or investors therein.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolios is comprised of four Trustees who are not "interested persons" as
that term is defined under the 1940 Act ("noninterested Trustees"). The
Committee has four-year staggered terms, with one member rotating off the
Committee to be replaced by another noninterested Trustee. The purpose of the
Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee
of the Board of Trustees of the Trust and of the Portfolios. The Audit
Committee's functions include making recommendations to the Trustees regarding
the selection of the independent certified public accountants, and reviewing
matters relative to trading and brokerage policies and practices, accounting
and auditing practices and procedures, accounting records, internal accounting
controls, and the functions performed by the custodian, transfer agent and
dividend disbursing agent of the Trust and of the Portfolios.
Trustees of the Portfolios that are not affiliated with an Adviser may
elect to defer receipt of all or a percentage of their annual fees in
accordance with the terms of a Trustees Deferred Compensation Plan (the
"Trustees" Plan"). Under the Trustees' Plan, an eligible Trustee may elect to
have his deferred fees invested by a Portfolio in the shares of one or more
funds in the Eaton Vance Family of Funds, and the amount paid to the Trustees
under the Trustees' Plan will be determined based upon the performance of such
investments. Deferral of Trustees' fees in accordance with the Trustees' Plan
will have a negligible effect on the Portfolios' assets, liabilities, and net
income per share, and will not obligate a Portfolio to retain the services of
any Trustee or obligate a Portfolio to pay any particular level of
compensation to the Trustee. Neither the Portfolios nor the Trust has a
retirement plan for its Trustees.
The fees and expenses of the noninterested Trustees of the Trust and the
Portfolios are paid by the Funds (and the other series of the Trust) and the
Portfolios, respectively. (The Trustees of the Trust and the Portfolios who
are members of an Adviser's organization receive no compensation from the
Trust or the Portfolios). Messrs. Chen, Chisholm, Lloyd George, Normandeau and
O'Neill are not U.S. residents. It may be difficult to effect service of
process within the U.S. or to realize judgments of U.S. courts upon them. It
is uncertain whether courts in other countries would entertain original
actions against them. During the fiscal year ended August 31, 1996, the
noninterested Trustees of the Trust and the Portfolios received the following
compensation in their capacities as Trustees from the Trust and the
Portfolios, and, for the year ended September 30, 1996, earned the following
compensation in their capacities as Trustees of the funds in the Eaton Vance
fund complex(1):
[Enlarge/Download Table]
SAMUEL L.
DONALD R. HAYES, III NORTON H. JOHN L. JACK L.
SOURCE OF COMPENSATION DWIGHT(3) (4) REAMER THORNDIKE TREYNOR
---------------------- --------- ---------- --------- --------- -------
Trust(2) $ 2,165 $ 1,992 $ 1,978 $ 2,004 $ 2,146
Information Age Portfolio $ 97 $ 87 $ 86 $ 87 $ 94
Developing Resources Portfolio 0 0 0 0 0
Health Sciences Portfolio 0 0 0 0 0
-------- -------- -------- -------- --------
Trust and Fund Complex $142,500(5) $153,750(6) $142,500 $147,500 $147,500
----------
(1) The Eaton Vance fund complex consists of 228 registered investment
companies or series thereof.
(2) The Trust consisted of 12 Funds as of August 31, 1996.
(3) Mr. Dwight received deferred compensation from each Portfolio as follows:
Information Age - $46; Developing Resources - $0; Health Sciences - $0.
(4) Mr. Hayes received deferred compensation from each Portfolio as follows:
Information Age - $3; Developing Resources - $0; Health Sciences - $0.
(5) Includes $42,500 of deferred compensation.
(6) Includes $37,500 of deferred compensation.
MANAGEMENT OF THE FUNDS AND THE PORTFOLIOS
Eaton Vance acts as the sponsor and manager of the Information Age and
Health Sciences Funds and the administrator of the Information Age and Health
Sciences Portfolios. The Information Age Portfolio has engaged BMR and Lloyd
George as its investment advisers, the Health Sciences Portfolio has engaged
M&I as its invetment adviser and the Developing Resources Portfolio has
engaged BMR as its investment adviser.
THE ADVISERS
As investment advisers to the Portfolios each Adviser manages a
Portfolio's investments, subject to the supervision of the Board of Trustees
of each Portfolio. The Advisers are also responsible for effecting all
security transactions on behalf of the Portfolios, including the allocation of
principal transactions and portfolio brokerage and the negotiation of
commissions. See "Portfolio Security Transactions."
Under the investment advisory agreement with the Information Age
Portfolio, BMR and Lloyd George are entitled to receive a monthly advisory fee
computed by applying the annual asset rate applicable to that portion of the
average daily net assets of the Portfolio throughout the month in each
Category as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
-------- ------------------------ ----------
1 less than $500 million ................ 0.75%
2 $500 million but less than $1 billion . 0.70
3 $1 billion but less than $1.5 billion . 0.65
4 $1.5 billion but less than $2 billion . 0.60
5 $2 billion but less than $3 billion ... 0.55
6 $3 billion and over ................... 0.50
As of August 31, 1996, the Information Age Portfolio has net assets of
$42,703,385. For the period from the start of business September 18, 1995, to
August 31, 1996, BMR and Lloyd George earned advisory fees of $199,131
(equivalent to 0.75% (annualized) of the Portfolio's average daily net assets
for such period). Such advisory fee was divided equally between Lloyd George
and BMR.
Under the investment advisory agreement with the Health Sciences
Portfolio, M&I's advisory fee rate on average daily net assets is reduced to
.70% on assets of $500 million but less than $1 billion, to .65% on assets of
$1 billion but less than $1.5 billion, to .60% on assets of $1.5 billion but
less than $2 billion, to .55% on assets of $2 billion but less than $3 billion
and .50% on assets of $3 billion and over.
The performance fee adjustment to the advisory fee is as follows: After 12
months, the basic advisory fee is subject to upward or downward adjustment
depending upon whether, and to what extent, the investment performance of the
Health Sciences Portfolio differs by at least one percentage point from the
record of the Standard & Poor's Index of 500 Common Stocks over the same
period. Each percentage point difference is multiplied by a performance
adjustment rate of 0.025%. The maximum adjustment plus/minus is 0.25%. One
twelfth (1/12) of this adjustment is applied each month to the average daily
net assets of the Portfolio over the entire performance period. This
adjustment shall be based on a rolling period of up to and including the most
recent 36 months. Portfolio performance shall be total return as computed
under Rule 482 under the Securities Act of 1933.
Under the investment advisory agreement with the Developing Resources
Portfolio, BMR receives a monthly fee based on average daily net assets as
follows:
AVERAGE DAILY NET ANNUALIZED FEE RATE MONTHLY FEE RATE
ASSETS FOR THE MONTH (FOR EACH LEVEL) (FOR EACH LEVEL)
-------------------- ------------------- ----------------
Up to $500 million ........................ 0.7500% 1/16 of 1%
$500 million but less than $1 billion ..... 0.6875% 11/192 of 1%
$1 billion but less than $1.5 billion ..... 0.6250% 5/96 of 1%
$1.5 billion but less than $2 billion ..... 0.5625% 3/64 of 1%
$2 billion but less than $3 billion ....... 0.5000% 1/24 of 1%
$3 billion and over ....................... 0.4375% 7/192 of 1%
Eaton Vance, its affiliates and its predecessor companies have been
managing assets of individuals and institutions since 1924 and managing
investment companies since 1931. They maintain a large staff of experienced
fixed-income and equity investment professionals to service the needs of their
clients. The fixed-income division focuses on all kinds of taxable investment-
grade and high-yield securities, tax-exempt investment-grade and high-yield
securities, and U.S. Government securities. The equity division covers stocks
ranging from blue chip to emerging growth companies.
Eaton Vance is among the oldest mutual funds organizations in the country.
As an experienced mutual fund provider, Eaton Vance has contributed to making
the securities market more widely accessible to investors. Eaton Vance equity
funds provide a way to take advantage of the potentially higher returns of
individual stocks. Eaton Vance has a staff of more than 25 investment
professionals specializing in security analysis and equity management.
The Eaton Vance investment process stresses intensive fundamental
research. Portfolios are built on a stock-by-stock basis and the process
includes visits to companies under consideration. The process also focuses on
well-managed companies with the following characteristics: strong underlying
value or franchise; solid earnings growth; steady cash flow, strong balance
sheet; innovative products or services; potential for sustained growth;
seasoned, creative management; or ability to survive variable market
conditions.
By investing in diversified portfolios and employing prudent and
professional management, Eaton Vance mutual funds can provide attractive
return, while exposing shareholders to less risk than if they were to build
investment portfolios on their own. Eaton Vance employs rigorous buy and sell
disciplines. For instance, purchases are made with an eye to both relative and
absolute growth rates and price-earning ratios, and sales are made when a
stock is fully valued, fundamentals deteriorate, management fails to execute
its strategy, or more attractive alternatives are available.
Eaton Vance and its affiliates act as adviser to over 150 mutual funds,
and individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features
an experienced team of investment professionals that began working together in
the mid-1980s. Lloyd George analysts cover East Asia, the India subcontinent,
Russia and Eastern Europe, Latin America, Australia and New Zealand from
offices in Hong Kong, London and Mumbai. Together Eaton Vance and Lloyd George
manage over $21 billion in assets. Eaton Vance mutual funds are distributed by
the Principal Underwriter both within the United States and offshore.
The Principal Underwriter believes that an investment professional can
provide valuable services to you to help you reach your investment goals.
Meeting investment goals requires time, objectivity and investment savvy.
Before making an investment recommendation, a representative can help you
carefully consider your short- and long-term financial goals, your tolerance
for investment risk, your investment time frame, and other investments you may
already own. Your professional investment representatives are knowledgeable
about financial markets, as well as the wide range of investment opportunities
available. A representative can help you decide when to buy, sell or persevere
with your investments. A professional investment representative can provide
you with tailored financial advice.
BMR manages the investments and affairs of the Developing Resources
Portfolio subject to the supervision of the Portfolio's Board of Trustees. BMR
furnishes to the Portfolio investment research, advice and supervision,
furnishes an investment program and determines what securities will be
purchased, held or sold by the Portfolio and what portion, if any, of the
Portfolio's assets will be held uninvested. The Investment Advisory Agreement
requires BMR to pay the salaries and fees of all officers and Trustees of the
Portfolio who are members of the BMR organization and all personnel of BMR
performing services relating to research and investment activities. The
Portfolio is responsible for all expenses not expressly stated to be payable
by BMR under the Investment Advisory Agreement, including, without implied
limitation, (i) expenses of maintaining the Portfolio and continuing its
existence, (ii) registration of the Portfolio under the 1940 Act, (iii)
commissions, fees and other expenses connected with the acquisition, holding
and disposition of securities and other investments, (iv) auditing, accounting
and legal expenses, (v) taxes and interest, (vi) governmental fees, (vii)
expenses of issue, sale and redemption of interests in the Portfolio, (viii)
expenses of registering and qualifying the Portfolio and interests in the
Portfolio under federal and state securities laws and of preparing and
printing registration statements or other offering statements or memoranda for
such purposes and for distributing the same to investors, and fees and
expenses of registering and maintaining registrations of the Portfolio and of
the Portfolio's placement agent as broker-dealer or agent under state
securities laws, (ix) expenses of reports and notices to investors and of
meetings of investors and proxy solicitations therefor, (x) expenses of
reports to governmental officers and commissions, (xi) insurance expenses,
(xii) association membership dues, (xiii) fees, expenses and disbursements of
custodians and subcustodians for all services to the Portfolio (including
without limitation safekeeping of funds, securities and other investments,
keeping of books, accounts and records, and determination of net asset values,
book capital account balances and tax capital account balances), (xiv) fees,
expenses and disbursements of transfer agents, dividend disbursing agents,
investor servicing agents and registrars for all services to the Portfolio,
(xv) expenses for servicing the accounts of investors, (xvi) any direct
charges to investors approved by the Trustees of the Portfolio, (xvii)
compensation and expenses of Trustees of the Portfolio who are not members of
BMR's organization, and (xviii) such non-recurring items as may arise,
including expenses incurred in connection with litigation, proceedings and
claims and any legal obligation of the Portfolio to indemnify its Trustees,
officers and investors with respect thereto, to the extent not covered by
insurance.
Each Investment Advisory Agreement continues in effect from year to year
so long as such continuance is approved at least annually (i) by the vote of a
majority of the noninterested Trustees of a Portfolio cast in person at a
meeting specifically called for the purpose of voting on such approval and
(ii) by the Board of Trustees of a Portfolio or by vote of a majority of the
outstanding voting securities of a Portfolio. Each Agreement may be terminated
at any time without penalty on sixty days' written notice by the Board of
Trustees of either party or by vote of the majority of the outstanding voting
securities of a Portfolio, and each Agreement will terminate automatically in
the event of its assignment. Each Agreement provides that an Adviser may
render services to others. Each Agreement also provides that an Adviser shall
not be liable for any loss incurred in connection with the performance of its
duties, or action taken or omitted under that Agreement, in the absence of
willful misfeasance, bad faith, gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
thereunder, or for any losses sustained in the acquisition, holding or
disposition of any security or other investment.
To the extent necessary to comply with U.S. tax law, Eaton Vance has
employed IBT Trust Company (Cayman) Ltd. to serve as the administrator of the
Portfolios. The sub-administrator maintains the Portfolios' principal office
and certain records and provides administrative assistance in connection with
meetings of the Portfolios' Trustees and interestholders.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Funds and the Portfolios" in the Prospectus for a
description of the services Eaton Vance performs as the manager and sponsor of
the Information Age and Health Sciences Funds and the administrator of the
Information Age and Health Sciences Portfolios. Under Eaton Vance's management
contract with the Information Age and Health Sciences Funds and administration
agreement with the Information Age and Health Sciences Portfolios, Eaton Vance
receives a monthly management fee from the Funds and a monthly administration
fee from the Portfolios. Each fee is computed by applying the annual asset
rate applicable to that portion of the average daily net assets of the Fund or
the Portfolio throughout the month in each Category as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
-------- ------------------------ ----------
1 less than $500 million ................... 0.25%
2 $500 million but less than $1 billion .... 0.23333
3 $1 billion but less than $1.5 billion .... 0.21667
4 $1.5 billion but less than $2 billion .... 0.20
5 $2 billion but less than $3 billion ...... 0.18333
6 $3 billion and over ...................... 0.1667
For the period from the start of business, September 18, 1995, to August
31, 1996, Eaton Vance earned administration fees of $66,210 (equivalent to
0.25% (annualized) of the Information Age Portfolio's average daily net assets
for such period). For the management fees that the Information Age Fund paid
to Eaton Vance, see Appendix B. For the management fees paid by the Health
Sciences Fund see Appendix A.
Eaton Vance's management contract with the Information Age and Health
Sciences Funds, and its administration agreement with the Information Age and
Health Sciences Portfolios will continue in effect from year to year, so long
as such continuance is approved annually by the vote of a majority of the
Trustees of the Trust or the Portfolios, as the case may be. Each agreement
may be terminated at any time without penalty on sixty days' written notice by
the Board of Trustees of either party thereto, or by a vote of a majority of
the outstanding voting securities of the Funds or the Portfolios, as the case
may be. Each agreement will terminate automatically in the event of its
assignment. Each agreement provides that, in the absence of Eaton Vance's
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties to the Information Age and Health Sciences Funds or the
Information Age and Health Sciences Portfolios under such contract or
agreement, Eaton Vance will not be liable to the Funds or the Portfolios for
any loss incurred. Each agreement was initially approved by the Trustees,
including the non-interested Trustees, of the Trust or the Portfolios.
As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Developing Resources Fund, but currently receives no compensation for
providing administrative services to the Fund. Under its agreement with the
Fund, Eaton Vance has been engaged to administer the Fund's affairs, subject
to the supervision of the Trustees of the Trust, and shall furnish for the use
of the Fund office space and all necessary office facilities, equipment and
personnel for administering the affairs of the Fund.
The Fund and the Portfolio, as the case may be, will each be responsible
for all of its respective costs and expenses not expressly stated to be
payable by an Adviser under the investment advisory agreement, by Eaton Vance
under the management contract or the administration agreement, or by the
Principal Underwriter under the distribution agreement. Such costs and
expenses to be borne by each of the Fund or the Portfolio, as the case may be,
include, without limitation: custody and transfer agency fees and expenses,
including those incurred for determining net asset value and keeping
accounting books and records; expenses of pricing and valuation services; the
cost of share certificates; membership dues in investment company
organizations; brokerage commissions and fees; fees and expenses of
registering under the securities laws; expenses of reports to shareholders and
investors; proxy statements, and other expenses of shareholders' or investors'
meetings; insurance premiums, printing and mailing expenses; interest, taxes
and corporate fees; legal and accounting expenses; compensation and expenses
of Trustees not affiliated with Eaton Vance or an Adviser; distribution and
service fees payable by the Fund under its Rule 12b-1 distribution plan; and
investment advisory, management and administration fees. The Fund and the
Portfolio, as the case may be, will also each bear expenses incurred in
connection with litigation in which the Fund or the Portfolio, as the case may
be, is a party and any legal obligation to indemnify its respective officers
and Trustees with respect thereto, to the extent not covered by insurance.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. BMR and Eaton Vance are both
Massachusetts business trusts, and EV is the trustee of BMR and Eaton Vance.
The Directors of EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and
Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and
John G. L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is
vice chairman and Mr. Hawkes is president and chief executive officer of EVC,
BMR, Eaton Vance and EV. All of the issued and outstanding shares of Eaton
Vance and EV are owned by EVC. All of the issued and outstanding shares of BMR
are owned by Eaton Vance. All shares of the outstanding Voting Common Stock of
EVC are deposited in a Voting Trust which expires on December 31, 1997, the
Voting Trustees of which are Messrs. Clay, Gardner, Hawkes, Rowland and Thomas
E. Faust, Jr. The Voting Trustees have unrestricted voting rights for the
election of Directors of EVC. All of the outstanding voting trust receipts
issued under said Voting Trust are owned by certain of the officers of BMR and
Eaton Vance who are also officers or officers and Directors of EVC and EV. As
of August 31, 1997, Messrs. Clay, Gardner and Hawkes each owned 24% of such
voting trust receipts, and Messrs. Rowland and Faust owned 15% and 13%,
respectively, of such voting trust receipts. Messrs. Dynner, Gardner and
Hawkes who are officers or Trustees of the Trust and the Portfolios are
members of the EVC, BMR, Eaton Vance and EV organizations. Messrs. Burt,
Murphy, O'Connor, Richardson, Tittmann and Woodbury, and Ms. Sanders, are
officers of the Trust and or the Portfolios, and are also members of the BMR,
Eaton Vance and EV organizations.
Eaton Vance owns all the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC owns all the stock of Fulcrum
Management, Inc. and MinVen, Inc., which are engaged in precious metal mining
venture investment and management. EVC also owns 22% of the Class A shares of
Lloyd George Management (B.V.I.) Limited, a registered investment adviser. BMR
, EVC, Eaton Vance and EV may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Funds and
the Portfolios, IBT. It is Eaton Vance's opinion that the terms and conditions
of such transactions were not and will not be influenced by existing or
potential custodial or other relationships between the Funds or the Portfolios
and such banks.
CUSTODIAN
IBT acts as custodian for the Trust and the Portfolios. IBT has the
custody of all cash and securities of the Funds and all securities of the
Portfolios purchased in the United States, and its subsidiary, IBT Fund
Services (Canada) Inc., 1 First Canadian Place, King Street West, Toronto,
Ontario, Canada, maintains the Funds' and the Portfolios' general ledger and
computes the daily net asset value of interests in the Portfolios and the net
asset value of shares of the Funds. In such capacities, IBT attends to details
in connection with the sale, exchange, substitution, transfer or other
dealings with the Funds' and the Portfolios' respective investments, receives
and disburses all funds, and performs various other ministerial duties upon
receipt of proper instructions from the Trust and the Portfolios,
respectively.
Portfolio securities, if any, purchased by a Portfolio in the U.S. are
maintained in the custody of IBT or of other domestic banks or depositories.
Portfolio securities purchased outside of the U.S. are maintained in the
custody of foreign banks and trust companies that are member of IBT's Global
Custody Network, or foreign depositories used by such foreign banks and trust
companies. Each of the domestic and foreign custodial institutions holding
portfolio securities has been approved by the Board of Trustees of each
Portfolio in accordance with regulations under the 1940 Act.
IBT charges fees which are competitive within the industry. These fees for
the Portfolios relate to (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
particular investment company at the custodian equal to 75% of the 91-day U.S.
Treasury Bill auction rate applied to the particular investment company
average daily collected balances. The portion of the fee for a Fund related to
bookkeeping and pricing services is based upon a percentage of the Fund's net
assets and the portion of the fee related to financial statement preparation
is a fixed amount. IBT also provides services in connection with the
preparation of shareholder reports and the electronic filing of such reports
with the Commission, for which it receives a separate fee. Landon T. Clay, a
Director of EVC and an officer, Trustee or Director of other entities in the
Eaton Vance organization, owns approximately 13% of the voting stock of
Investors Financial Services Corp., the holding company parent of IBT.
Management believes that such ownership does not create an affiliated person
relationship between the Trust or a Portfolio and IBT under the 1940 Act.
SERVICES FOR ACCUMULATION -- CLASS A SHARES
The following services are voluntary, involve no extra charge, other than
the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.
Intended Quantity Investment -- Statement of Intention. If it is
anticipated that $100,000 or more of Class A shares and shares of the other
continuously offered open-end funds listed under "The Eaton Vance Exchange
Privilege" in the Prospectus will be purchased within a 13-month period, a
Statement of Intention should be signed so that shares may be obtained at the
same reduced sales charge as though the total quantity were invested in one
lump sum. Shares held under Right of Accumulation (see below) as of the date
of the Statement will be included toward the completion of the Statement. The
Statement authorizes the Transfer Agent to hold in escrow sufficient shares
(5% of the dollar amount specified in the Statement) which can be redeemed to
make up any difference in sales charge on the amount intended to be invested
and the amount actually invested. Execution of a Statement does not obligate
the shareholder to purchase or the Fund to sell the full amount indicated in
the Statement, and should the amount actually purchased during the 13-month
period be more or less than that indicated on the Statement, price adjustments
will be made. For sales charges and other information on quantity purchases,
see "How to Buy Shares" in the Prospectus. Any investor considering signing a
Statement of Intention should read it carefully.
Right of Accumulation -- Cumulative Quantity Discount. The applicable
sales charge level for the purchase of Class A shares is calculated by taking
the dollar amount of the current purchase and adding it to the value
(calculated at the maximum current offering price) of the shares the
shareholder owns in his or her account(s) in the Fund and in the other
continuously offered open-end funds listed under "The Eaton Vance Exchange
Privilege" in the Prospectus for which Eaton Vance acts as adviser or
administrator at the time of purchase. The sales charge on the shares being
purchased will then be at the rate applicable to the aggregate. For sales
charges on quantity purchases, see "How to Buy Shares" in the Prospectus.
Shares purchased (i) by an individual, his or her spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other
fiduciary of a single trust estate or a single fiduciary account, will be
combined for the purpose of determining whether a purchase will qualify for
the Right of Accumulation and if qualifying, the applicable sales charge
level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information
to permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The
Right of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or
quarterly payments of any permitted amount designated by the shareholder (see
"Eaton Vance Shareholder Services -- Withdrawal Plan" in the Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, although they are a return of principal, may require
the recognition of taxable gain or loss. Income dividends and capital gains
distributions in connection with withdrawal plan accounts will be credited at
net asset value as of the record date for each distribution. Continued
withdrawals in excess of current income will eventually use up principal,
particularly in a period of declining market prices. A shareholder may not
have a withdrawal plan in effect at the same time he or she has authorized
Bank Automated Investing or is otherwise making regular purchases of Fund
shares. The shareholder, the Transfer Agent or the Principal Underwriter will
be able to terminate the withdrawal plan at any time without penalty.
DETERMINATION OF NET ASSET VALUE
The Trustees of each Portfolio have established the following procedures
for the valuation of the Portfolio's assets. Marketable securities listed on
foreign or U.S. securities exchanges or in the NASDAQ National Market System
are valued at closing sale prices or if there were no sales at the mean
between the closing bid and asked prices therefor on such exchanges or System.
Unlisted or listed securities for which closing sale prices are not available
are valued at the mean between the latest bid and asked prices. An option
contract is valued at the last sale price as quoted on the principal exchange
or board of trade on which such option or contract is traded, or in the
absence of a sale, the mean between the last bid and asked prices. Futures
positions on securities or currencies are generally valued at closing
settlement prices. Direct placement securities and securities of venture
capital companies, except as provided below, are taken at fair value as
determined in good faith by or pursuant to procedures established by the
Trustees. Direct placement securities and securities of former venture capital
companies which are readily marketable are considered marketable securities.
Short term debt securities with a remaining maturity of 60 days of less
are valued at amortized cost. If securities were acquired with a remaining
maturity of more than 60 days, their amortized cost value will be based on
their value on the sixty-first day prior to maturity. Other fixed income and
debt securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service. All other securities are valued at fair value
as determined in good faith by or at the direction of the Trustees.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset
value of the Portfolio are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio's net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be
made and reflected in such computation). Foreign securities and currency held
by the Portfolio will be valued in U.S. dollars; such values will be computed
by the custodian based on foreign currency exchange rate quotations.
Physical commodities, including bullion, will generally be valued at fair
value based on prevailing market prices.
Each investor in a Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, determined on the prior Portfolio Business Day,
which represented that investor's share of the aggregate interests in the
Portfolio on such prior day. Any additions or withdrawals for the current
Portfolio Business Day will then be recorded. Each investor's percentage of
the aggregate interest in the Portfolio will then be recomputed as a
percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the Portfolio Valuation Time on
the prior Portfolio Business Day plus or minus, as the case may be, that
amount of any additions to or withdrawals from the investor's investment in
the Portfolio on the current Portfolio Business Day, and (ii) the denominator
of which is the aggregate net asset value of the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, the amount of the net additions to or withdrawals from the aggregate
investment in the Portfolio on the current Portfolio Business Day by all
investors in the Portfolio. The percentage so determined will then be applied
to determine the value of the investor's interest in the Portfolio for the
current Portfolio Business Day. Each Fund and Portfolio will be closed for
business and will not price their shares on the following business holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
INVESTMENT PERFORMANCE
Average annual total return is determined separately for each Class of a
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period,
(ii) the deduction of the maximum sales charge from the initial $1,000
purchase order for Class A shares, (iii) a complete redemption of the
investment and (iv) the deduction of any CDSC at the end of the period. For
information concerning the total return of the Classes of a Fund, see Appendix
A, Appendix B and Appendix C.
Total return may be compared to relevant indices, such as the Consumer
Price Index and various domestic and foreign securities indices. A Fund's
total return and comparisons with these indices may be used in advertisements
and in information furnished to present or prospective shareholders. In
addition, evaluations of a Fund's performance or rankings of mutual funds
(which include a Fund) made by independent sources may be used in
advertisements and in information furnished to present or prospective
shareholders. Information about the portfolio allocation and holdings of a
Portfolio may also be included in advertisements and other material furnished
to present prospective shareholders. A Fund's performance may differ from that
of other investors in its corresponding Portfolio, including other investment
companies.
Information (including charts and illustrations) relating to inflation and
the effects of inflation on the dollar may be included in advertisements and
other material furnished to present and prospective shareholders. Such
information may reflect the change in the net asset value of a hypothetical
investment in a Fund over a specified time period and compare it to an
inflationary measure, such as the Consumer Price Index (which is computed by
the Bureau of Labor Statistics of the U.S. Department of Labor).
Information used in advertisements and in materials furnished to present
or prospective shareholders may include statistics, data and performance
studies prepared by independent organizations or included in various
publications reflecting the investment performance or return achieved by
various classes and types of investments (e.g. common stocks, small company
stocks, long-term corporate bonds, long-term government bonds, intermediate-
term government bonds, U.S. Treasury bills) over various periods of time. This
information may be used to illustrate the benefits of long-term investments in
common stocks.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
- cost associated with aging parents;
- funding a college education (including its actual and estimated
cost);
- health care expenses (including actual and projected expenses);
- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
- retirement (including the availability of social security benefits,
the tax treatment of such benefits and statistics and other
information relating to maintaining a particular standard of living
and outliving existing assets).
Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the
value of investing as early as possible and regularly, as well as staying
invested. The benefits of investing in equity securities by means of a mutual
fund may also be included (such benefits may include diversification,
professional management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time
periods; and results of diversifying assets among several investments with
varying performance. Information in advertisements and materials furnished to
present and prospective investors may also include quotations (including
editorial comments) and statistics concerning investing in securities, as well
as investing in particular types of securities and the performance of such
securities.
The Trust (or Principal Underwriter) may provide investors with
information on global investing, which may include descriptions, comparisons,
charts and/or illustrations of: foreign and domestic equity market
capitalizations; returns obtained by foreign and domestic securities; and the
effects of globally diversifying an investment portfolio (including volatility
analysis and performance information). Such information may be provided for a
variety of countries over varying time periods.
The Trust (or Principal Underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to
investors or prospective investors. Such material or advertisements may also
provide information on the use of investment professionals by such investors.
TAXES
Each series of the Trust is treated as a separate entity for federal
income tax purposes. Each Fund has elected to be treated and intends to
qualify each year as a regulated investment company ("RIC") under the Code.
Accordingly, each Fund intends to satisfy certain requirements relating to
sources of its income and diversification of its assets and to distribute
substantially all of its ordinary income (including tax-exempt income, if
applicable) and net income in accordance with the timing requirements imposed
by the Code, so as to maintain its RIC status and to avoid paying any federal
income or excise tax. Because each Fund invests its assets in a Portfolio, the
Portfolio normally must satisfy the applicable source of income and
diversification requirements in order for the Fund to also satisfy these
requirements. Each Portfolio will allocate at least annually among its
investors, including a Fund, the Portfolio's net investment income, net
realized capital gains, and any other items of income, gain, loss, deduction
or credit. Each Portfolio will make allocations to a Fund in a manner intended
to comply with the Code and applicable regulations and will make moneys
available for withdrawal at appropriate times and in sufficient amounts to
enable a Fund to satisfy the tax distribution requirements that apply to the
Fund and that must be satisfied in order to avoid federal income and/or excise
taxes on the Fund. For purposes of applying the requirements of the Code
regarding qualification as a RIC, each Fund will be deemed (i) to own its
proportionate share of each of the assets of the corresponding Portfolio and
(ii) to be entitled to the gross income of that Portfolio attributable to such
share.
In order to avoid incurring a federal excise tax obligation, the Code
requires that each Fund distribute (or be deemed to have distributed) by
December 31 of each calendar year at least 98% of its ordinary income (not
including tax-exempt income, if applicable) for such year, at least 98% of its
capital gain net income (which is the excess of its realized capital gains
over its realized capital losses), generally computed on the basis of the one-
year period ending on October 31 of such year, after reduction by (i) any
available capital loss carryforwards and (ii) 100% of any income from the
prior year (as previously computed) that was not paid out during such year and
on which the Fund paid no federal income tax. Under current law, provided that
a Fund qualifies as a RIC and a Portfolio is treated as a partnership for
Massachusetts and federal tax purposes, neither the Fund nor the Portfolio
should be liable for any income, corporate excise or franchise tax in the
Commonwealth of Massachusetts.
For federal income tax purposes each Portfolio will be treated as a
partnership that is not a "publicly traded partnership". As a result, it will
not be subject to federal income tax; instead, the corresponding Fund, as an
investor in the Portfolio, will be required to take into account in
determining its federal income tax liability its share of the Portfolio's
income, gains, losses, deductions, and credits, without regard to whether it
has received any cash distributions from the Portfolio. Because the Fund will
be deemed to own a proportionate share of the Portfolio's assets, and to earn
a proportionate share of the Portfolio's income, for purposes of determining
whether the Fund satisfies the requirements to qualify as a RIC, the Portfolio
intends to conduct its operations so that the Fund will be able to satisfy all
those requirements.
A Portfolio's transactions in options, futures contracts, forward
contracts and certain other transactions involving foreign exchange gain or
loss will be subject to special tax rules, the effect of which may be to
accelerate income to the Portfolio, defer Portfolio losses, cause adjustments
in the holding periods of Portfolio securities, convert capital gain into
ordinary income and convert short-term capital losses into long-term capital
losses. For example, the tax treatment of many types of options, futures
contracts and forward contracts entered into by a Portfolio will be governed
by Section 1256 of the Code. Absent a tax election for "mixed straddles" (see
below), each such position held by the Portfolio on the last business day of
each taxable year will be marked to market (i.e., treated as if it were closed
out on such day), and any resulting gain or loss, except for certain currency-
related positions, will generally be treated as 60% long-term and 40% short-
term capital gain or loss, with subsequent adjustments made to any gain or
loss realized upon an actual disposition of such positions. When the Portfolio
holds an option or contract governed by Section 1256 which substantially
diminishes the Fund's risk of loss with respect to another position of the
Portfolio not governed by Section 1256 (as might occur in some hedging
transactions), this combination of positions could be a "mixed straddle" which
is generally subject to special tax rules requiring deferral of losses and
other adjustments in addition to being subject in part to Section 1256. A
Portfolio may make certain tax elections for its "mixed straddles" which could
alter certain effects of these rules.
Foreign exchange gains and losses realized by a Portfolio and allocated to
a Fund in connection with the Portfolio's investments in foreign securities
and certain options, futures or forward contracts or foreign currency may be
treated as ordinary income and losses under special tax rules. Certain
options, futures or forward contracts of the Portfolio may be required to be
marked to market (i.e., treated as if closed out) on the last day of each
taxable year, and any gain or loss realized with respect to these contracts
may be required to be treated as 60% long-term and 40% short-term gain or
loss. Positions of the Portfolio in securities and offsetting options, futures
or forward contracts may be treated as "straddles" and be subject to other
special rules that may, upon allocation of the Portfolio's income, gain or
loss to the Fund, affect the amount, timing and character of the Fund's
distributions to shareholders. Certain uses of foreign currency and foreign
currency derivatives such as options, futures, forward contracts and swaps and
investment by the Portfolio in certain "passive foreign investment companies"
may be limited or a tax election may be made, if available, in order to
preserve the Fund's qualification as a RIC or avoid imposition of a tax on the
Fund.
Each Portfolio anticipates that it will be subject to foreign taxes on its
income (including, in some cases, capital gains) from foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate
such taxes. If more than 50% of a Fund's total assets, taking into account its
allocable share of a Portfolio's total assets, at the close of any taxable
year of the Fund consists of stock or securities of foreign corporations, the
Fund may file an election with the Internal Revenue Service pursuant to which
shareholders of the Fund will be required to (i) include in ordinary gross
income (in addition to taxable dividends actually received) their pro rata
shares of foreign income taxes paid by the Portfolio and allocated to the Fund
even though not actually received, and (ii) treat such respective pro rata
portions as foreign income taxes paid by them. Shareholders may then deduct
such pro rata portions of foreign income taxes in computing their taxable
incomes, or, alternatively, use them as foreign tax credits, subject to
applicable limitations, against their U.S. income taxes. Shareholders who do
not itemize deductions for federal income tax purposes will not, however, be
able to deduct their pro rata portion of foreign taxes deemed paid by the
Fund, although such shareholders will be required to include their shares of
such taxes in gross income. Shareholders who claim a foreign tax credit for
such foreign taxes may be required to treat a portion of dividends received
from the Fund as separate category income for purposes of computing the
limitations on the foreign tax credit. Tax-exempt shareholders will ordinarily
not benefit from this election. Each year that the Fund files the election
described above, its shareholders will be notified of the amount of (i) each
shareholder's pro rata share of foreign income taxes paid by the Portfolio and
allocated to the Fund and (ii) the portion of Fund dividends which represents
income from each foreign country. If the Fund does not make this election, it
may deduct its allocated share of such taxes in computing its investment
company taxable income.
A Portfolio's investments, if any, in securities issued with original
issue discount (possibly including certain asset-related securities) or
securities acquired at a market discount (if an election is made to include
accrued market discount in current income) will cause it to realize income
prior to the receipt of cash payments with respect to these securities. In
order to enable the corresponding Fund to distribute its proprotionate share
of this income and avoid a tax payable by the Fund, the Portfolio may be
required to liquidate portfolio securities that it might otherwise have
continued to hold in order to generate cash that the Fund may withdraw from
the Portfolio for subsequent distribution to Fund shareholders.
Investment in gold, platinum and silver bullion and coins may cause an
investment company to fail certain income or asset tests that must be
satisfied to qualify as a regulated investment company under the Code.
Accordingly, BMR will endeavor to manage the Developing Resources Portfolio's
assets so that: (1) income and gains derived from investments in bullion and
coins (and any other "non-qualified" income) will not exceed 10% of the
Developing Resources Funds' gross annual income; and (2) less than 50% of the
value of the Fund's total assets as of the close of each quarter of its
taxable year will be invested in bullion and coins (and any other "non-
qualified assets"). If the Developing Resources Fund did not qualify for
taxation as a RIC, it would be required to pay federal income tax on its net
income, which would reduce the amount available for distribution to
shareholders.
The portion of distributions made by a Fund which are derived from
dividends received by the Portfolio from U.S. domestic corporations and
allocated to the Fund may qualify for the dividends-received deduction for
corporations. The dividends-received deduction is reduced to the extent the
shares of the Fund with respect to which the dividends are received are
treated as debt-financed under the federal income tax law and is eliminated if
the shares are deemed to have been held for less than a minimum period,
generally 46 days. Receipt of certain distributions qualifying for the
deduction may result in reduction of the tax basis of the corporate
shareholder's shares. Distributions eligible for the dividends-received
deduction may give rise to (or increase) an alternative minimum tax for
corporations depending upon the shareholder's particular tax situation.
Any loss realized upon the redemption or exchange of shares with a tax
holding period of 6 months or less will be treated as a long-term capital loss
to the extent of any distribution of net long-term capital gains with respect
to such shares. All or a portion of a loss realized upon a redemption or other
disposition of Fund shares may be disallowed under "wash sale" rules if other
Fund shares are purchased (whether through reinvestment of dividends or
otherwise) within the 30 days before or after such disposition. Any disallowed
loss will result in an adjustment to the shareholder's tax basis in some or
all of the other shares acquired.
Amounts paid by a Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the Internal Revenue Service
(the "IRS"), as well as shareholders with respect to whom the Fund has
received notification from the IRS or a broker, may be subject to "backup"
withholding of federal income tax arising from the Fund's dividends and other
distributions as well as the proceeds of redemption transactions (including
repurchases and exchanges), at a rate of 31%. An individual's TIN is generally
his or her social security number.
Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on a Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless
the tax is reduced or eliminated by an applicable tax convention treaty.
Distributions from the excess of a Fund's net long-term capital gain over its
net short-term capital loss received by such shareholders and any gain from
the sale or other disposition of shares of the Fund generally will not be
subject to U.S. federal income taxation, provided that non-resident alien
status has been certified by the shareholder. Different U.S. tax consequences
may arise if: (i) the shareholder is engaged in a trade or business in the
United States; (ii) the shareholder is present in the United States for a
sufficient period of time during a taxable year to be treated as a U.S.
resident, (generally 180 days or more); or (iii) the shareholder fails to
provide any required certifications regarding its status as a non-resident
alien investor. Foreign shareholders should consult their tax advisers
regarding the U.S. and foreign tax consequences of an investment in the Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as retirement plans, tax-exempt
entities, insurance companies and financial institutions. Shareholders should
consult their own tax advisers with respect to special tax rules that may
apply in their particular situations, as well as the state, local and, when
applicable, foreign tax consequences of investing in a Fund.
PRINCIPAL UNDERWRITER
CLASS A SHARES. Class A shares of a Fund may be continuously purchased at
the public offering price through Authorized Firms which have agreements with
the Principal Underwriter. The Trust reserves the right to suspend or limit
the offering of its shares to the public at any time. The public offering
price is the net asset value next computed after receipt of the order, plus,
where applicable, a variable percentage (sales charge) depending upon the
amount of purchase as indicated by the sales charge table set forth in the
Prospectus (see "How to Buy Shares"). Such table is applicable to purchases of
a Fund alone or in combination with purchases of certain other funds offered
by the Principal Underwriter, made at a single time by (i) an individual, or
an individual, his spouse and their children under the age of twenty-one,
purchasing shares for his or their own account, and (ii) a trustee or other
fiduciary purchasing shares for a single trust estate or a single fiduciary
account.
The table is also presently applicable to (1) purchases of Class A shares,
alone or in combination with purchases of any of the other funds offered by
the Principal Underwriter, through one dealer aggregating $50,000 or more made
by any of the persons enumerated above within a thirteen-month period starting
with the first purchase pursuant to a written Statement of Intention, in the
form provided by the Principal Underwriter, which includes provisions for a
price adjustment depending upon the amount actually purchased within such
period (a purchase not made pursuant to such Statement may be included
thereunder if the Statement is filed within 90 days of such purchase); or (2)
purchases of Class A shares pursuant to the Right of Accumulation and declared
as such at the time of purchase.
Subject to the applicable provisions of the 1940 Act, the Trust may issue
Class A shares at net asset value in the event that an investment company
(whether a regulated or private investment company or a personal holding
company) is merged or consolidated with or acquired by the Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares
for the assets of such investment company. Class A shares may be sold at net
asset value to any officer, director, trustee, general partner or employee of
the Trust, a Portfolio or any investment company for which Eaton Vance or BMR
acts as investment adviser, any investment advisory, agency, custodial or
trust account managed or administered by Eaton Vance or by any parent,
subsidiary or other affiliate of Eaton Vance, or any officer, director or
employee of any parent, subsidiary or other affiliate of Eaton Vance. The
terms "officer," "director," "trustee," "general partner" or "employee" as
used in this paragraph include any such person's spouse and minor children,
and also retired officers, directors, trustees, general partners and employees
and their spouses and minor children. Class A shares may also be sold at net
asset value to registered representatives and employees of Authorized Firms
and to the spouses and children under the age of 21 and beneficial accounts of
such persons.
The Principal Underwriter acts as principal in selling Class A shares
under a Distribution Agreement with the Trust. The expenses of printing copies
of prospectuses used to offer shares to Authorized Firms or investors and
other selling literature and of advertising are borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of a Fund and its Class A shares
under federal and state securities laws are borne by the Class. The
Distribution Agreement is renewable annually by the Board of Trustees of the
Trust (including a majority of the noninterested Trustees), may be terminated
on six months' notice by either party and is automatically terminated upon
assignment. The Principal Underwriter distributes Class A shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold. The Principal Underwriter allows Authorized Firms discounts
from the applicable public offering price which are alike for all Authorized
Firms. The Principal Underwriter may allow, upon notice to all Authorized
Firms with whom it has agreements, discounts up to the full sales charge
during the periods specified in the notice. During periods when the discount
includes the full sales charge, such Authorized Firms may be deemed to be
underwriters as that term is defined in the Securities Act of 1933.
CLASS B AND CLASS C SHARES. Under a Distribution Agreement, the Principal
Underwriter acts as principal in selling Class B and Class C shares. The
expenses of printing copies of prospectuses used to offer shares to Authorized
Firms or investors and other selling literature and of advertising is borne by
the Principal Underwriter. The fees and expenses of qualifying and registering
and maintaining qualifications and registrations of a Fund and its Class B and
Class C shares under federal and state securities laws are borne by the Class.
In addition, each Class B and Class C makes payments to the Principal
Underwriter pursuant to a Distribution Plan as described in the Prospectus;
the provisions of the plan relating to such payments are included in the
Distribution Agreement. The Distribution Agreement is renewable annually by
the Trust's Board of Trustees (including a majority of the noninterested
Trustees who have no direct or indirect financial interest in the operation of
the Distribution Plan or the Distribution Agreement), may be terminated on
sixty days' notice either by such Trustees or by vote of a majority of the
outstanding Class B and Class C shares or on six months' notice by the
Principal Underwriter and is automatically terminated upon assignment. The
Principal Underwriter distributes Class B shares on a "best efforts" basis
under which it is required to take and pay for only such shares as may be
sold. The Trust has authorized the Principal Underwriter to act as its agent
in repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the Principal Underwriter. The Principal Underwriter estimates that
the expenses incurred by it in acting as repurchase agent for the Trust will
exceed the amounts paid therefor. For the amount paid by the Trust to the
Principal Underwriter for acting as repurchase agent, see Appendix A and
Appendix B.
SERVICE PLAN -- CLASS A SHARES
The Trust on behalf of its Developing Resources Fund Class A shares has
adopted a Service Plan (the "Plan") designed to meet the service fee
requirements of the sales charge rule of the National Association of
Securities Dealers, Inc. (the "NASD"). (Management believes service fee
payments are not distribution expenses governed by Rule 12b-1 under the 1940
Act, but has chosen to have the Plan approved as if that Rule were
applicable.) The following supplements the discussion of the Plan contained in
the Prospectus.
The Plan remains in effect from year to year for so long as such
continuance is approved by a vote of both a majority of (i) the noninterested
Trustees who have no direct or indirect financial interest in the operation of
the Plan or any agreements related to it (the "Plan Trustees") and (ii) all of
the Trustees then in office, cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan. The Plan may be terminated any time by
vote of the Plan Trustees or by a vote of a majority of the outstanding Class
A shares of Developing Resources Fund. The Plan has been approved by the Board
of Trustees of the Trust, including the Plan Trustees.
The Plan requires quarterly Trustee review of a written report of the
amount expended under the Plan and the purposes for which such expenditures
were made. The Plan may not be amended to increase materially the payments
described herein without approval of the shareholders of Class A shares, and
all material amendments of the Plan must also be approved by the Trustees of
the Trust in the manner described above. So long as the Plan is in effect, the
selection and nomination of the noninterested Trustees shall be committed to
the discretion of such Trustees. The Trustees have determined that in their
judgment there is a reasonable likelihood that the Plan will benefit the
Developing Resources Fund and its Class A shareholders.
DISTRIBUTION PLAN -- CLASS A SHARES
As described in the Prospectus, in addition to the fees and expenses
described herein, the Trust on behalf of the Information Age and Health
Sciences Funds Class A shares finances distribution activities and bears
expenses associated with the distribution of shares and the provision of
certain personal and account maintenance services to shareholders pursuant to
a distribution plan (the "Plans") designed to meet the requirements of Rule
12b-1 under the 1940 Act.
The Plans remain in effect from year to year provided such continuance is
approved at least annually by a vote of both a majority of (i) the
noninterested Trustees of the Trust who have no direct or indirect financial
interest in the operation of the Plans or any agreements related to the Plans
(the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in office. The
Plans may be terminated at any time by vote of a majority of the Rule 12b-1
Trustees or by vote of a majority of the outstanding Class A shares of a Fund.
Each Plan requires quarterly Trustee review of a written report of the amount
expended under the Plan and the purposes for which such expenditures were
made. The Plans may not be amended to increase materially the payments
described therein without approval of the affected shareholders of Class A
shares and the Trustees. So long as the Plans are in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion
of such Trustees. The Trustees have determined that in their judgment there is
a reasonable likelihood that the Plans will benefit the Funds and their
shareholders.
Each Plan is intended to compensate the Principal Underwriter for its
distribution services to a Fund by paying the Principal Underwriter monthly
distribution fees in connection with the sale of Class A shares. The quarterly
service fee paid by the Class A shares of the Information Age Fund under its
Plan is intended to compensate the Principal Underwriter for its personal and
account maintenance services and for the payment by the Principal Underwriter
of service fees to Authorized Firms.
DISTRIBUTION PLANS -- CLASS B AND CLASS C SHARES
The Trust has adopted Distribution Plans (the "Plans") on behalf of its
Class B and Class C shares designed to meet the requirements of Rule 12b-1
under the 1940 Act and the sales charge rule of the NASD. The purpose of each
Plan, is to compensate the Principal Underwriter for its distribution services
and facilities provided with respect to Class B and Class C shares.
The Plans provide that the Fund will pay sales commissions and
distribution fees to the Principal Underwriter only after and as a result of
the sale of Class B or Class C shares of the Fund. On each sale of Fund shares
(excluding reinvestment of distributions) the Fund will pay the Principal
Underwriter amounts representing (i) sales commissions equal to 5% of Class B
sales and 6.25% of Class C sales of the amount received by the Fund for each
share sold and (ii) distribution fees calculated by applying the rate of 1%
over the prime rate then reported in The Wall Street Journal to the
outstanding balance of uncovered distribution charges (as described below) of
the Principal Underwriter.
The amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be
accrued on such day as a liability of the Funds respective Class and will
accordingly reduce the Class' net assets upon such accrual, all in accordance
with generally accepted accounting principles. The amount payable on each day
is limited to 1/365 of .75% of a Class's net assets on such day. The level of
a Class' net assets changes each day and depends upon the amount of sales and
redemptions of shares, the changes in the value of the investments held by the
Portfolio, the expenses of the Class, Fund and the Portfolio accrued and
allocated to the Fund and Class on such day, income on portfolio investments
of the Portfolio accrued and allocated to the Fund on such day, and any
dividends and distributions declared on Fund shares. The Trust does not accrue
possible future payments as a liability of a Class or reduce a Class' current
net assets in respect of unknown amounts which may become payable under the
Plans in the future because the standards for accrual of such a liability
under accounting principles have not been satisfied.
The Plans provide that the Class will receive all CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding uncovered distribution charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Trust to the Principal
Underwriter whenever there exist uncovered distribution charges.
In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions
and distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled
to be paid under the Plans since their inception. Payments theretofore paid or
payable under the Plans by the Trust to the Principal Underwriter and CDSCs
theretofore paid or payable to the Principal Underwriter will be subtracted
from such distribution charges; if the result of such subtraction is positive,
a distribution fee (computed at 1% over the prime rate then reported in The
Wall Street Journal) will be computed on such amount and added thereto, with
the resulting sum constituting the amount of outstanding uncovered
distribution charges with respect to such day. The amount of outstanding
uncovered distribution charges of the Principal Underwriter calculated on any
day does not constitute a liability recorded on the financial statements of
the Fund.
The amount of uncovered distribution charges of the Principal Underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of shares, the nature of such sales (i.e., whether
they result from exchange transactions, reinvestments or from cash sales
through Authorized Firms), the level and timing of redemptions of shares upon
which a CDSC will be imposed, the level and timing of redemptions of shares
upon which no CDSC will be imposed (including redemptions of shares pursuant
to the exchange privilege which result in a reduction of uncovered
distribution charges), changes in the level of the net assets of the Class,
and changes in the interest rate used in the calculation of the distribution
fee under the Plans. Periods with a high level of sales of Class shares
accompanied by a low level of early redemptions of Class shares resulting in
the imposition of CDSCs will tend to increase the time during which there will
exist uncovered distribution charges of the Principal Underwriter.
Currently, payments of sales commissions and distribution fees and of
service fees may equal, 1% of a Class's average daily net assets per annum.
For actual payments made and the outstanding uncovered distribution charges of
the Principal Underwriter, see Appendix B. The Trust believes that the
combined rate of all these payments may be higher than the rate of payments
made under distribution plans adopted by other investment companies pursuant
to Rule 12b-1. Although the Principal Underwriter will use its own funds
(which may be borrowed from banks) to pay sales commissions and service fees
for Class C sales and sales commissions for Class B sales at the time of sale,
it is anticipated that the Eaton Vance organization will profit by reason of
the operation of the Plans through an increase in the Fund's assets (thereby
increasing the advisory fee payable to BMR by the Portfolio) resulting from
sale of Fund shares and through the amounts paid to the Principal Underwriter,
including CDSCs, pursuant to the Plans. The Eaton Vance organization may be
considered to have realized a profit under the Plans if at any point in time
the aggregate amounts theretofore received by the Principal Underwriter
pursuant to the Plans and from CDSCs have exceeded the total expenses
theretofore incurred by such organization in distributing Class B and Class C
shares of the Fund. Total expenses for this purpose will include an allocable
portion of the overhead costs of such organization and its branch offices,
which costs will include without limitation leasing expense, depreciation of
building and equipment, utilities, communication and postage expense,
compensation and benefits of personnel, travel and promotional expense,
stationery and supplies, literature and sales aids, interest expense, data
processing fees, consulting and temporary help costs, insurance, taxes other
than income taxes, legal and auditing expense and other miscellaneous overhead
items. Overhead is calculated and allocated for such purpose by the Eaton
Vance organization in a manner deemed equitable to the Trust.
The Plans continue in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of
(i) the noninterested Trustees of the Trust who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to
the Plan (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in
office, and the Distribution Agreement contains a similar provision. The Plans
and Distribution Agreements may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by a vote of a majority of the
outstanding voting securities of the applicable Class. The Plans require
quarterly Trustee review of a written report of the amount expended under the
Plans and the purposes for which such expenditures were made. The Plans may
not be amended to increase materially the payments described therein without
approval of the shareholders of the affected Class and the Trustees. So long
as the Plans are in effect, the selection and nomination of the noninterested
Trustees shall be committed to the discretion of such Trustees.
The Trustees of the Trust believe that the Plans will be a significant
factor in the expected growth of the Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its Class B and Class C shareholders.
Payments for sales commissions and distribution fees made to the Principal
Underwriter under the Plans will compensate the Principal Underwriter for its
services and expenses in distributing Class B and Class C shares of the Fund.
Service fee payments made to the Principal Underwriter and Authorized Firms
under the Plans provide incentives to provide continuing personal services to
investors and the maintenance of shareholder accounts. By providing
incentives to the Principal Underwriter and Authorized Firms, the Plans are
expected to result in the maintenance of, and possible future growth in, the
assets of the Fund. Based on the foregoing and other relevant factors, the
Trustees of the Trust have determined that in their judgment there is a
reasonable likelihood that the Plan will benefit the Fund and its Class B and
Class C shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions of
the Portfolios, including the selection of the market and the broker-dealer
firm, are made by an Adviser.
An Adviser places the portfolio security transactions of a Portfolio and
of all other accounts managed by it for execution with many broker-dealer
firms. An Adviser uses its best efforts to obtain execution of portfolio
transactions at prices which are advantageous to the relevant Portfolio and
(when a disclosed commission is being charged) at reasonably competitive
commission rates. In seeking such execution, an Adviser will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the size and type of
the transaction, the general execution and operational capabilities of the
broker-dealer, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition
of the broker-dealer, the value and quality of the services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission
or spread, if any. Transactions on stock exchanges and other agency
transactions involve the payment by a Portfolio of negotiated brokerage
commissions. Such commissions vary among different broker-dealer firms, and a
particular broker-dealer may charge different commissions according to such
factors as the difficulty and size of the transaction and the volume of
business done with such broker-dealer. Transactions in foreign securities
usually involve the payment of fixed brokerage commissions, which are
generally higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets,
but the price paid or received by a Portfolio usually includes an undisclosed
dealer markup or markdown. In an underwritten offering, the price paid by a
Portfolio often includes a disclosed fixed commission or discount retained by
the underwriter or dealer. Although commissions paid on portfolio security
transactions will, in the judgment of an Adviser, be reasonable in relation to
the value of the services provided, commissions exceeding those which another
firm might charge may be paid to broker-dealers who were selected to execute
transactions on behalf of the Portfolios and an Adviser's other clients for
providing brokerage and research services to an Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of a Portfolio
may receive a commission which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
an Adviser determines in good faith that such compensation was reasonable in
relation to the value of the brokerage and research services provided. This
determination may be made on the basis of either that particular transaction
or on the basis of overall responsibilities which an Adviser and its
affiliates have for accounts over which they exercise investment discretion.
In making any such determination, an Adviser will not attempt to place a
specific dollar value on the brokerage and research services provided or to
determine what portion of the commission should be related to such services.
Brokerage and research services may include advice as to the value of
securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the
performance of accounts; effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement) and the
"Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealer
firms which execute portfolio transactions for the clients of such advisers
and from third parties with which such broker-dealers have arrangements.
Consistent with this practice, an Adviser receives Research Services from many
broker-dealer firms with which an Adviser places the portfolio transactions of
a Portfolio and from third parties with which these broker-dealers have
arrangements. These Research Services include such matters as general economic
and market reviews, industry and company reviews, evaluations of securities
and portfolio strategies and transactions, recommendations as to the purchase
and sale of securities and other portfolio transactions, financial, industry
and trade publications, news and information services, pricing and quotation
equipment and services, and research oriented computer hardware, software,
data bases and services. Any particular Research Service obtained through a
broker-dealer may be used by an Adviser in connection with client accounts
other than those accounts which pay commissions to such broker-dealer. Any
such Research Service may be broadly useful and of value to an Adviser in
rendering investment advisory services to all or a significant portion of its
clients, or may be relevant and useful for the management of only one client's
account or of a few clients' accounts, or may be useful for the management of
merely a segment of certain clients' accounts, regardless of whether any such
account or accounts paid commissions to the broker-dealer through which such
Research Service was obtained. The advisory fee paid by each Portfolio is not
reduced because an Adviser receives such Research Services. An Adviser
evaluates the nature and quality of the various Research Services obtained
through broker-dealer firms and attempts to allocate sufficient commissions to
such firms to ensure the continued receipt of Research Services which the
Adviser believes are useful or of value to it in rendering investment advisory
services to its clients.
Subject to the requirement that an Adviser shall use its best efforts to
seek to execute portfolio security transactions at advantageous prices and at
reasonably competitive commission rates or spreads, an Adviser is authorized
to consider as a factor in the selection of any broker-dealer firm with whom
Portfolio orders may be placed the fact that such firm has sold or is selling
shares of the Funds or of other investment companies sponsored by Eaton Vance.
This policy is not inconsistent with a rule of the NASD, which rule provides
that no firm which is a member of the NASD shall favor or disfavor the
distribution of shares of any particular investment company or group of
investment companies on the basis of brokerage commissions received or
expected by such firm from any source.
Securities considered as investments for the Portfolios may also be
appropriate for other investment accounts managed by an Adviser or its
affiliates. Whenever decisions are made to buy or sell securities by a
Portfolio and one or more of such other accounts simultaneously, an Adviser
will allocate the security transactions (including "hot" issues) in a manner
which it believes to be equitable under the circumstances. As a result of such
allocations, there may be instances where a Portfolio will not participate in
a transaction that is allocated among other accounts. If an aggregated order
cannot be filled completely, allocations will generally be made on a pro rata
basis. An order may not be allocated on a pro rata basis where, for example:
(i) consideration is given to portfolio managers who have been instrumental in
developing or negotiating a particular investment; (ii) consideration is given
to an account with specialized investment policies that coincide with the
particulars of a specific investment; (iii) pro rata allocation would result
in odd-lot or de minimis amounts being allocated to a portfolio or other
client; or (iv) where the Adviser reasonably determines that departure from a
pro rata allocation is advisable. While these aggregation and allocation
policies could have a detrimental effect on the price or amount of the
securities available to the Portfolio from time to time, it is the opinion of
the Trustees of the Trust and the Portfolios that the benefits from an
Adviser's organization outweigh any disadvantage that may arise from exposure
to simultaneous transactions.
For the period from the Information Age Portfolio's start of business,
September 18, 1995, to August 31, 1996, the Portfolio paid brokerage
commission of $241,041 with respect to portfolio transactions. Of this amount,
approximately $211,697 was paid in respect of portfolio security transactions
aggregating approximately $64,655,820 to firms which provided some Research
Services to the Adviser's organization (although many such firms may have been
selected in any particular transaction primarily because of their execution
capabilities).
OTHER INFORMATION
The Trust is a Massachusetts business trust established in 1989 as the
successor to Eaton Vance Growth Fund, Inc., a Massachusetts corporation. On
August 18, 1992, the Trust changed its name from Eaton Vance Growth Fund to
Eaton Vance Growth Trust. The Funds were reorganized as Class A shares
(formerly EV Traditional Information Age Fund, EV Traditional Worldwide
Developing Resources Fund and EV Traditional Worldwide Health Sciences Fund,
Inc.), Class B shares (formerly EV Marathon Information Age Fund, EV Marathon
Worldwide Developing Resources Fund and EV Marathon Worldwide Health Sciences
Fund) and Class C shares (formerly EV Classic Information Age Fund) of Eaton
Vance Growth Trust on September 1, 1997, so information herein prior to such
date is for the Funds when they were separate series of the Trust (or a
separate corporation) and before they became multiple-class funds. Eaton
Vance, pursuant to its agreement with the Trust, controls the use of the words
"Eaton Vance" or "EV" in the Fund's name and may use the words "Eaton Vance"
and "EV" in other connections and for other purposes.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent
of shareholders to change the name of the Trust or any series or to make such
other changes (such as reclassifying series or classes of shares or
restructuring the Trust) as do not have a materially adverse effect on the
rights or interests of shareholders or if they deem it necessary to conform
the Declaration to the requirements of federal laws or regulations. The
Trust's By-Laws provide that the Trust will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with any
litigation or proceeding in which they may be involved because of their
offices with the Trust. However, no indemnification will be provided to any
Trustee or officer for any liability to the Trust or its shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such
liability has been imposed. The Trust's Declaration of Trust contains an
express disclaimer of liability on the part of the Fund shareholders, and the
Trust's By-Laws provide that the Trust shall assume the defense on behalf of
any Fund shareholders. (The Declaration also contains provisions limiting the
liability of a series or class to that series or class.) Moreover, the Trust's
By-Laws also provide for indemnification out of the property of the Fund of
any shareholder held personally liable solely by reason of being or having
been a shareholder for all loss or expense arising from such liability. The
assets of the Fund are readily marketable and will ordinarily substantially
exceed its liabilities. In light of the nature of the Fund's business and the
nature of its assets, management believes that the possibility of the Fund's
liability exceeding its assets, and therefore the shareholders's risk of
personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will
call a shareholder's meeting for the election of Trustees. Except for the
foregoing circumstances and unless removed by action of the shareholders in
accordance with the Trust's By-Laws, the Trustees shall continue to hold
office and may appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him
from that office either by a written declaration filed with the Trust's
custodian or by votes cast at a meeting called for that purpose. The By-Laws
further provide that under certain circumstances the shareholders may call a
meeting to remove a Trustee and that the Trust is required to provide
assistance in communicating with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action
of the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with
the Portfolio's custodian or by votes cast at a meeting called for that
purpose. The Declaration of Trust further provides that under certain
circumstances the investors may call a meeting to remove a Trustee and that
the Portfolio is required to provide assistance in communicating with
investors about such a meeting.
The Portfolio's Declaration of Trust provides that the Fund and other
entities permitted to invest in the Portfolio (e.g., other U.S. and foreign
investment companies and common and commingled trust funds) will each be
liable for all obligations of the Portfolio. However, the risk of the Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio
itself is unable to meet its obligations. Accordingly, the Trustees of the
Trust believe that neither the Fund nor its shareholders will be adversely
affected by reason of the Fund investing in the Portfolio.
The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any
emergency as determined by the Commission which makes it impracticable for the
Portfolio to dispose of its securities or value its assets, or during any
other period permitted by order of the Commission for the protection of
investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Developing Resources Fund and
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts are
the independent accountants of the Information Age Fund, providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Commission. Deloitte & Touche, Grand
Cayman, Cayman Islands, British West Indies are the independent certified
public accountants of the Developing Resources Portfolio and Coopers & Lybrand
Chartered Accountants, Toronto, Canada, are the independent accountants for
the Information Age Portfolio.
For the fiscal year ended August 31, 1996 and the audit of the Health
Sciences Fund for such year, Tait, Weller & Baker, Two Penn Center Plaza,
Suite 700, Philadelphia, Pennsylvania, had served as the Health Sciences
Fund's independent accountants. For future periods, Coopers & Lybrand L.L.P.
will be the independent accountants of the Health Sciences Fund. Coopers &
Lybrand Chartered Accountants are the independent accountants of the Health
Sciences Portfolio.
FINANCIAL STATEMENTS
The audited financial statements of and the auditors' reports for the
Funds and the Information Age Portfolio appear in each Fund's most recent
annual report to shareholders, the unaudited financial statements of the Funds
and the Portfolios appear in each Fund's most recent semiannual report to
shareholders, both of which are incorporated by reference into this SAI. A
copy of the Funds' most recent semiannual and annual report accompanies this
SAI.
Registrant incorporates by reference the audited financial information for
the fiscal year ended August 31, 1996 and the unaudited financial information
for the six-months ended February 28, 1997, for the Funds and Portfolios
listed below, all as previously filed electronically with the Commission:
Six Months Ended February 28, 1997
EV Marathon Information Age Fund
Information Age Portfolio
(Accession No. 0000950109-97-003557)
EV Marathon Worldwide Developing Resources Fund
Worldwide Developing Resources Portfolio
(Accession No. 0000950109-97-003402)
EV Traditional Worldwide Health Sciences Fund, Inc.
Worldwide Health Sciences Portfolio
(Accession No. 0000950156-97-000419)
Fiscal Year Ended August 31, 1996
EV Marathon Information Age Fund
Information Age Portfolio
(Accession No. 0000928816-96-000325)
EV Marathon Worldwide Developing Resources Fund
(Accession No. 0000950156-96-000833)
EV Traditional Worldwide Health Sciences Fund, Inc.
(Accession No. 0000928816-96-000323)
WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
MARCH 17, 1997
ASSETS:
Cash ....................................................... $100,020
Deferred organization expenses ............................. 7,000
--------
Total assets ........................................... $107,020
LIABILITIES:
Accrued organization expenses .............................. 7,000
--------
NET ASSETS ..................................................... $100,020
========
NOTES:
(1) Worldwide Developing Resources Portfolio (the "Portfolio") was organized
as a New York Trust on February 14, 1997 and has been inactive since that
date, except for matters relating to its organization and registration as
an investment company under the Investment Company Act of 1940 and the
sale of interests therein at the purchase price of $100,000 to EV Marathon
Worldwide Developing Resources Fund and the sale of interests therein at
the purchase price of $10 to Eaton Vance Management and $10 to Boston
Management and Research (the "Initial Interests").
(2) Organization expenses are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years, commencing on
the effective date of the Portfolio's initial offering of its interests.
The amount paid by the Portfolio on any withdrawal by the holders of the
Initial Interests of any of the respective Initial Interests will be
reduced by a portion of any unamortized organization expenses, determined
by the proportion of the amount of the Initial Interests withdrawn to the
Initial Interests then outstanding.
(3) At 4:00 p.m., New York City time, on each business day of the Portfolio,
the value of an investor's interest in the Portfolio is equal to the
product of (i) the aggregate net asset value of the Portfolio multiplied
by (ii) the percentage representing that investor's share of the aggregate
interest in the Portfolio effective for that day.
REPORT OF INDEPENDENT AUDITORS
To the Trustees and Investors of
Worldwide Developing Resources Portfolio:
We have audited the accompanying statement of assets and liabilities of
Worldwide Developing Resources Portfolio (a New York Trust) as of March 17,
1997. This financial statement is the responsibility of the Portfolio's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Worldwide Developing
Resources Portfolio as of March 17, 1997, in conformity with generally
accepted accounting principles.
Deloitte & Touche
Grand Cayman, Cayman Islands
British West Indies
March 18, 1997
WORLDWIDE HEALTH SCIENCES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996
ASSETS:
Cash ....................................................... $100,020
Deferred organization expenses ............................. 12,000
--------
Total assets ........................................... $112,020
LIABILITIES:
Accrued organization expenses .............................. 12,000
--------
NET ASSETS ..................................................... $100,020
========
NOTES:
(1) Worldwide Health Sciences Portfolio (the "Portfolio") was organized as a
New York Trust on March 26, 1996 and has been inactive since that date,
except for matters relating to its organization and registration as an
investment company under the Investment Company Act of 1940 and the sale
of interests therein at the purchase price of $100,000 to Boston
Management & Research, $10 to Eaton Vance Management and $10 to EV
Marathon Worldwide Health Sciences Fund (the "Initial Interests").
(2) Organization expenses are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years, commencing on
the effective date of the Portfolio's initial offering of its interests.
The amount paid by the Portfolio on any withdrawal by the holders of the
Initial Interests of any of the respective Initial Interests will be
reduced by a portion of any unamortized organization expenses, determined
by the proportion of the amount of the Initial Interests withdrawn to the
Initial Interests then outstanding.
(3) At 4:00 p.m., New York City time, on each business day of the Portfolio,
the value of an investor's interest in the Portfolio is equal to the
product of (i) the aggregate net asset value of the Portfolio multiplied
by (ii) the percentage representing that investor's share of the aggregate
interest in the Portfolio effective for that day.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of Worldwide Health Sciences Portfolio:
We have audited the accompanying statement of assets and liabilities of
Worldwide Health Sciences Portfolio (a New York Trust) as of August 31, 1996.
This financial statement is the responsibility of the Portfolio's management.
Our responsibility is to express an opinion on this financial statement based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Worldwide Health Sciences
Portfolio as of August 31, 1996, in conformity with generally accepted
accounting principles.
Coopers & Lybrand
Chartered Accountants
Toronto, Ontario
September 2, 1996
APPENDIX A
CLASS A SHARES
FEES AND EXPENSES -- HEALTH SCIENCES FUND
Through August 31, 1996, the Health Sciences Fund invested directly in
securities rather than investing in the Health Sciences Portfolio. In
addition, some current service providers and some fee rates differ from the
providers and rates in effect prior to August 31, 1996.
ADVISER
Prior to the Health Sciences Portfolio's start of business on September 1,
1996, the Health Sciences Fund paid advisory fees directly to M&I. During the
fiscal years ended August 31, 1996 and 1995, the Health Sciences Fund paid M&I
$350,234 and $138,826, respectively, in advisory fees. M&I received advisory
fees of $121,553 during the fiscal year ended August 31, 1994 and pursuant to
the expense limitation previously in effect, M&I reimbursed $16,868 during
such period.
MANAGER AND ADMINISTRATOR
The prior administrator (manager) of the Fund was paid $114,411 and
$58,707, respectively, for its services during the fiscal years ended August
31, 1996 and 1995.
DISTRIBUTION PLAN
Pursuant to the Distribution Plan in effect during the fiscal year ended
August 31, 1996, the Fund paid $90,449 in 12b-1 fees to the prior distributor.
The Distribution Plan relates to Class A shares only.
PRINCIPAL UNDERWRITER
No fees have been paid to date.
BROKERAGE
During the fiscal years ended August 31, 1996, 1995, and 1994, the Fund
paid $184,676, $29,541 and $40,651, respectively, in brokerage commissions.
PERFORMANCE INFORMATION -- ALL FUNDS
The tables below indicate the cumulative and average total return on a
hypothetical investment of $1,000 in a predecessor fund reorganized September
1, 1997 into Class A shares for the periods shown in each table. For the
Developing Resources Fund, the total for part of the period reflects the
Developing Resources Portfolio's total return (or that of its predecessor)
adjusted to reflect any applicable Fund sales charge. Total return for this
time period has not been adjusted to reflect the Developing Resources Fund's
distribution fees and/or service fees and certain other expenses. The Value of
Initial Investment reflects the deduction of the maximum sales charge of
5.75%. Past performance is not indicative of future results. Investment return
and principal value will fluctuate; shares, when redeemed, may be worth more
or less than their original cost. Information presented with two asterisks
(**) includes the effect of subsidizing expenses. Returns would have been
lower without subsidies.
VALUE OF A $1,000 INVESTMENT -- DEVELOPING RESOURCES FUND
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TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ------------------------ -------------------------
PERIOD DATE INVESTMENT ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------------------------------------- ----------- ------------ ----------- ----------- ----------- ------------ ---------
Life of the Fund** 10/21/87 $943.15 $3,067.87 225.28% 13.43% 206.79% 12.72%
5 Years Ended
2/28/97** 2/28/92 $942.95 $2,078.95 120.48% 17.13% 107.90% 15.76%
1 Year Ended
2/28/97 2/28/96 $942.42 $1,257.64 33.45% 33.45% 25.76% 25.76%
VALUE OF A $1,000 INVESTMENT -- HEALTH SCIENCES FUND
[Enlarge/Download Table]
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ------------------------ -------------------------
PERIOD** DATE INVESTMENT ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------------------------------------- ----------- ------------ ----------- ----------- ----------- ------------ ---------
10 Years Ended
2/28/97 2/28/87 $942.69 $3,961.28 320.21% 15.44% 296.13% 14.76%
5 Years Ended
2/28/97 2/29/92 $942.27 $2,275.86 141.53% 19.29% 127.59% 17.88%
1 Year Ended
2/28/97 2/28/96 $942.63 $1,130.23 19.90% 19.90% 13.02% 13.02%
VALUE OF A $1,000 INVESTMENT -- INFORMATION AGE FUND
[Enlarge/Download Table]
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ------------------------ -------------------------
PERIOD DATE INVESTMENT ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------------------------------------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Life of the Fund 9/18/95 $942.51 $1,141.51 21.11% 14.12% 14.15% 9.56%
1 Year Ended
2/28/97 2/28/96 $942.83 $1,065.21 12.98% 12.98% 6.52% 6.52%
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at July 31, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of Health
Sciences Class A and of Health Sciences Fund. As of July 31, 1997, Merrill
Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL and Charles Schwab & Co.
Inc., San Francisco, CA were the record owners of 6.3% and 5.2%, respectively,
of the Class A shares, which are held on behalf of their customers who are the
beneficial owners of such shares, and as to which they had voting power under
certain limited circumstances. To the knowledge of the Trust, no other person
owned of record or beneficially 5% or more of Health Sciences Fund's
outstanding Class A shares as of such date.
APPENDIX B
CLASS B SHARES
FEES AND EXPENSES -- DEVELOPING RESOURCES AND INFORMATION AGE FUND
ADVISER
Prior to the Developing Resources Portfolio's start of business on April
1, 1997, the Developing Resources Fund paid advisory fees directly to Eaton
Vance. As at August 31, 1996, the Developing Resources Fund had net assets of
$20,128,782. For the fiscal years ended August 31, 1996, 1995 and September
30, 1994, the Fund paid Eaton Vance advisory fees of $114,803, $92,809 and
$70,439, respectively (equivalent to 0.75% (annualized) of the Fund's average
daily net assets for each such period).
MANAGER
As of August 31, 1996, the Information Age Fund had net assets of
$21,800,478. For the period from the start of business, September 18, 1995, to
August 31, 1996, Eaton Vance earned management fees of $34,782 (equivalent to
0.25% (annualized) of the Fund's average daily net assets for such period).
DISTRIBUTION PLANS
Each Distribution Plan and Distribution Agreement remains in effect until
April 28, 1998 and may be continued as described under "Distribution Plan".
Pursuant to Rule 12b-1, the Plan has been approved by the relevant Fund's
shareholders and by the Board of Trustees of the Trust, as required by Rule
12b-1.
The following table shows, for the fiscal year ended August 31, 1996, (1)
sales commissions paid by the Principal Underwriter to Authorized Firms on
sales of Class B shares, (2) Fund (Class B) distribution payments to the
Principal Underwriter under the Plan, (3) CDSC payments to the Principal
Underwriter, (4) service fees on Class B shares paid or accrued under the
Plan, and (5) amount of service fees on Class B shares paid to Authorized
Firms (the balance of which being retained by the Principal Underwriter).
[Enlarge/Download Table]
DISTRIBUTION CDSC SERVICE
PAYMENTS TO PAYMENTS TO FEES TO
SALES THE PRINCIPAL THE PRINCIPAL SERVICE AUTHORIZED
CLASS B COMMISSIONS UNDERWRITER UNDERWRITER FEES FIRMS
----------- ------------- ------------- ------- ----------
Developing Resources ............ $148,206 $114,803 $109,300 $25,896 $25,392
Information Age ................. 742,461 104,346 41,000 0 0
PRINCIPAL UNDERWRITER
For the fiscal year ended August 31, 1996, each Fund paid the Principal
Underwriter for repurchase transactions handled by it $2.50 for each such
transaction which aggregated as follows: Developing Resources Fund and --
$587.50 and Information Age Fund -- $287.
PERFORMANCE INFORMATION -- ALL FUNDS
The tables below indicate the cumulative and average annual total return
on a hypothetical investment of $1,000 in Class B shares for the periods shown
in each table. For the Health Sciences Fund, the total for part of the period
reflects the Health Sciences Portfolio's total return (or that of its
predecessor) adjusted to reflect any applicable Fund sales charge. Total
return for this time period has not been adjusted to reflect the Health
Sciences Fund's distribution fees and/or service fees and certain other
expenses. Past performance is not indicative of future results. Investment
return and principal value will fluctuate; shares, when redeemed, may be worth
more or less than their original cost. Information presented with two
asterisks (**) includes the effect of subsidizing expenses. Return would have
been lower without subsidies.
VALUE OF A $1,000 INVESTMENT -- DEVELOPING RESOURCES FUND
[Enlarge/Download Table]
VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT DEDUCTING DEDUCTING
DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD DATE INVESTMENT CDSC ON 2/28/97 CDSC ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ -----------
Life of
the Fund** 10/21/87 $1,000 $3,252.76 $3,252.76 225.28% 13.43% 225.28% 13.43%
5 Years
Ended
2/28/97** 2/28/92 $1,000 $2,204.75 $2,184.75 120.48% 17.13% 118.48% 16.92%
1 Year
Ended
2/28/97 2/28/96 $1,000 $1,334.48 $1,284.48 33.45% 33.45% 28.45% 28.45%
------------
* Investment operations began on October 21, 1987.
VALUE OF A $1,000 INVESTMENT -- HEALTH SCIENCES FUND
[Enlarge/Download Table]
VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT DEDUCTING DEDUCTING
DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD DATE INVESTMENT CDSC ON 2/28/97 CDSC ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
10 Years
Ended
2/28/97 2/28/87 $1,000 $4,206.23 $4,206.23 320.62% 15.45% 320.62% 15.45%
5 Years
Ended
2/28/97 2/28/92 $1,000 $2,417.66 $2,397.66 141.77% 19.31% 139.77% 19.11%
1 Year
Ended
2/28/97 2/28/96 $1,000 $1,200.22 $1,150.22 20.02% 20.02% 15.02% 15.02%
VALUE OF A $1,000 INVESTMENT -- INFORMATION AGE FUND
[Enlarge/Download Table]
VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT DEDUCTING DEDUCTING
DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD DATE INVESTMENT CDSC ON 2/28/97 CDSC ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ----------
Life of
the Fund 9/18/95 $1,000 $1,209.24 $1,159.24 20.92% 14.00% 15.92% 10.73%
1 Year
Ended
2/28/97 2/28/96 $1,000 $1,129.08 $1,079.08 12.91% 12.91% 7.91% 7.91%
------------
* Investment operations began on September 18, 1995.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at July 31, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of Developing
Resources and Information Age Class B and of Developing Resources and
Information Age Funds. As of July 31, 1997, Merrill Lynch, Pierce, Fenner &
Smith, Inc., Jacksonville, FL was the record owner of the following amounts of
the Class B shares, which are held on behalf of its customers who are the
beneficial owners of such shares, and as to which it had voting power under
certain limited circumstances: Developing Resources Fund -- 17.7% and
Information Age Fund -- 26.6%. To the knowledge of the Trust, no other person
owned of record or beneficially 5% or more of any Fund's outstanding Class B
shares as of such date.
APPENDIX C
CLASS C SHARES
PERFORMANCE INFORMATION
The tables below indicate the cumulative and average annual total return
on a hypothetical investment of $1,000 in a predecessor fund reorganized
September 1, 1997 into Class C shares for the periods shown in the table. The
total for part of the period reflects the Portfolio's total return (or that of
its predecessor) adjusted to reflect any applicable Fund sales charge. Total
return for this time period had not been adjusted to reflect the Fund's
distribution fees and/or service fees and certain other expenses. Past
performance is not indicative of future results. Investment return and
principal value will fluctuate; shares, when redeemed, may be worth more or
less than their original cost. Information presented with two asterisks (**)
includes the effect of subsidizing expenses. Return would have been lower
without subsidies.
VALUE OF A $1,000 INVESTMENT -- INFORMATION AGE FUND
[Enlarge/Download Table]
VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT DEDUCTING DEDUCTING
DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD DATE INVESTMENT CDSC ON 2/28/97 CDSC ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ----------
Life of
the Fund** 11/22/95 $1,000 $1,206.41 $1,206.41 20.64% 13.82% 20.64% 13.82%
1 Year
Ended
2/28/97 2/28/96 $1,000 $1,134.95 $1,124.95 13.50% 13.50% 12.50% 12.50%
------------
* Investment operations began on November 22, 1995.
Appendix D
[Logo]
EATON VANCE
==============
MUTUAL FUNDS
[medical graphic]
EATON VANCE
WORLDWIDE HEALTH
SCIENCES FUNDS
Participate in the Accelerating Revolution in Global Health Sciences
EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND ("A")
EV MARATHON WORLDWIDE HEALTH SCIENCES FUND ("B")
[globe graphic]
EATON VANCE
GLOBAL MANAGEMENT--GLOBAL DISTRIBUTION
[logo]
EATON VANCE
--------------
MUTUAL FUNDS
THE CASE FOR HEALTH SCIENCES
THE ACCELERATING REVOLUTION
In no other discipline has innovation been more dramatic--or critical to human
existence--than in the field of health sciences, which embraces both medical
research and health care. Indeed, the health sciences industry is in the midst
of a revolution that began in this century and is accelerating as we approach
its close.
o The discovery of penicillin in the late 1920s was the catalyst for the modern
health care revolution. That discovery fostered the realization that disease
could be cured with drugs and was the foundation for today's
multi-billion-dollar pharmaceutical industry.
o More recently, technological breakthroughs like computerized axial tomography
(CAT scans), magnetic resonance imaging (MRI) and ultrasound have
revolutionized diagnostic capabilities, while heart-lung machines, kidney
dialysis and pacemakers are among the many devices that complement drugs and
surgery in treating illness.
o The discovery of the structure of DNA and the cracking of the genetic code
are perhaps the most notable breakthroughs. Not only have they produced
exciting recombinant/cloning therapies, they have opened new research
frontiers that are transforming health sciences even today.
o Today, all over the world, new drugs and treatments are in some stage of
development. Within the next few years, we will witness some startling
discoveries and, within many of our lifetimes, the health sciences industry
will achieve breakthroughs, so revolutionary, that none of us now can even
imagine.
The large and small companies engaged in the pursuit of tomorrow's innovations
(and those who invest in them) have the potential to profit handsomely.
--------------------------------------------------------------------------------
THE HEALTH SCIENCES UNIVERSE
[medical graphic]
The health sciences universe includes companies principally engaged in the
development, production or distribution of products and services related to
health care.
Biotechnology: Companies producing or planning to produce diagnostic and
therapeutic drugs using recombinant and molecular biology and rational drug
design platforms to treat and cure diseases.
Pharmaceuticals: Companies involved in large-scale, global discovery and
development of innovative prescription drugs and diagnostics,
over-the-counter products, delivery systems, nutrition, animal health and
sometimes chemical and agricultural products.
[microscope graphic]
Diagnostics: Companies that develop or maintain sophisticated diagnostic
equipment such as CAT scanners and Magnetic Resonance Imaging, as well as
urological and serological assays.
Managed Health Care: Operations of investor-owned hospital chains (including
acute care psychiatric hospitals), nursing centers, health maintenance
organizations, and rehabilitation clinics which seek to deliver hospital care
on an efficient cost basis.
Medical Equipment and Supplies: Companies engaged in the manufacture of
inpatient and outpatient medical (and dental), surgical, laboratory and
diagnostic products (ranging from cotton swabs through kidney dialysis
equipment to CAT scanners).
[beakers with solution graphic]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
--------------------------------------------------------------------------------
WORLD DEMOGRAPHICS ARGUE FOR A
COMING EXPLOSION IN HEALTH CARE
The health sciences industry knows no borders or political frontiers. In the
U.S. and the developed countries of Europe and Asia, as well as in emerging
countries, demographics are at work that should push demand steadily upward.
IN THE MATURE ECONOMIES
The mature economies of the world house 14% of the earth's population, yet
account for 80% of all health care expenditures. What's more, individuals over
age 65 account for a substantially greater proportion of spending than younger
age groups, and that trend should continue as the populations of the world's
mature economies age.
Sources: PSMI International Data Bases; Central Intelligence Agency
o In 1900 in the U.S., for example, there were 3.1 million people age 65 or
older. By 1993, there were 32.8 million, or 10 times as many.*
o In the U.S., the 75-and-over age group is growing at the fastest pace, soon
to be replaced by those 85 and older. By the year 2050, it is projected that
the over-85 population will exceed 18 million people.*
* Source: U.S. Bureau of the Census
o The oldest of the "baby boomers" turned 50 in 1996. As this generation ages,
its demand for health care and, hence, its health care expenditures, should
escalate dramatically.
o Over the past two decades, health care expenditures have been increasing in
many countries throughout the world. In the U.S., for example, heath care
costs amounted to $884.2 billion in 1993, or 13.9% of Gross Domestic Product
(GDP), compared to only 5.9% of GDP in 1965.
Source: U.S. Department of Labor
AGING AMERICA
Population Growth 1900-2050
(in millions)
85 and older 65 and older
1900 0.1 3.1
1920 0.2 4.9
1940 0.4 9.0
1960 0.9 16.7
1980 2.2 25.7
1990 3.0 30.0
2000 4.3 35.3
2010 5.7 40.1
2020 6.5 53.3
2030 8.4 70.2
2050 18.2 78.9
Source: U.S. Bureau of the Census
IN THE EMERGING ECONOMIES
o Presently, the emerging markets account for 86% of the world's population,
but only 20% of global health care expenditures. But the potential lies in
how much they WILL spend. Where the per capita spending per year is $270 in
the west, it is only $15 in the emerging markets.
Sources: PSMI International Data Bases; Central Intelligence Agency
o It is estimated that over 10% of the emerging market population -- a consumer
group similar in size to the population of established economies -- can now
afford western prices. And the percentage will surely increase as
liberalization in these markets produces a growing middle class.
Source: Mehta and Isaly
ADVANCES CREATE DEMAND
Beyond demographics, the very innovations within the health sciences industry
create demand for products and services that improve our quality of life in a
highly cost-effective manner.
For example, if you were diagnosed with a peptic ulcer, surgery was the
accepted treatment. Then came Tagamet(TM), Zantac(TM) and Prilosec(TM).
Today, ulcers are more treatable than the common cold. (According to the
August 5, 1996 edition of FORTUNE, Zantac(TM) is the most successful drug
ever produced, generating over $27 billion in worldwide sales since it was
introduced in 1981.)
There are numerous unmet needs that the health sciences industry will seek to
answer in the future.
[Beakers with solutions graphic]
HISTORY OF STRONG PERFORMANCE
Although past performance cannot guarantee future results, over the past 10
years, the health and biotechnology sector has outperformed both the Standard &
Poor's 500 Index and the Morgan Stanley Capital International Index.
A HISTORY OF STRONG PERFORMANCE
HEALTH/BIOTECH FUNDS VERSUS WORLD MARKETS
Growth of $100, 12/31/85 - 6/30/96
MSCI S&P LIPPER HEALTH/
WORLD INDEX 500 BIOTECH FUNDS
1986 100 100 100
1987 142.800003 118.660004 116.599998
1988 166.729996 124.900002 117.650002
1989 206.669998 145.639999 132.160004
1990 242.210007 191.800003 191.080002
1991 202.199997 185.850006 232.880005
1992 240.550003 242.479996 398.51001
1993 229.339996 260.959991 329.130005
1994 284.440002 276.380005 344.709991
1995 312.170013 319.399994 422.700012
1996 376.820007 421.929993 611.02002
Sources: Lipper Analytical Services, Inc.; Standard & Poor's; MSCI.
The Lipper Health/Biotechnology Funds Average is composed of open-end mutual
funds that invest at least 65% of their equity portfolios in shares of companies
engaged in health care, medicine and biotechnology. The Standard & Poor's 500
Composite Index is an unmanaged index of 500 capitalization-weighted common
stocks and is commonly used as a measure of U.S. stock market performance. The
Morgan Stanley Capital International World Index is an unmanaged,
capitalization-weighted index composed of a sample of companies representative
of the market structure of 22 world markets, including the U.S., which are
generally open to foreign investments.
NOW EATON VANCE OFFERS YOU AN EASY, AFFORDABLE WAY TO PARTICIPATE IN THE GROWTH
POTENTIAL OF HEALTH SCIENCES ... THE EV WORLDWIDE HEALTH SCIENCES FUNDS.
THE CASE FOR
EV WORLDWIDE HEALTH SCIENCES FUNDS
INVESTMENT OBJECTIVE
The objective of the Eaton Vance Worldwide Health Sciences Funds is long-term
capital growth. The Funds seek to achieve their objective by investing in the
Worldwide Health Sciences Portfolio* (the "Portfolio"). The Portfolio is a
diversified, open-end investment company having the same investment objective as
the Funds.
* Formerly the Medical Research Investment Fund, Inc.
INVESTMENT STRATEGY
Recognizing that health sciences is truly a global industry and that knowledge
is not confined to any one region, the Funds' adviser, Mehta and Isaly Asset
Management, Inc., takes a worldwide investment perspective. Its current
investment strategy is...
o All investments are selected for their long-term potential.
o Generally, between 20% and 40% of the Portfolio assets are invested in 10 to
15 major pharmaceutical companies with market capitalizations greater than $2
billion. The selection of major companies is based on potential to increase
market share.
o The remaining 60% to 80% of assets are invested in 15 to 20 smaller
biotechnology and speciality health care companies. Selection is based on
Portfolio potential to achieve above-average growth.
o Portfolio holdings are distributed between the United States, Europe and the
Far East, which includes Australia.
o The goal is to achieve a high level of capital growth with controlled risk.
--------------------------------------------------------------------------------
GEOGRAPHICAL ALLOCATION OF PORTFOLIO ASSETS
AS OF 7/31/96
WORLDWIDE DATASTREAM WORLD
HEALTH SCIENCES PORTFOLIO PHARMACEUTICALS INDEX
BIG CAP 42%* BIG CAP 94%*
FAR EAST 36% FAR EAST 29%
AMERICAS 16% AMERICAS 36%
EUROPE 48% EUROPE 35%
SMALLER CAP 56% SMALLER CAP 6%
FAR EAST 25% FAR EAST 27%
AMERICAS 48% AMERICAS 13%
EUROPE 27% EUROPE 60%
CASH: 2%
* market capitalization of $2 billion or more
In assembling the Portfolio, The Funds' adviser has focussed on smaller cap
companies, which account for two-thirds of all research being undertaken in the
worldwide health sciences industry. This weighting contrasts sharply with the
makeup of the Datastream World Pharmaceuticals Index, whose composition includes
94% large cap companies.
Source: Datastream; Mehta and Isaly
--------------------------------------------------------------------------------
INVESTMENT UNIVERSE
According to a 1993 study by Hoffmann-La Roche (which the Funds' adviser
believes is the most current), the 20 largest research and development companies
in the world, with market capitalizations of $2 billion and up, had about 1,100
drugs in various stages of research. The small firms, of which there are
hundreds, had over 2,300 drugs in research. In other words, the smaller
companies are undertaking over two-thirds of the scientific research, and, in
the opinion of the Funds' adviser, this is where there is the greatest potential
for dramatic appreciation on investment.
FIRMS ARE EVALUATED DIFFERENTLY
o THE LARGE COMPANIES: Here, the Funds' adviser looks for future increase in
market share, which correlates well with the stock price.
o THE SMALLER COMPANIES: Here the focus is to look for "promise," -- for truly
innovate therapies that go beyond treating just the symptoms. The realization
of such promise will determine a company's future market share and so, just
as with the larger firms, will determine its future earnings and stock price.
All the new compounds (drugs) that will be on the market in the year 2000 are in
development now, and the Funds' investment adviser believes it knows about each
through its extensive investment research activities.
[hand holding test tube graphic]
THE CASE FOR
MEHTA AND ISALY ASSET MANAGEMENT, INC.
Mehta and Isaly Asset Management, Inc. (formerly G/A Capital Management, Inc.),
a New York-based investment advisory company founded in 1989, brings a unique
combination of scientific and financial expertise to the management of the
Funds. The firm includes 10 professional and 5 support staff who specialize in
pharmaceutical, biotechnology and health care analysis with a global
perspective.
At least four important differences distinguish Mehta and Isaly from other
investment management firms.
o First, all 10 professionals are analysts. The Funds' Portfolio averages 30
holdings at any one time. Probably no other management company has such a high
ratio of analysts to portfolio holdings.
o Second, four of the analysts hold Ph.D. degrees in scientific disciplines.
This means they are able to evaluate the viability of drugs and technologies
under development in the biotech sector.
o Third, analysts cover the health sciences industry from a global perspective.
This enables the firm to "buy the best there is," wherever it is. Every
portfolio acquisition is examined in a worldwide, not a country-by-country,
perspective.
o Fourth, the Portfolio is managed to remain fully invested. Reason:there are
always exciting opportunities; the question is which ones, and at which time,
will best serve the Portfolio's objective?
In addition to serving as investment adviser to the Funds, Mehta and Isaly
provides advice to 15 pharmaceutical companies worldwide and 80 institutional
investors in the U.S., Europe and Japan. Total assets under management are over
$250 million.
HOW THE ADVISER SEEKS TO CONTROL RISK
In Mehta and Isaly's view, there are two principal forms of risk associated with
investment in health sciences:technological risk and financial risk.
While there is a large component of chance in technological risk, (i.e.,
assessing the viability of products, therapies and technologies under
development) the firm strives to reduce that risk by carrying out an intensive
valuation process. This is where the team of scientific analysts proves
invaluable.
Mehta and Isaly focuses on 11 smaller-company research and therapeutic
subsectors. Then, working across the global spectrum of firms engaged in the
same pursuits, it evaluates competition, market potential and probabilities of
achieving a major breakthrough.
In addition, Mehta and Isaly seeks to control financial risk by diversifying the
Portfolio both geographically and by market capitalization, as well as thorough
painstaking financial analysis and field trips to targeted Portfolio companies.
--------------------------------------------------------------------------------
HOW PORTFOLIO HOLDINGS ARE SELECTED
1) Mehta and Isaly keeps 300 companies on computer file
o 200 based in United States
o 100 based in Europe and Far East
2) Staff does initial screening on products and valuation
3) 200 companies are chosen for firm's assignment list
o Staff meets with company management
o Acquires in-depth perspective
o Does valuation screens
o Evaluates products and therapies
o Assesses markets
o Determines financial position
4) List is further narrowed to 100 companies
o Intensive contact with management
5) 25 to 30 companies are selected for Portfolio
o Staff closely monitors each one
--------------------------------------------------------------------------------
ABOUT EATON VANCE
With a history that dates to 1924, Eaton Vance is a Boston-based investment
management firm. The company serves as the Funds' sponsor and administrator.
Eaton Vance features...
o Over seven decades of investment management expertise in U.S. equities
o More than 25 professionals specializing in security analysis and equity
management
o Over $17 billion in assets under management
o More than 150 mutual funds, as well as retirement plans, pension funds and
endowments
ABOUT RISK
Eaton Vance and Mehta and Isaly believe opportunities for long-term growth of
capital are excellent for many health sciences companies. The Funds, however,
should not be considered a complete investment program due to lack of industry
diversification.
The health sciences industry generally is subject to substantial government
regulation. Accordingly, changes in government policies or regulation could have
a material effect on the demand for products and services offered by health
science companies and, therefore, could affect the performance of the Funds.
Enforcement of intellectual property laws will effect the value of many
companies. It should be recognized that foreign securities and markets in which
the Portfolio invests pose different and greater risks than those customarily
associated with domestic securities and their markets. Furthermore, investors
should consider other risks associated with a portfolio which contains
international securities, including fluctuations in foreign currency exchange
rates and political and economic instability. In addition, the Portfolio may
invest up to 20% of its total assets in below investment grade securities and up
to 100% of its assets in the securities of emerging companies. Emerging
companies, especially foreign emerging companies, may not be as liquid as larger
domestic companies. The net asset value of Fund shares will fluctuate over time
and investors may experience losses.
SHAREHOLDER SERVICES
o Investment minimum, $1,000; subsequent investments of $50 or more.
o Reinvest fund distributions automatically.
o Free exchange of your shares for those of other Eaton Vance Funds (with the
same distribution plan) with the ease of a phone call. The exchange privilege
may be changed or discontinued at any time.
o Bank draft investing for automatic monthly or quarterly investments from a
checking account.
o Tax-sheltered retirement plans. Purchase shares of the Funds in an Individual
Retirement Account, 401(k) Plan, Pension or Profit-Sharing Plan or a 403(b)
Retirement Plan.
o Systematic withdrawal plans for automatic periodic withdrawals from a fund
account.
Withdrawals from Marathon Fund outside an allowed systematic withdrawal plan may
be subject to a contingent deferred sales charge. See prospectus for details.
IT PAYS TO SEEK PROFESSIONAL ADVICE
You have crucial investment goals -- your children's education, a comfortable
retirement, financial independence. Or all three. Meeting those goals requires
time, objectivity and investment savvy. Most people do not hesitate to consult a
professional for advice in other important areas of their lives. With your
financial future at stake, why not seek the help of a professional investment
representative! Before making an investment recommendation, your representative
can help you carefully consider --
o your short- and long-term financial goals
o your tolerance for investment risk
o your investment time frame
o the other investments you may already own
Your investment representative is knowledgeable about financial markets, as well
as the wide range of investment opportunities available. Your representative can
help you decide when to buy, sell or persevere with your investments. With your
professional investment representative, you have someone you can depend on for
tailored financial advice -- today, and during the years to come.
Take a closer look at the Eaton Vance Worldwide Health Sciences Funds. We think
you'll agree they represent an exciting global investment opportunity. Your
professional investment adviser and Eaton Vance are there to help you capture
the growth potential of the world's health sciences industry.
For more complete information about EV Marathon Worldwide Health Siences Fund,
EV Traditional Worldwide Health Sciences Fund or any other Eaton Vance fund,
including distribution plans, charges and expenses, please write or call your
financial adviser for a prospectus(es). Read the prospectus(es) carefully before
you invest or send money. The Funds' objective and certain policies are
nonfundamental and may be changed without shareholder approval. The Funds are
intended for long-term investors and are not meant to be a complete investment
program.
Ask your investment adviser how EV Marathon Worldwide Health Sciences Fund or EV
Traditional Worldwide Health Sciences Fund, Inc. might fit into your portfolio.
[Logo]
EATON VANCE
==============
MUTUAL FUNDS
-----------------------------------------------------------
EATON VANCE INFORMATION AGE FUND
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 1, 1997
--------------------------------------------------------------
PORTFOLIO INVESTMENT ADVISERS
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Lloyd George Investment Management (Bermuda) Limited
3808 One Exchange Square, Central, Hong Kong
Mehta and Islay Asset Management, Inc., 41 Madison Avenue,
New York, NY 10010-2202
FUND SPONSOR AND MANAGER OR ADMINISTRATOR
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
9/1 COMBSAI
PART C
OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS*
INCLUDED IN PART A FOR THE FUNDS LISTED BELOW ARE "FINANCIAL
HIGHLIGHTS" FROM THE DATE INDICATED TO THE FISCAL YEAR ENDED
AUGUST 31, 1996 AND FOR THE SIX MONTHS ENDED FEBRUARY 28,
1997 (UNAUDITED):
Eaton Vance Greater China Growth Fund (start of business June 7, 1993)
Eaton Vance Growth Fund (period commencing September 1, 1986)
Eaton Vance Information Age Fund (start of business
September 18, 1995)
Eaton Vance Worldwide Developing Resources Fund (start of business
October 21, 1987)
Eaton Vance Worldwide Health Sciences Fund (period commencing
September 1, 1986)
INCORPORATED BY REFERENCE INTO PART B ARE THE FINANCIAL
STATEMENTS CONTAINED IN THE SEMI-ANNUAL REPORTS FOR THE FUNDS
LISTED BELOW, EACH DATED FEBRUARY 28, 1997 (UNAUDITED) (WHICH
WERE PREVIOUSLY FILED ELECTRONICALLY PURSUANT TO SECTION
30(b)(2) OF THE INVESTMENT COMPANY ACT OF 1940):
[Download Table]
Eaton Vance Greater China Growth Fund Eaton Vance Worldwide Developing
(Accession No. 0000950109-97-003531) Resources Fund
Eaton Vance Growth Fund (Accession No. 0000950109-97-003402)
(Accession No. 0000950109-97-003401) Eaton Vance Worldwide Health Sciences Fund
Eaton Vance Information Age Fund (Accession No. 0000950156-97-000419)
(Accession No. 0000950109-97-003557)
THE FINANCIAL STATEMENTS CONTAINED IN EACH FUND'S SEMI-ANNUAL REPORT ARE
AS FOLLOWS:
Statement of Assets and Liabilities (Unaudited)
Statement of Operations (Unaudited)
Statements of Changes in Net Assets (Unaudited)
Financial Highlights (Unaudited)
Notes to Financial Statements (Unaudited)
INCORPORATED BY REFERENCE INTO PART B ARE THE FINANCIAL STATEMENTS
CONTAINED IN THE ANNUAL REPORTS FOR THE FUNDS LISTED BELOW, EACH DATED
AUGUST 31, 1996 (WHICH WERE PREVIOUSLY FILED ELECTRONICALLY PURSUANT TO
SECTION 30(b)(2) OF THE INVESTMENT COMPANY ACT OF 1940):
[Enlarge/Download Table]
Eaton Vance Greater China Growth Fund Eaton Vance Worldwide Developing Resources Fund
(Accession No. 0000928816-96-000318) (Accession No. 0000950156-96-000833)
Eaton Vance Growth Fund Eaton Vance Worldwide Health Sciences Fund
(Accession No. 0000950156-96-000841) (Accession No. 0000928816-96-000326)
Eaton Vance Information Age Fund
(Accession No. 0000928816-96-000325)
*Eaton Vance Greater China Growth Fund was previously known as EV Marathon
Greater China Growth Fund; Eaton Vance Growth Fund was previously known as EV
Traditional Growth Fund; Eaton Vance Information Age Fund was previously known
as EV Marathon Information Age Fund; Eaton Vance Worldwide Health Sciences Fund
was previously known as EV Traditional Worldwide Health Sciences Fund; and
Eaton Vance Worldwide Developing Resources Fund was previously known as EV
Marathon Gold & Natural Resources Fund.
THE FINANCIAL STATEMENTS CONTAINED IN EACH FUND'S ANNUAL REPORT ARE AS
FOLLOWS:
Portfolio of Investments (for Eaton Vance Worldwide Developing Resources
Fund only)
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Independent Auditors' Report (for Eaton Vance Growth Fund only)
Report of Independent Certified Public Accountants
ALSO INCORPORATED BY REFERENCE INTO PART B ARE THE FOLLOWING FINANCIAL
STATEMENTS OF GREATER CHINA GROWTH PORTFOLIO, GROWTH PORTFOLIO,
INFORMATION AGE PORTFOLIO AND WORLDWIDE HEALTH SCIENCES PORTFOLIO, WHICH
ARE CONTAINED IN THE SEMI-ANNUAL REPORTS DATED FEBRUARY 28, 1997 OF THE
CORRESPONDING FUNDS:
THE FINANCIAL STATEMENTS FOR EACH PORTFOLIO CONTAINED IN EACH FUND'S
SEMI-ANNUAL REPORT ARE AS FOLLOWS:
Portfolio of Investments (Unaudited)
Statement of Assets and Liabilities (Unaudited)
Statement of Operations (Unaudited)
Statements of Changes in Net Assets (Unaudited)
Supplementary Data (Unaudited)
Notes to Financial Statements (Unaudited)
ALSO INCORPORATED BY REFERENCE INTO PART B ARE THE FOLLOWING FINANCIAL
STATEMENTS OF GREATER CHINA GROWTH PORTFOLIO, GROWTH PORTFOLIO AND
INFORMATION AGE PORTFOLIO, WHICH ARE CONTAINED IN THE ANNUAL REPORTS
DATED AUGUST 31, 1996 OF THE CORRESPONDING FUNDS: 86THE FINANCIAL
STATEMENTS FOR EACH PORTFOLIO CONTAINED IN EACH FUND'S ANNUAL REPORT ARE
AS FOLLOWS:
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements
Independent Auditors' Report
APPEARING IN PART B ARE THE STATEMENT OF ASSETS AND LIABILITIES AND
AUDITORS' REPORT FOR WORLDWIDE HEALTH SCIENCES PORTFOLIO AND WORLDWIDE
DEVELOPING RESOURCES PORTFOLIO DATED AUGUST 31, 1996 AND MARCH 17, 1997,
RESPECTIVELY.
(b) EXHIBITS:
(1)(a) Declaration of Trust dated May 25, 1989 filed as Exhibit (1)(a)
to Post-Effective Amendment No. 59 and incorporated herein by
reference.
(b) Amendment to the Declaration of Trust dated August 18, 1992
filed as Exhibit (1)(b) to Post-Effective Amendment No. 59 and
incorporated herein by reference.
(c) Amendment to the Declaration of Trust dated June 23, 1997 filed
herewith.
(2)(a) By-Laws filed as Exhibit (2)(a) to Post-Effective Amendment No.
59 and incorporated herein by reference.
(b) Amendment to By-Laws dated December 13, 1993 filed as Exhibit
(2)(b) to Post-Effective Amendment No. 59 and incorporated
herein by reference.
(3) Not applicable
(4) Not applicable
(5)(a) Management Contract between the Trust (on behalf of Eaton Vance
Information Age Fund, Eaton Vance Greater China Growth Fund and
Eaton Vance Worldwide Health Sciences Fund) and Eaton Vance
Management dated June 23, 1997 filed herewith.
(6)(a)(1) Distribution Agreement between the Trust and Eaton Vance
Distributors, Inc. dated June 23, 1997 with attached Schedule A
dated June 23, 1997 filed herewith.
(a)(2) Distribution Agreement between Eaton Vance Growth Trust (on
behalf of its Marathon series) and Eaton Vance Distributors,
Inc. effective November 1, 1996 (with attached Schedule A
effective November 1, 1996) filed as Exhibit No. (6)(a)(2) to
Post- Effective Amendment No. 65 and incorporated herein by
reference.
(a)(3) Distribution Agreement between Eaton Vance Growth Trust (on
behalf of its Traditional series) and Eaton Vance Distributors,
Inc. effective November 1, 1996 (with attached Schedule A
effective November 1, 1996) filed as Exhibit No. (6)(a)(3) to
Post- Effective Amendment No. 65 and incorporated herein by
reference.
(a)(3)(a) Amended Schedule A effective April 1, 1997 to the Distribution
Agreement (on behalf of its Traditional Series) filed as
Exhibit No. (6)(a)(3)(a) to Post-Effective Amendment No. 67 and
incorporated herein by reference.
(b) Selling Group Agreements between Eaton Vance Distributors, Inc.
and Authorized Firms filed as Exhibit (6)(b) to Post-Effective
Amendment No. 61 and incorporated herein by reference.
(7) The Securities and Exchange Commission has granted the
Registrant an exemptive order that permits the Registrant to
enter into deferred compensation arrangements with its
independent Trustees. See in the Matter of Capital Exchange
Fund, Inc., Release No. IC-20671 (November 1, 1994).
(8)(a) Custodian Agreement with Investors Bank & Trust Company dated
November 7, 1994 filed as Exhibit (8) to Post-Effective
Amendment No. 59 and incorporated herein by reference.
(b) Amendment to Custodian Agreement witn Investors Bank & Trust
Company dated October 23, 1995 filed as Exhibit (8)(b) to
Post-Effective Amendment No. 61 and incorporated herein by
reference.
(9)(a)(1) Administrative Services Agreement with Eaton Vance Management
for Eaton Vance Growth Fund and Eaton Vance Worldwide
Developing Resources Fund filed as Exhibit (9)(a) to
Post-Effective Amendment No. 59 and incorporated herein by
reference.
(a)(2) Amendment dated June 23, 1997 to Schedule A to Administrative
Services Agreement filed herewith.
(b) Transfer Agency Agreement dated June 7, 1989 filed as Exhibit
(9)(d) to Post-Effective Amendment No. 55 and incorporated
herein by reference.
(c) Amendment to Transfer Agency Agreement dated February 1, 1993
filed as Exhibit (9)(e) to Post-Effective Amendment No. 55 and
incorporated herein by reference.
(10) Not applicable.
(11)(a) Consent of Independent Auditors for Eaton Vance Marathon
Greater China Growth Fund filed herewith.
(b) Consent of Independent Accountants for Eaton Vance Growth Fund
filed herewith.
(c) Consent of Independent Accountants for Eaton Vance Information
Age Fund filed herewith.
(d) Consent of Independent Accountants for Information Age
Portfolio filed herewith.
(e) Consent of Independent Auditors for Eaton Vance Worldwide
Developing Resources Fund filed herewith.
(f) Consent of Independent Auditors for Worldwide Developing
Resources Portfolio filed herewith.
(g) Consent of Independent Accountants for Eaton Vance Worldwide
Health Sciences Fund filed herewith.
(h) Consent of Independent Accountants for Worldwide Health
Sciences Portfolio filed herewith.
(12) Not applicable
(13) Not applicable
(14)(1) Vance, Sanders Profit Sharing Retirement Plan for
Self-Employed Persons with Adoption Agreement and instructions
filed as Exhibit (8)(b)(1) to Post-Effective Amendment No. 28
and incorporated herein by reference.
(2) Eaton & Howard, Vance Sanders Defined Contribution Prototype
Plan and Trust with Adoption Agreements: (1) Basic
Profit-Sharing Retirement Plan; (2) Basic Money Purchase
Pension Plan; (3) Thrift Plan Qualifying as Profit-Sharing
Plan; (4) Thrift Plan Qualifying as Money Purchase Plan; (5)
Integrated Profit-Sharing Retirement Plan and (6) Integrated
Money Purchase Pension Plan filed as Exhibit (14)(2) to Post-
Effective Amendment No. 29 and incorporated herein by
reference.
(3) Individual Retirement Custodian Account (Form 5305A) and
Instructions filed as Exhibit 18 to Post-Effective Amendment
No. 24 on Form S-5, File #2-22019 and incorporated herein by
reference.
(15)(a) Eaton Vance Growth Trust Class A Service Plan adopted June 23,
1997 with attached Schedule A dated June 23, 1997 filed
herewith.
(b) Eaton Vance Growth Trust Class A Distribution Plan adopted June
23, 1997 with attached Schedule A dated June 23, 1997 filed
herewith.
(c) Eaton Vance Growth Trust Class B Distribution Plan adopted June
23, 1997 with attached Schedule A dated June 23, 1997 filed
herewith.
(d) Eaton Vance Growth Trust Class C Distribution Plan adopted June
23, 1997 with attached Schedule A dated June 23, 1997 filed
herewith.
(e) Amendment to Distribution Plan of Eaton Vance Growth Trust on
behalf of EV Marathon Asian Small Companies Fund adopted June
24, 1996 filed as Exhibit No. (15)(n) to Post- Effective
Amendment No. 65 and incorporated herein by reference.
(f) Amendment to Distribution Plan of Eaton Vance Growth Trust on
behalf of EV Traditional Asian Small Companies Fund adopted
June 24, 1996 filed as Exhibit No. (15)(o) to Post- Effective
Amendment No. 65 and incorporated herein by reference.
(16) Schedules for Computation of Performance Quotations filed
herewith.
(17)(a) Power of Attorney dated April 22, 1997 for Eaton Vance Growth
Trust filed herewith.
(b) Power of Attorney dated April 22, 1997 for Growth Portfolio
filed herewith.
(c) Power of Attorney for Information Age Portfolio filed herewith.
(d) Power of Attorney dated February 14, 1997 for Asian Small
Companies Portfolio filed as Exhibit (17)(d) to Post-Effective
Amendment No. 67 and incorporated herein by reference.
(e) Power of Attorney dated February 14, 1997 for Greater China
Growth Portfolio filed as Exhibit (17)(e) to Post-Effective
Amendment No. 67 and incorporated herein by reference.
(f) Power of Attorney for Worldwide Health Sciences Portfolio filed
herewith.
(g) Power of Attorney for Worldwide Developing Resources Portfolio
filed herewith.
(18) Multiple Class Plan for Eaton Vance Funds dated June 23, 1997
filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(2)
NUMBER OF RECORD
(1) HOLDERS AS OF
TITLE OF CLASS JULY 31, 1997
-------------- -------------
Shares of beneficial interest without par value
EV Marathon Asian Small Companies Fund 1
EV Traditional Asian Small Companies Fund 1
EV Classic Greater China Growth Fund 1,115
EV Marathon Greater China Growth Fund 21,199
EV Traditional Greater China Growth Fund 14,115
EV Classic Growth Fund 91
EV Marathon Growth Fund 621
EV Traditional Growth Fund 9,806
EV Classic Information Age Fund 140
EV Marathon Information Age Fund 2,126
EV Traditional Information Age Fund 1,182
EV Marathon Worldwide Developing Resources Fund 1,980
EV Traditional Worldwide Developing Resources Fund 76
EV Marathon Worldwide Health Sciences Fund 4,551
ITEM 27. INDEMNIFICATION
Article XIV of the Trust's Declaration of Trust, dated May 25, 1989, as
amended, permits Trustee and officer indemnification by By-law, contract and
vote. Article XI of the By-laws contains indemnification provisions.
Registrant's Trustees and officers are insured under a standard mutual fund
errors and omissions insurance policy covering loss incurred by reason of
negligent errors and omissions committed in their capacities as such.
The distribution agreements of the Trust also provide for reciprocal
indemnity of the principal underwriter on the one hand, and the Trustees and
officers, on the other.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the information set forth under the caption "Investment
Adviser and Administrator," "Management of the Fund" or "Management of the Fund
and the Portfolio" in the Statement of Additional Information, which information
is incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
Eaton Vance Growth Trust Eaton Vance Municipal Bond Fund L.P.
Eaton Vance Income Fund of Boston Eaton Vance Mutual Funds Trust
Eaton Vance Investment Trust Eaton Vance Prime Rate Reserves
Eaton Vance Municipals Trust Eaton Vance Special Investment Trust
Eaton Vance Municipals Trust II EV Classic Senior Floating-Rate Fund
(b)
[Enlarge/Download Table]
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICE
BUSINESS ADDRESS* WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
------------------- -------------------------- --------------------
James B. Hawkes Vice President and Director President and Trustee
William M. Steul Vice President and Director None
Wharton P. Whitaker President and Director None
Chris Berg Vice President None
Kate Bradshaw Vice President None
Daniel C. Cataldo Vice President None
Raymond Cox Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President Secretary
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
Perry D. Hooker Vice President None
Brian Jacobs Senior Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Timothy D. McCarthy Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Thomas Otis Secretary and Clerk None
George D. Owen, II Vice President None
F. Anthony Robinson Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland, Jr. Vice President, Treasurer and Director None
Stephen M. Rudman Vice President None
John P. Rynne Vice President None
Kevin Schrader Vice President None
George V.F. Schwab, Jr. Vice President None
Cornelius J. Sullivan Senior Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Chris Volf Vice President None
Sue Wilder Vice President None
----------
*Address is 24 Federal Street, Boston, MA 02110
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor, Mail Code ADM27, Boston, MA 02116, and its transfer agent, First
Data Investor Services Group, 4400 Computer Drive, Westborough, MA 01581-5120,
with the exception of certain corporate documents and portfolio trading
documents which are in the possession and custody of Eaton Vance Management, 24
Federal Street, Boston, MA 02110. Certain corporate documents of Information Age
Portfolio and Worldwide Health Sciences Portfolio (each a "Portfolio") are also
maintained by IBT Trust Company (Cayman), Ltd., The Bank of Nova Scotia
Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands, British West
Indies, and certain investor account, Portfolio and the Registrant's accounting
records are held by IBT Fund Services (Canada) Inc., 1 First Canadian Place,
King Street West, Suite 2800, P.O. Box 231, Toronto, Ontario, Canada M5X 1C8.
Registrant is informed that all applicable accounts, books and documents
required to be maintained by registered investment advisers are in the custody
and possession of Eaton Vance Management.
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
The Registrant undertakes to file a Post-Effective Amendment on behalf of EV
Marathon Asian Small Companies Fund and EV Traditional Asian Small Companies
Fund, using financial statements which need not be certified, within four to six
months from the effective date of Post-Effective Amendment No. 62
(or the commencement of their operations).
The Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the latest annual report to shareholders, upon request and
without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of the Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston, and
Commonwealth of Massachusetts, on the 22nd day of August, 1997.
EATON VANCE GROWTH TRUST
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
[Enlarge/Download Table]
SIGNATURE TITLE DATE
--------- ----- ----
President, Principal Executive
/s/ JAMES B. HAWKES Officer and Trustee August 22, 1997
--------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer August 22, 1997
--------------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee August 22, 1997
--------------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee August 22, 1997
--------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee August 22, 1997
--------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee August 22, 1997
--------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee August 22, 1997
--------------------------------------
JACK L. TREYNOR
*By: /s/ ALAN R. DYNNER
--------------------------------
ALAN R. DYNNER
As Attorney-in-fact
SIGNATURES
Greater China Growth Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (File No.
2-22019) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts on the 22nd day
of August, 1997.
GREATER CHINA GROWTH PORTFOLIO
By HON. ROBERT LLOYD GEORGE*
--------------------------------------
HON. ROBERT LLOYD GEORGE, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
[Enlarge/Download Table]
SIGNATURE TITLE DATE
--------- ----- ----
President, Principal Executive
HON. ROBERT LLOYD GEORGE* Officer and Trustee August 22, 1997
--------------------------------------
HON. ROBERT LLOYD GEORGE
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer and Trustee August 22, 1997
--------------------------------------
JAMES L. O'CONNOR
HON. EDWARD K.Y. CHEN* Trustee August 22, 1997
--------------------------------------
HON. EDWARD K.Y. CHEN
DONALD R. DWIGHT* Trustee August 22, 1997
--------------------------------------
DONALD R. DWIGHT
/s/ JAMES B. HAWKES Trustee August 22, 1997
--------------------------------------
JAMES B. HAWKES
SAMUEL L. HAYES, III* Trustee August 22, 1997
--------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee August 22, 1997
--------------------------------------
NORTON H. REAMER
*By: /s/ ALAN R. DYNNER
--------------------------------------
ALAN R. DYNNER
As Attorney-in-fact
SIGNATURES
Growth Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of Eaton Vance Growth Trust (File No. 2-22019) to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Boston, Commonwealth of Massachusetts on the 22nd day of August, 1997.
GROWTH PORTFOLIO
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
[Download Table]
SIGNATURE TITLE DATE
--------- ----- ----
President, Principal
Executive Officer and
/s/ JAMES B. HAWKES Trustee August 22, 1997
--------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer and Trustee August 22, 1997
--------------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee August 22, 1997
--------------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee August 22, 1997
--------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee August 22, 1997
--------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee August 22, 1997
--------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee August 22, 1997
--------------------------------------
JACK L. TREYNOR
*By: /s/ ALAN R. DYNNER
--------------------------------------
ALAN R. DYNNER
As Attorney-in-fact
SIGNATURES
Information Age Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of Eaton Vance Growth Trust (File No. 2-22019) to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Hamilton, Bermuda on the 23rd day of June, 1997.
INFORMATION AGE PORTFOLIO
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
[Download Table]
SIGNATURE TITLE DATE
--------- ----- ----
President, Principal
Executive Officer and
/s/ JAMES B. HAWKES Trustee June 23, 1997
--------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR* Officer and Trustee June 23, 1997
--------------------------------------
JAMES L. O'CONNOR
HON. EDWARD K.Y. CHEN* Trustee June 23, 1997
--------------------------------------
HON. EDWARD K.Y. CHEN
DONALD R. DWIGHT Trustee June 23, 1997
--------------------------------------
DONALD R. DWIGHT
HON. ROBERT LLOYD GEORGE* Trustee June 23, 1997
--------------------------------------
HON. ROBERT LLOYD GEORGE
SAMUEL L. HAYES, III Trustee June 23, 1997
--------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER Trustee June 23, 1997
--------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE Trustee June 23, 1997
--------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR Trustee June 23, 1997
--------------------------------------
JACK L. TREYNOR
*By: /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES
As Attorney-in-fact
SIGNATURES
Worldwide Developing Resources Portfolio has duly caused this Amendment to
the Registration Statement on Form N-1A of Eaton Vance Growth Trust (File No.
2-22019) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hamilton, Bermuda on the 23rd day of June, 1997.
WORLDWIDE DEVELOPING RESOURCES
PORTFOLIO
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
[Download Table]
SIGNATURE TITLE DATE
--------- ----- ----
President, Principal
Executive Officer and
/s/ JAMES B. HAWKES Trustee June 23, 1997
--------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR* Officer and Trustee June 23, 1997
--------------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT Trustee June 23, 1997
--------------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III Trustee June 23, 1997
--------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER Trustee June 23, 1997
--------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE Trustee June 23, 1997
--------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR Trustee August 22, 1997
--------------------------------------
JACK L. TREYNOR
*By: /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES
As Attorney-in-fact
SIGNATURES
Worldwide Health Sciences Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (File No.
2-22019) to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hamilton, Bermuda on the 23rd day of June, 1997.
WORLDWIDE HEALTH SCIENCES PORTFOLIO
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
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SIGNATURE TITLE DATE
--------- ----- ----
President, Principal
Executive Officer and
/s/ JAMES B. HAWKES Trustee June 23, 1997
--------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR* Officer and Trustee June 23, 1997
--------------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT Trustee June 23, 1997
--------------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III Trustee June 23, 1997
--------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER Trustee June 23, 1997
--------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE Trustee June 23, 1997
--------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR Trustee August 22, 1997
--------------------------------------
JACK L. TREYNOR
*By: /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES
As Attorney-in-fact
| 485BPOS | Last “Page” of 61 | TOC | 1st | Previous | Next | ↓Bottom | Just 61st |
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(1)(c) Amendment to Declaration of Trust dated June 23, 1997.
(5)(a) Management Agreement between the Trust and Eaton Vance Management
dated June 23, 1997.
(6)(a)(1) Distribution Agreement between the Trust and Eaton Vance Distributors,
Inc. dated June 23, 1997 and Schedule A thereto dated June 23, 1997.
(9)(a)(2) Amendment dated June 23, 1997 of Administrative Services Agreement to
Schedule A .
(11)(a) Consent of Independent Auditors for Eaton Vance Greater China Growth
Fund.
(11)(b) Consent of Independent Accountants for Eaton Vance Growth Fund.
(11)(c) Consent of Independent Accountants for Eaton Vance Information Age
Fund.
(11)(d) Consent of Independent Accountants for Information Age Portfolio.
(11)(e) Consent of Independent Auditors for Eaton Vance Worldwide Developing
Resources Fund.
(11)(f) Consent of Independent Auditors for Worldwide Developing Resources
Portfolio.
(11)(g) Consent of Independent Certified Public Accountants for Eaton Vance
Worldwide Health Sciences Fund
(11)(h) Consent of Independent Accountants for Worldwide Health Sciences
Portfolio.
(15)(a) Eaton Vance Growth Trust Class A Service Plan adopted June 23, 1997
with attached Schedule A dated June 23, 1997.
(15)(b) Eaton Vance Growth Trust Class A Distribution Plan adopted
June 23, 1997 with attached Schedule A dated June 23, 1997.
(15)(c) Eaton Vance Growth Trust Class B Distribution Plan adopted
June 23, 1997 with attached Schedule A dated June 23, 1997.
(15)(d) Eaton Vance Growth Trust Class C Distribution Plan adopted
June 23, 1997 with attached Schedule A dated June 23, 1997.
(16) Schedules for Computation of Performance Quotations.
(17)(a) Power of Attorney dated April 22, 1997 for Eaton Vance Growth Trust.
(17)(b) Power of Attorney dated April 22, 1997 for Growth Portfolio.
(17)(c) Power of Attorney dated February 14, 1997 for Information Age
Portfolio.
(17)(f) Power of Attorney for Worldwide Health Sciences Portfolio.
(17)(g) Power of Attorney for Worldwide Developing Resources Portfolio.
(18) Multiple Class Plan for Eaton Vance Funds dated June 23, 1997.
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘485BPOS’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 8/31/99 | | 15 | | 19 | | | 24F-2NT, N-30D, NSAR-B |
| | 9/30/98 | | 15 | | 19 |
| | 4/28/98 | | 48 |
| | 12/31/97 | | 23 | | 41 |
| | 9/30/97 | | 16 |
| | 9/1/97 | | 1 | | 53 |
| | 8/31/97 | | 17 | | 41 | | | 24F-2NT, N-30D, NSAR-B, NSAR-B/A |
| Filed on / Effective on: | | 8/25/97 | | 1 |
| | 8/22/97 | | 55 | | 60 |
| | 7/31/97 | | 19 | | 54 |
| | 6/23/97 | | 23 | | 61 |
| | 5/2/97 | | 23 | | 54 | | | 497, N-30D |
| | 4/30/97 | | 35 | | 54 | | | N-30D |
| | 4/22/97 | | 54 | | 61 |
| | 4/17/97 | | 19 |
| | 4/1/97 | | 48 | | 54 | | | 497, 497J |
| | 3/31/97 | | 16 |
| | 3/18/97 | | 44 |
| | 3/17/97 | | 43 | | 54 |
| | 2/28/97 | | 5 | | 54 | | | N-30D, NSAR-A |
| | 2/14/97 | | 43 | | 61 |
| | 11/1/96 | | 23 | | 54 |
| | 10/31/96 | | 23 | | 54 | | | N-30D |
| | 10/25/96 | | 35 | | 54 | | | N-30D |
| | 10/24/96 | | 1 | | | | | 24F-2NT |
| | 10/22/96 | | 42 | | 54 | | | N-30D, NSAR-B |
| | 9/30/96 | | 19 | | 41 |
| | 9/23/96 | | 17 |
| | 9/2/96 | | 46 |
| | 9/1/96 | | 47 |
| | 8/31/96 | | 1 | | 54 | | | 24F-2NT, N-30D, NSAR-B |
| | 8/5/96 | | 52 |
| | 6/24/96 | | 54 |
| | 4/1/96 | | 12 |
| | 3/26/96 | | 45 |
| | 3/18/96 | | 35 |
| | 1/1/96 | | 7 | | 23 |
| | 12/31/95 | | 32 |
| | 11/22/95 | | 49 |
| | 10/23/95 | | 54 | | | | | N-30D |
| | 9/18/95 | | 18 | | 54 |
| | 9/1/95 | | 18 |
| | 8/31/95 | | 5 | | 48 | | | 24F-2NT, 485APOS, N-30D, NSAR-B, NSAR-B/A |
| | 6/19/95 | | 23 | | 41 |
| | 3/27/95 | | 23 | | 41 |
| | 11/7/94 | | 38 | | 54 |
| | 11/1/94 | | 54 |
| | 9/30/94 | | 48 |
| | 9/13/94 | | 37 |
| | 8/31/94 | | 23 | | 47 | | | NSAR-B |
| | 8/2/94 | | 11 | | 35 |
| | 8/1/94 | | 35 | | 36 |
| | 3/1/94 | | 23 | | 41 |
| | 12/28/93 | | 25 |
| | 12/13/93 | | 54 |
| | 9/30/93 | | 16 |
| | 9/1/93 | | 35 | | 36 |
| | 8/31/93 | | 5 | | 36 |
| | 6/7/93 | | 5 | | 54 |
| | 2/1/93 | | 54 |
| | 10/28/92 | | 7 | | 26 |
| | 10/8/92 | | 23 |
| | 9/30/92 | | 18 |
| | 9/8/92 | | 23 |
| | 8/18/92 | | 23 | | 54 |
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