Document/Exhibit Description Pages Size
1: 485APOS Pea 59/31 Eaton Vance Growth Trust 104± 476K
39: EX-27 ƒ FDS Gold & Natural - 12 Mos 2± 14K
38: EX-27 ƒ FDS Gold & Natural - 6 Mos 2± 14K
7: EX-99.(5)(A) Advisory Agreement - Gold & Natural 5± 27K
2: EX-99.1(A) Declaration of Trust 16± 67K
3: EX-99.1(B) Amendment to Dot 2 14K
4: EX-99.1(C) Series Designation 3± 19K
26: EX-99.11 Auditors Consent 1 12K
27: EX-99.15(A) Service Plan - T - Growth 3± 18K
28: EX-99.15(B) Distribution Plan - T- China 4± 21K
29: EX-99.15(C) Distribution Plan - M - China 5± 24K
30: EX-99.15(D) Distribution Plan - C - China 5± 25K
31: EX-99.15(E) Distribution Plan - C - Growth 5± 25K
32: EX-99.15(F) Distribution Plan - M - Growth 4± 23K
33: EX-99.15(I) Distribution Plan - Gold & Natural 4± 25K
34: EX-99.16 Performance Schedule 1 15K
35: EX-99.17(A) POA - Growth Trust 1 15K
36: EX-99.17(B) POA - China Portfolio 1 14K
37: EX-99.17(C) POA - Growth Portfolio 1 15K
5: EX-99.2(A) By-Laws 15± 60K
6: EX-99.2(B) Amendment to By-Laws 1 11K
8: EX-99.5(B) Management Contract - T - China 4± 24K
9: EX-99.5(C) Management Contract - M - China 4± 24K
10: EX-99.5(D) Management Contract - C - China 4± 24K
11: EX-99.6(A)(1) Distribution Agreement - T - Growth 9± 40K
12: EX-99.6(A)(2) Distribution Agreement - T - China 9± 41K
13: EX-99.6(A)(3) Distribution Agreement - M - China 10± 47K
14: EX-99.6(A)(4) Distribution Agreement - C - China 10± 48K
15: EX-99.6(A)(5) Distribution Agreement - C - Growth 10± 48K
16: EX-99.6(A)(6) Distribution Agreement - M - Growth 10± 46K
17: EX-99.6(A)(9) Distribution Agreement - Gold & Natural 10± 48K
18: EX-99.6(B) Selling Group Agreement 19± 76K
19: EX-99.6(C) Schedule of Dealer Discounts 6± 30K
20: EX-99.8 Custodian Agreement 26± 107K
21: EX-99.9(A) Admin. Services - T - Growth 4± 24K
22: EX-99.9(B) Admin. Services - C - Growth 4± 24K
23: EX-99.9(C) Admin. Services - M - Growth 4± 24K
24: EX-99.9(D) Transfer Agency Agree. 19± 71K
25: EX-99.9(E) Amendment - Transfer Agency Agree. 10± 40K
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 16, 1995
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. 59 [X]
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 31 [X]
EATON VANCE GROWTH TRUST
----------------------------------------------
(FORMERLY EATON VANCE GROWTH FUND)
(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)
THOMAS OTIS
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective on October 30, 1995
pursuant to paragraph (a) of Rule 485 or such earlier date as the Commission
may determine.
The exhibit index required by Rule 483(a) under the Securities Act of 1933
is located on page in the sequential numbering system of the manually
signed copy of this Registration Statement.
The Registrant has filed a Declaration pursuant to Rule 24f-2, and on
October 20, 1994 filed its "Notice" as required by that Rule for the series of
the registrant with a fiscal year ended August 31, 1994.
===============================================================================
This Amendment to the registration statement on Form N-1A consists of the
following documents and papers:
Cross Reference Sheets required by Rule 481(a) under the Securities Act of
1933
Part A -- The Prospectus of:
EV Marathon Gold & Natural Resources Fund
Part B -- The Statement of Additional Information of:
EV Marathon Gold & Natural Resources 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
EV MARATHON GOLD & NATURAL RESOURCES FUND
[Enlarge/Download Table]
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
---------------------------
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 Financial Highlights; Performance
Information
4. ................... General Description of Registrant The Fund's Investment Objective; How the Fund
Invests its Assets; Special Considerations;
Organization of the Fund
5. ................... Management of the Fund Management of the Fund
5A.................... Management's Discussion of Fund Not Applicable
Performance
6. ................... Capital Stock and Other Securities Organization of the Fund; Reports to
Shareholders; The Lifetime Investing
Account/Distribution Options; Distributions
and Taxes
7. ................... Purchase of Securities Being Offered Valuing Fund Shares; How to Buy Fund Shares;
Distribution Plan; The Lifetime Investing
Account/Distribution Options; The Eaton
Vance Exchange Privilege; Eaton Vance
Shareholder Services
8. ................... Redemption or Repurchase How to Redeem Fund 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 Investment Objective and Policies; Investment
Restrictions
14. ................... Management of the Fund Trustees and Officers
15. ................... Control Persons and Principal Holders of Control Persons and Principal Holders of
Securities Securities
16. ................... Investment Advisory and Other Investment Adviser; Distribution Plan;
Services Custodian; Independent Certified Public
Accountants
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; Service for
Securities Being Offered Withdrawal; Principal Underwriter;
Distribution Plan
20. ................... Tax Status Taxes
21. ................... Underwriters Principal Underwriter
22. ................... Calculation of Performance Data Investment Performance
23. ................... Financial Statements Financial Statements
EATON VANCE GROWTH TRUST
EV MARATHON GOLD & NATURAL RESOURCES FUND
SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 1, 1995
1. Effective August 31, 1995, EV Marathon Gold & Natural Resources Fund was
reorganized and became a series of Eaton Vance Growth Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts. Prior to the
reorganization, the Fund had been a separate Massachusetts business trust.
Except for the fact that the Fund is now a series of Eaton Vance Growth Trust,
shares of the Fund represent the same interest in the Fund's assets, are of the
same class, are subject to the same terms and conditions, fees and expenses and
confer the same rights as when the Fund was separate trust.
2. THE FOLLOWING PARAGRAPH REPLACES THE PARAGRAPH UNDER THE CAPTION "EATON
VANCE SHAREHOLDER SERVICES - REINVESTMENT PRIVILEGE":
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST, WITH CREDIT FOR ANY CONTINGENT DEFERRED SALES CHARGES PAID ON THE
REPURCHASED OR REDEEMED SHARES, ANY PORTION OR ALL OF THE REPURCHASE OR
REDEMPTION PROCEEDS (PLUS THAT AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO
ROUND OFF THE PURCHASE TO THE NEAREST FULL SHARE) IN SHARES OF THE FUND,
provided that the reinvestment is effected within 60 days after such repurchase
or 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 Fund (or by the Fund's Transfer Agent). To the
extent that any shares of the Fund are sold at a loss and the proceeds are
reinvested in shares of the Fund (or other shares of the Fund 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.
3. UNDER THE SECTION ENTITLED "MANAGEMENT OF THE FUND", THE FOLLOWING PARAGRAPH
REPLACES THE EXISTING PARAGRAPH IDENTIFYING THE PORTFOLIO MANAGER:
William D. Burt and Barclay Tittmann are the co-portfolio managers of the
Fund. Mr. Burt joined Eaton Vance Management as a Vice President in November,
1994. Previously he was a Vice President of The Boston Company (1990-1994) and
a Vice President of Baring America Asset Management (1979-1990). Mr. Tittmann
joined Eaton Vance Management 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.
THE DATE OF THE ATTACHED PROSPECTUS IS CHANGED TO SEPTEMBER 1, 1995.
September 1, 1995 M-NRPS
EV Marathon Gold & Natural Resources Fund
Supplement
to Prospectus dated February 1, 1995
Under the section entitled "Management of the Fund", the following
paragraph replaces the existing paragraph identifying the portfolio manager:
William D. Burt and Barclay Tittmann are the co-portfolio
managers of the Fund. Mr. Burt joined Eaton Vance Management as a Vice
President in November, 1994. Previously he was a Vice President of The
Boston Company (1990-1994) and a Vice President of Baring America Asset
Management (1979-1990). Mr. Tittmann joined Eaton Vance Management 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.
March 31, 1995 M-NRPS
EV MARATHON GOLD & NATURAL RESOURCES FUND
EV MARATHON GOLD & NATURAL RESOURCES FUND (THE "FUND") IS A MUTUAL FUND
SEEKING CAPITAL APPRECIATION AND PROTECTION OF PURCHASING POWER THROUGH
NATURAL RESOURCE RELATED INVESTMENTS.
Shares of the Fund are not deposits 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 February 1, 1995, as supplemented
from time to time, has been filed with the Securities and Exchange 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., 24 Federal Street, Boston, MA 02110 (telephone (800)
225-6265). The Fund's investment adviser is Eaton Vance Management (the
"Investment Adviser") which is located at the same address.
------------------------------------------------------------------------------
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]
TABLE OF CONTENTS
Page Page
Shareholder and Fund Expenses ..................... 2 How to Buy Fund Shares ........................ 17
The Fund's Financial Highlights ................... 3 How to Redeem Fund Shares ..................... 18
The Fund's Investment Objective ................... 4 Reports to Shareholders ....................... 20
How the Fund Invests Its Assets ................... 4 The Lifetime Investing Account/Distribution
Special Considerations ............................ 8 Options ..................................... 20
Organization of the Fund .......................... 12 The Eaton Vance Exchange Privilege ............ 21
Management of the Fund ............................ 13 Eaton Vance Shareholder Services .............. 22
Distribution Plan ................................. 13 Distributions and Taxes ....................... 24
Valuing Fund Shares ............................... 16 Performance Information ...................... 25
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PROSPECTUS DATED FEBRUARY 1, 1995
SHAREHOLDER AND FUND EXPENSES
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[Enlarge/Download Table]
SHAREHOLDER TRANSACTION EXPENSES
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on Redemption During the
First Seven Years (as a percentage of redemption proceeds exclusive of all
reinvestments and capital appreciation in the account)<F2> 5.00%-0%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Investment Adviser Fee 0.750%
Rule 12b-1 Distribution (and Service) Fees 0.833%
Other Expenses 1.057%
-----
Total Operating Expenses 2.640%
=====
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
An investor would pay the following contingent deferred
sales charge and expenses on a $1,000 investment,
assuming (a) 5% annual return and (b) redemption at the end
of each period: $77 $122 $160 $297
An investor would pay the following expenses on the same
investment, assuming (a) 5% annual return and (b) no redemptions: $27 $ 82 $140 $297
<FN>
Notes:
<F1> The purpose of the above table and Example is to assist investors in
understanding the various costs and expenses that investors in the Fund may
bear directly or indirectly. The percentages indicated in the table and the
amounts included in the Example are based on the Fund's fiscal year ended
September 30, 1994. The table and Example should not be considered a
representation of past or future expenses and actual expenses may be
greater or less than those shown. For further information regarding the
expenses of the Fund, see "The Fund's Financial Highlights", "Management of
the Fund" and "How to Redeem Fund Shares." Because the Fund makes payments
under its Distribution Plan adopted under Rule 12b-1, a long-term
shareholder 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. See "Distribution Plan."
<F2> No contingent deferred sales charge is imposed on (a) shares purchased more
than six years prior to the redemption, (b) shares acquired through the
reinvestment of dividends and distributions and (c) any appreciation in
value of other shares in the account (see "How to Redeem Fund Shares"), and
no such charge is imposed on exchanges of Fund shares for shares of the
funds currently listed under "The Eaton Vance Exchange Privilege".
THE FUND'S FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------
The following information should be read in conjunction with the financial
statements included in the Statement of Additional Information, all of which has
been so included in reliance upon the report of Deloitte & Touche LLP,
independent certified public accountants, as experts in accounting and auditing.
Further information regarding the performance of the Fund is contained in the
Fund's annual report to shareholders which may be obtained without charge by
contacting the Fund's Principal Underwriter, Eaton Vance Distributors, Inc.
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[Enlarge/Download Table]
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988<F2>
---- ---- ---- ---- ---- ---- ------
NET ASSET VALUE,
beginning of year $13.240 $11.850 $11.140 $12.140 $13.460 $11.420 $10.000
------- ------- ------- ------- ------- ------- -------
INCOME FROM
OPERATIONS:
Net investment
income (loss) .. $(0.050) $(0.090) $(0.083) $ 0.020 $ 0.069 $ 0.060 $ 0.134
Net realized and
unrealized gain
(loss) on
investments .... 2.650 1.480 1.103 (0.570) (0.009) 2.480 1.406
------- ------- ------- ------- ------- ------- -------
Total income
from investment
operations ... $ 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)
Net realized gain
on investments . -- -- (0.060) (0.320) (1.220) (0.280) --
In excess of net
investment income<F4> (0.020) -- (0.250) (0.110) (0.091) (0.146) --
In excess of
realized gain on
investment ..... (0.930) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total
distributions $(0.950) $ -- $(0.310) $(0.450) $(1.380) $(0.500) $(0.120)
------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, end
of year .......... $14.890 $13.240 $11.850 $11.140 $12.140 $13.460 $11.420
======= ======= ======= ======= ======= ======= =======
TOTAL RETURN<F5>.... 20.47% 11.73% 9.44% (4.36)% 0.01% 22.96% 15.39%
RATIOS/SUPPLEMENTAL DATA<F1>:
Net assets, end of
year (000 omitted) $13,055 $ 5,792 $ 3,775 $ 4,042 $ 4,391 $ 2,999 $ 2,424
Ratio of net
expenses to
average daily
net assets ..... 2.64% 3.15% 3.26% 3.29% 2.50% 1.62% 0.99%<F3>
Ratio of net
investment income
(loss) to
average daily net
assets ......... (0.96)% (0.92)% (0.67)% 0.17% 0.33% 0.45% 0.83%<F3>
PORTFOLIO TURNOVER . 17% 57% 32% 27% 35% 53% 25%
<FN>
<F1> 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 income per share and the ratios would have been as
follows:
NET INVESTMENT
INCOME (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%<F3>
Net investment
income (loss) . (1.67)% (2.06)% (0.96)% (2.40)% (4.80)% (6.08)%<F3>
<F2> For the period from the start of business, October 21, 1987, to September
30, 1988.
<F3> Computed on an annualized basis.
<F4> 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.
<F5> 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. Dividends and distributions, if any, are assumed to be reinvested
at the net asset value on the reinvestment date.
THE FUND'S INVESTMENT OBJECTIVE
------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS CAPITAL APPRECIATION AND PROTECTION OF THE
PURCHASING POWER OF THE SHAREHOLDER'S CAPITAL. The Fund will concentrate its
assets in natural resource related investments and may engage in various active
management strategies, as described below. Although the Fund will derive income
from some of its investments, current income is not an investment objective and
will not be a primary consideration in selecting securities for the Fund's
portfolio. There can be no assurance that the Fund will achieve its investment
objective. The Fund's investment adviser, Eaton Vance Management ("Eaton
Vance"), will manage its investments and affairs.
Except as otherwise indicated in this Prospectus, the investment objective
and policies of the Fund may be changed by the Trustees of the Fund without
shareholder approval, although the Trustees intend to submit material changes in
the investment objective to shareholders for their approval. If any changes were
made, the Fund might have investment objectives different from the objectives
which an investor considered appropriate at the time the investor became a
shareholder in the Fund.
HOW THE FUND INVESTS ITS ASSETS
------------------------------------------------------------------------------
BASIC INVESTMENT STRATEGIES. The Fund seeks to achieve its investment objective
through a portfolio of domestic and foreign natural resource related
investments. Under normal investment conditions the Fund expects that it will
invest primarily in common stocks, but it may also hold convertible bonds,
convertible preferred stocks, warrants, preferred stocks and debt securities if
Eaton Vance believes such investments would help to achieve the Fund's
investment objective. The Fund may also invest in debt, preferred or convertible
securities, the value of which is related to the market value of some natural
resource asset ("asset-related securities"). See "Special Considerations --
Asset-Related Securities" below. In making investments for the Fund, Eaton Vance
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 Fund 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. See
"Direct Placement Securities and Venture Capital Investments" and "Metals
Investments" below.
WHEN EATON VANCE ANTICIPATES SIGNIFICANT ECONOMIC OR POLITICAL INSTABILITY,
SUCH AS HIGH INFLATION OR TURMOIL IN THE FOREIGN CURRENCY EXCHANGE MARKETS, THE
FUND, 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 Fund to liquidate portfolio assets and incur transaction
costs. There can be no assurance that any such change in investment strategy
will result in the realization of the Fund's investment objective.
Except as described below, the Fund under normal circumstances will maintain
at least 65% of its total assets in natural resource related investments or in
asset-related securities.
At times Eaton Vance may judge that investment conditions make the Fund's
basic investment strategies described above inconsistent with the best interests
of shareholders. At such times Eaton Vance may use alternative investment
strategies primarily designed to reduce fluctuations in the value of the Fund's
assets. In implementing these temporary "defensive" strategies, the Fund 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 Fund may also hold a portion of its assets in cash or money
market instruments, including repurchase agreements and cash equivalents, for
liquidity purposes. It is impossible to predict when, or for how long, the Fund
will use these alternative strategies.
NATURAL RESOURCE RELATED INVESTMENTS. Under normal investment conditions it is
anticipated that the Fund's portfolio will include a significant amount of
domestic and foreign natural resource related investments. A natural resource
related investment includes 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. Eaton Vance currently deems a company to be
in the natural resource investment sector (a) if 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) if in Eaton Vance'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 non-ferrous
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.
Eaton Vance 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. Eaton Vance 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. Eaton Vance's flexible
investment approach enables it to change the Fund's investment emphasis to
various subsectors within the large natural resource investment sector depending
upon Eaton Vance'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 Fund,
Eaton Vance will consider, among other investments, domestic and foreign
companies which may
* EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD GOLD, SILVER, PLATINUM AND
OTHER PRECIOUS METALS. Eaton Vance 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.
* EXPLORE FOR, FINANCE, DEVELOP OR PRODUCE ENERGY RESOURCES SUCH AS OIL,
NATURAL GAS, COAL, OIL SHALE AND URANIUM. In this subsector, Eaton Vance
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.
* EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD STRATEGIC METALS, SUCH AS
TITANIUM, CHROMIUM, VANADIUM AND NIOBIUM.
* CREATE AND DEVELOP NEW GEOCHEMICAL TECHNOLOGY OR PROPRIETARY METHODS FOR
DETECTING, DEVELOPING, PRODUCING OR PROCESSING MINERAL DEPOSITS AND OTHER
NATURAL RESOURCES.
* 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.
* PROVIDE NATURAL RESOURCE TRANSPORTATION, DISTRIBUTION AND PROCESSING
SERVICES, SUCH AS PIPELINES AND REFINING.
DIRECT PLACEMENT SECURITIES AND VENTURE CAPITAL INVESTMENTS. On occasion the
Fund may make natural resource related investments in "direct placement
securities" issued by a company directly to the Fund. Direct placement
securities are normally not available to small investors, but are often offered
to institutional investors such as the Fund. Various considerations may lead
issuers to seek direct placement of their securities. For example, such issuers
may not be in a position to sell such securities publicly because they need to
raise money within a short period of time or need a relatively small amount of
money to fund their current operations or a particular project. Such issuers may
desire to establish relations with institutional investors such as the Fund
which will have a continuing financial interest in the issuer and perhaps make
further investments. Alternatively, the climate of the public securities market
may be temporarily unfavorable either in general or with respect to the
particular industry or company. The Fund believes there exist opportunities for
acquiring direct placement securities from issuers (particularly from junior
North American gold mining companies) with substantial growth potential in the
natural resources area.
Direct placement securities acquired by the Fund will be common stock, or
obligations or preferred stock having, as part of the package purchased, equity
features such as accompanying shares of common stock, securities convertible
into such shares, or conversion rights or warrants to purchase such shares. The
shares of common stock which are the subject of such equity features will
generally be the shares of the issuer, although in some cases they may be the
shares of a parent or other affiliate of the issuer, and will usually have or be
expected in time to have a public market. Nearly all securities acquired by the
Fund directly from an issuer and shares into which such securities may be
converted or which may be purchased on the exercise of warrants will, however,
be subject to legal or contractual delays in or restrictions on resale and will
therefore initially be treated as "restricted securities" in the Fund's
portfolio.
The Fund 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. An investment of this type gives the
aggressive investor participation in a private enterprise which may, if
successful, afford significant appreciation potential. Venture capital investing
is by its very nature a high-risk activity which can result in substantial
losses.
Eaton Vance anticipates that the Fund's direct placement securities and
venture capital investments will constitute a small portion of its total
portfolio, and may include companies involved in the production of precious
metals. Advances in extractive and exploration technology as well as
inflationary economic conditions have provided opportunities for small and
medium sized independent companies to profitably exploit previously known gold
orebodies and newly discovered types of orebodies. Eaton Vance believes that
investing in such companies may produce superior investment returns. In this
connection, Eaton Vance will attempt to identify those entrepreneurially managed
emerging companies which concentrate in developing mines that offer the
potential of quick payback, relatively high rates of return at current prices,
and the possibility of orebody extensions.
All of such investments will involve risks to the Fund and its shareholders.
Therefore, the Fund may not invest more than 10% of its total assets, taken at
market value at the time of investment, in certain securities issued by venture
capital companies, certain over-the-counter options, unmarketable securities,
and repurchase agreements maturing in more than seven days. The Fund is further
subject to an additional investment restriction (set forth in the Statement of
Additional Information) which in effect prohibits an investment which would
cause more than 5% of its total assets, taken at market value, to be invested in
companies with less than three years of continuous operations. The Fund's direct
placement securities and venture capital investments are considered speculative
in nature and are not readily marketable.
METALS INVESTMENTS. In addition to investments in natural resource related
securities, the Fund may invest up to 10% of its portfolio in gold or silver
bullion, strategic metals, and gold or silver coins ("Metals Investments"). The
Fund 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.
In making direct investments in bullion or metals, the Fund normally will
not take possession of the bullion or metals, but instead will obtain receipts
or certificates representing ownership. In the event the Fund does take
possession, the bullion or metals would be delivered to and held by a
nonaffiliated 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 Fund will pay for the metals only
upon actual receipt. Although the Fund would incur storage, shipping and other
costs by owning bullion or metals, such costs should be minimized by the use of
receipts or certificates.
The Fund's Metals Investments will not generate income. The return to the
Fund from its Metals Investments will consist solely of market appreciation or
depreciation and gains or losses realized on sales. Accordingly, as indicated
above, the Fund will not invest more than 10% of its total assets, taken at
market value at the time of investment, in Metals Investments.
ACTIVE MANAGEMENT STRATEGIES. The Fund may engage in various active management
strategies, including entering into repurchase agreements and forward foreign
currency exchange contracts, writing and purchasing options on foreign
currencies, and leverage through borrowing. The Fund may write covered call and
covered put options on securities and metals, purchase such call and put
options, and enter into closing purchase and sale transactions with respect
thereto. The Fund may, for hedging or permissible non-hedging purposes, purchase
and sell futures contracts on various securities and metals and other physical
commodities, certificates of deposit, Eurodollar time deposits, securities
indices, economic indices (e.g., the Consumer Price Indices and the Commodity
Research Bureau Futures Price Index) and other financial instruments or indices,
purchase and write call and put options on any of such futures contracts and
enter into closing purchase and sale transactions with respect to such contracts
and options. Options, futures contracts, forward contracts and repurchase
agreements involve credit and other risks which are described below. A
discussion of the greater costs and risks which may result from the Fund's
investment policy with respect to leveraging through borrowing is set forth
under "Special Considerations -- Leverage Through Borrowing". The Fund's
investments in Metals Investments and in certain options, futures contracts and
forward contracts on foreign currencies or commodities may be limited by tax
requirements for qualification of the Fund as a regulated investment company.
The Fund expects that various new types of investments, hedging techniques and
management strategies will be developed and made available to institutional
investors in the future. Eaton Vance will consider making such investments or
using such techniques or strategies if it determines that they are consistent
with the Fund's investment objective and policies.
SPECIAL CONSIDERATIONS
------------------------------------------------------------------------------
The Fund's classification under the Investment Company Act of 1940 as a
"non-diversified" investment company allows it to invest more than 5% of its
assets in the securities of any issuer and, during certain periods, to own more
than 10% of the voting securities of an issuer. Since a relatively high
percentage of the Fund's assets may from time to time be invested in the
securities of a limited number of issuers which may be in the natural resource
investment sector, the value of the Fund's shares could be adversely affected by
a single economic, political or regulatory occurrence or other development. In
any event, because the Fund expects to concentrate its investments in the
natural resources sector or various subsectors thereof, the value of its shares
will be especially affected by factors peculiar to this investment sector and
may fluctuate more widely than the value of shares of a mutual fund which
invests in a broader range of industries. The Fund should therefore be
considered as an investment vehicle in the natural resources sector, and not as
a balanced investment program.
FOREIGN INVESTMENTS. There are no prescribed geographic limits on companies in
which the Fund may invest. The Fund has no restrictions on the amount of its
assets that may be invested in securities of foreign issuers and thus the
relative amount of such investments will change from time to time. Under certain
economic, financial and political conditions, the Fund may invest primarily in
foreign securities. Investing in foreign securities may represent a greater
degree of risk than investing in domestic securities, because of the possibility
of exchange rate fluctuations, adoption of adverse exchange control regulations,
delays in settlement of transactions, less publicly- available financial and
other information, more volatile and less liquid markets, less securities
regulation, higher brokerage costs, difficulties in enforcing judgments, less
favorable tax provisions, war, expropriation or nationalization of assets or
other adverse governmental actions. Since the Fund may invest in securities
denominated or quoted in currencies other than the United States dollar, changes
in foreign currency exchange rates may affect the value of securities in the
portfolio and the unrealized appreciation or depreciation of investments insofar
as United States investors are concerned.
The Fund may invest in securities of foreign issuers either directly or in
the form of American Depository Receipts ("ADRs"), European Depository Receipts
("EDRs") or other similar securities convertible into securities of foreign
issuers. These securities are not necessarily denominated in the same currency
as the securities into which they may be converted. ADRs are receipts typically
issued by a U.S. banking institution evidencing ownership of the underlying
securities; 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.
GOLD-RELATED INVESTMENTS. As indicated above, under certain circumstances the
Fund may invest a majority of its assets in gold-related companies or in
asset-related securities. 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, Russia,
Canada, the United States, Brazil and Australia. Sales of gold by Russia are
largely unpredictable and often relate to political and economic considerations
rather than to market forces. Economic, social and political developments within
South Africa may affect significantly South African gold production.
The Fund does not intend to invest in companies the assets of which are
located primarily in the Republic of South Africa. This current limitation may
affect adversely the Fund's ability to invest in gold-related securities and
during certain periods may result in the Fund restricting its investments to
relatively few gold-related companies.
ASSET-RELATED SECURITIES. The Fund may invest in debt securities, preferred
stocks or convertible 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. For the purposes of the Fund's investment
policies, these securities are referred to as "asset-related securities". 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 asset-related securities in which the Fund may
invest may bear interest or pay preferred dividends at below market (or even
relatively nominal) rates. 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 relate. In such instance the Fund may
sell the asset-related security in the secondary market, to the extent one
exists, prior to 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.
CERTAIN INVESTMENT RESTRICTIONS AND POLICIES. The Fund has 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. Briefly, among these fundamental restrictions,
the Fund may not (1) pledge more than 33 1/3% of its total assets to secure its
permitted borrowings; (2) purchase more than 10% of the total outstanding voting
securities of an issuer, except when significant economic, political or
financial instability is anticipated; or (3) invest more than 10% of its total
assets in venture capital companies, unmarketable securities, options on foreign
currencies which do not trade on exchanges and repurchase agreements maturing in
more than seven days. These restrictions are considered at the time of
acquisition of assets; the sale of portfolio assets is not required in the event
of a subsequent change in cirumstances. In addition, the Fund has adopted a
fundamental policy which requires it during normal market conditions to
concentrate at least 25% of its total assets in the natural resource group of
industries. Except for the fundamental investment restrictions and policies
specifically enumerated in the Statement of Additional Information, the
investment objective and policies of the Fund are not fundamental policies and
accordingly may be changed by the Trustees without obtaining the approval of the
Fund's shareholders. While not required to do so, the Trustees intend to submit
any material change in the Fund's investment objective to the shareholders for
their approval.
Eaton Vance intends to follow certain other nonfundamental investment
policies (which may be changed without shareholder authorization) in managing
the Fund's portfolio in addition to the other nonfundamental investment policies
described or referred to elsewhere in this Prospectus. These policies may help
to reduce investment risk. It is the Fund's current policy not to invest more
than 10% of its total assets in the securities of any one issuer (excluding U.S.
Government securities, or certificates of deposit, bankers' acceptances or time
deposits of banking or thrift institutions), or to invest more than 5% of its
assets in warrants (excluding warrants acquired in units or attached to
securities, which warrants are deemed to be without value).
The Fund intends to qualify as a regulated investment company under the
Internal Revenue Code (the "Code") and consequently will not be required to pay
any Federal income or excise taxes to the extent that it distributes to its
shareholders its net investment income and net realized capital gains in the
manner required by the Code. The Code currently requires that the Fund, to so
qualify, among other things, at the close of each of its fiscal quarters and
with respect to 50% of its assets, (i) may not have more than 5% of its total
assets invested in the securities of any one issuer (except obligations of the
U.S. Government, its agencies or instrumentalities) and (ii) may not own more
than 10% of the outstanding voting securities of any one issuer. These Code
diversification requirements could affect the Fund's portfolio investments under
certain conditions.
PORTFOLIO TURNOVER. Eaton Vance will change the Fund's investments whenever it
believes a change may be appropriate, without regard to how long a particular
investment may have been held. Changes in investments generally involve expenses
to the Fund, which may include brokerage commissions or dealer mark-ups and
other transaction costs on the disposition of investments and reinvestment of
the proceeds in other investments, and may result in net capital gains
distributions of which will be subject to tax. The Fund's investment policies
and strategies may result in a higher portfolio turnover rate than that
experienced by other mutual funds. The Fund's portfolio turnover rate will not
be a limiting factor when Eaton Vance considers a change in the Fund's
investment portfolio, and in any fiscal year such rate could exceed 200%.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements 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. Under a repurchase agreement the Fund buys a security at
one price and simultaneously promises to sell that same security back to the
seller at a higher price. The repurchase date is usually within seven days of
the original purchase date. At no time will the Fund commit more than 10% of its
assets to repurchase agreements which mature in more than seven days. Repurchase
agreements are deemed to be loans under the Investment Company Act of 1940. In
all cases Eaton Vance must be satisfied with the creditworthiness of the other
party to the agreement before entering into a repurchase agreement. In the event
of the bankruptcy of the other party to a repurchase agreement, the Fund might
experience delays in recovering its cash. To the extent that, in the meantime,
the value of the securities the Fund purchased may have decreased, the Fund
could experience a loss.
LEVERAGE THROUGH BORROWING. The Fund may borrow from banks or by entering into
reverse repurchase agreements to increase its portfolio holdings of securities,
commodities and commodity contracts. Such borrowings may be on a secured or
unsecured basis at fixed or variable rates of interest. A reverse repurchase
agreement is functionally identical to a repurchase agreement except that the
roles of the parties are reversed so that the Fund will sell the the underlying
security with the promise to repurchase. The Investment Company Act of 1940
requires the Fund to maintain continuous asset coverage of not less than 300%
with respect to all borrowings. This allows the Fund to borrow for such purposes
an amount (when taken together with any borrowings for temporary or emergency
purposes as described below) 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 Fund may be
required to dispose of some of its portfolio holdings within three days in order
to reduce the Fund's debt and restore the 300% asset coverage, even though it
may be disadvantageous from an investment standpoint to dispose of assets at
that time. Leveraging will exaggerate any increase or decrease in the net asset
value of the Fund's portfolio, and in that respect may be considered a
speculative practice. The interest which the Fund must pay on borrowed money,
together with any additional fees to maintain a line of credit or any minimum
average balances required to be maintained by the bank, are additional costs
which will reduce or eliminate any net investment income and may also offset any
potential capital gains. Unless the appreciation and income, if any, on assets
acquired with borrowed funds exceed the costs of borrowing, the use of leverage
will diminish the investment performance of the Fund compared with what it would
have been without leverage.
The Fund will not always borrow money for additional investments. The Fund'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.
Successful use of a leveraging strategy depends on Eaton Vance's ability to
correctly predict interest rates and market movements.
The Fund, like many other investment companies, may also borrow money for
temporary or emergency purposes, but such borrowings may not exceed 10% of the
value of the Fund's gross assets when the loan is made.
DERIVATIVE INSTRUMENTS. From time to time, the Fund may purchase or enter into
derivative instruments to enhance return, to hedge against fluctuations in
securities prices or currency exchange rates, to change the duration of the
Fund's fixed income portfolio (if any) or as a substitute for the purchase or
sale of securities or currency. The Fund's investments in derivative securities
may include indexed securities. The Fund's transactions in derivative contracts
may include the purchase or sale of futures contracts on securities, indices or
currency; options on futures contracts; options on securities, indices or
currency; and forward contracts to purchase or sell securities or currency.
All of the Fund's transactions in derivative instruments involve a risk of
loss or depreciation due to unanticipated adverse changes in interest rates,
securities prices or currency exchange rates. The loss on derivative contracts
(other than purchase options) may exceed the Fund's initial investment in these
contracts. In addition, the Fund may lose the entire premium paid for purchased
options that expire before they can be profitably exercised by the Fund.
Indexed Securities. The Fund may invest in indexed securities, including
PERLs and other currency linked securities. The interest rate or, in some cases,
the principal payable at the maturity of an indexed security may change
positively or inversely in relation to one or more interest rates, financial
indices, currency rates or other financial indicators ("reference prices"). An
indexed security may be leveraged to the extent that the magnitude of any change
in the interest rate or principal payable on an indexed security is a multiple
of the change in the reference price. Thus, indexed securities may decline in
value due to adverse market changes in currency exchange rates and other
reference prices.
Derivative Contracts. The Fund may purchase and sell a variety of derivative
contracts, including futures contracts on securities, indices or currency;
options on futures contracts; options on securities, indices or currency;
forward contracts to purchase or sell securities or currency; and currency
swaps. The Fund incurs liability to a counterparty in connection with
transactions in futures contracts, forward contracts and swaps and in selling
options. The Fund pays a premium for purchased options. In addition, the Fund
incurs transactions costs in opening and closing positions in derivative
contracts.
Risks Associated With Derivative Securities and Contracts. The risks
associated with the Fund's transactions in derivative securities and contracts
may include some or all of the following: (1) market risk; (2) leverage and
volatility risk; (3) correlation risk; (4) credit risk; and (5) liquidity and
valuation risk.
Entering into a derivative contract involves a risk that the applicable
market will move against the Fund's position and that the Fund will incur a
loss. For derivative contracts other than purchased options, this loss may
exceed the amount of the initial investment made or the premium received by the
Fund.
Derivative instruments may sometimes increase or leverage the Fund's
exposure to a particular market risk. Leverage enhances the price volatility of
derivative instruments held by the Fund. The Fund may partially offset the
leverage inherent in derivative contracts by maintaining a segregated account
consisting of cash and liquid, high grade debt securities, by holding offsetting
portfolio securities or currency positions or by covering written options.
The Fund's success in using derivative instruments to hedge portfolio assets
depends on the degree of price correlation between the derivative instrument 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
Fund's assets.
Derivative securities and over-the-counter derivative contracts involve a
risk that the issuer or counterparty will fail to perform its contractual
obligations.
Some derivative securities are not readily marketable or may become illiquid
under adverse market conditions. In addition, during periods of extreme market
volatility, a commodity or exchange may suspend or limit trading in an
exchange-traded derivative contract, which may make the contract temporarily
illiquid and difficult to price. The staff of the Securities and Exchange
Commission ("SEC") takes the position that certain over-the-counter options are
illiquid investments. The Fund's ability to terminate over-the-counter
derivative contracts may depend on the cooperation of the counterparties to such
contracts. For thinly traded derivative securities and contracts, the only
source of price quotations may be the selling dealer or counterparty.
ORGANIZATION OF THE FUND
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EV MARATHON GOLD & NATURAL RESOURCES FUND, A BUSINESS TRUST ESTABLISHED UNDER
MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST DATED AUGUST 3, 1987, AS
AMENDED, IS A MUTUAL FUND -- AN OPEN-END NON-DIVERSIFIED MANAGEMENT INVESTMENT
COMPANY. The Fund changed its name from Eaton Vance Natural Resources Trust to
EV Marathon Gold & Natural Resources Fund on April 1, 1994. The Trustees of the
Fund are responsible for the overall management and supervision of its affairs.
The Fund has one class of shares of beneficial interest, an unlimited number of
which may be issued. Each share represents an equal proportionate beneficial
interest in the Fund. When issued and outstanding, the shares are fully paid and
nonassessable by the Fund and redeemable as described under "How to Redeem Fund
Shares". Shareholders are entitled to one vote for each full share held.
Fractional shares may be voted proportionately. Shares have no preemptive or
conversion rights and are freely transferable. Upon liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets of the Fund
available for distribution to shareholders.
MANAGEMENT OF THE FUND
------------------------------------------------------------------------------
THE FUND ENGAGES 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 Trustees of the Fund, Eaton
Vance manages the Fund's investments and affairs. Under its investment advisory
agreement with the Fund, Eaton Vance receives a monthly advisory fee of .0625%
(equivalent to .75 of 1% annually) of the average daily net assets of the Fund
up to $500 million; the fee will be reduced at various asset levels over $500
million. This fee may be higher than that paid by many other investment
companies.
For the fiscal year ended September 30, 1994, the Fund paid Eaton Vance
advisory fees equivalent to 0.75%, of the Fund's average daily net assets for
such period.
Eaton Vance also furnishes for the use of the Fund office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Fund. The Fund is responsible for the payment of all expenses
other than those expressly stated to be payable by Eaton Vance under the
investment advisory agreement.
Eaton Vance places the Fund's portfolio security transactions for execution
with many broker-dealer firms and uses its best efforts to obtain execution of
such transactions at prices which are advantageous to the Fund and at reasonably
competitive commission rates. Subject to the foregoing, Eaton Vance may consider
sales of shares of the Fund or of other investment companies sponsored by Eaton
Vance as a factor in the selection of firms to execute portfolio transactions.
Thomas E. Faust, Jr. has acted as the portfolio manager since 1987. He has
been a Vice President of Eaton Vance since 1985.
EATON VANCE OR ITS AFFILIATES ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES
AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $15 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly held holding company. Eaton Vance Corp., through its
subsidiaries and affiliates, engages in investment management and marketing
activities, fiduciary and banking services, oil and gas operations, real estate
investment, consulting, and management, and development of precious metals
properties. Eaton Vance Distributors, Inc. (the "Principal Underwriter" or
"EVD"), 24 Federal Street, Boston, MA 02110, a wholly-owned subsidiary of Eaton
Vance, acts as Principal Underwriter to the Fund.
DISTRIBUTION PLAN
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THE FUND FINANCES DISTRIBUTION ACTIVITIES AND HAS ADOPTED A DISTRIBUTION PLAN
(THE "PLAN") PURSUANT TO RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940.
Rule 12b-1 permits a mutual fund, such as the Fund, to finance distribution
activities and bear expenses associated with the distribution of its shares
provided that any payments made by the Fund are made pursuant to a written plan
adopted in accordance with the Rule. The Plan is also subject to, and complies
with, the sales charge rule of the National Association of Securities Dealers,
Inc. (the "NASD Rule"). The Plan is described in the Statement of Additional
Information, and the following is a brief description of the salient features of
the Plan. The Plan provides that the Fund, subject to the NASD Rule, will pay
sales commissions and distribution fees to the Principal Underwriter only after
and as a result of the sale of 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 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 Principal Underwriter
currently expects to pay sales commissions (except on exchange transactions and
reinvestments) to a financial services firm (an "Authorized Firm") at the time
of sale equal to 4% of the purchase price of the shares sold by such Firm. The
Principal Underwriter will use its own funds (which may be borrowed from banks)
to pay such commissions. Because the payment of the sales commissions and
distribution fees to the Principal Underwriter is subject to the NASD Rule
described below, it will take the Principal Underwriter a number of years to
recoup the sales commissions paid by it to Authorized Firms from the payments
received by it from the Fund pursuant to the Plan.
THE NASD RULE REQUIRES THE FUND TO LIMIT ITS ANNUAL PAYMENTS OF SALES
COMMISSIONS AND DISTRIBUTION FEES TO THE PRINCIPAL UNDERWRITER TO AN AMOUNT NOT
EXCEEDING .75% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR.
Accordingly, the Fund accrues daily an amount at the rate of 1/365 of .75% of
the Fund's net assets, and pays such accrued amounts monthly to the Principal
Underwriter. The Plan requires such accruals to be automatically discontinued
during any period in which there are no outstanding Uncovered Distribution
Charges under the Plan. Uncovered Distribution Charges are calculated daily and,
briefly, are equivalent to all unpaid sales commissions and distribution fees to
which the Principal Underwriter is entitled under the Plan less all contingent
deferred sales charges theretofore paid to the Principal Underwriter. The Eaton
Vance organization may be considered to have realized a profit under the Plan if
at any point in time the aggregate amounts of all payments received by the
Principal Underwriter from the Fund pursuant to the Plan, including any
contingent deferred sales charges, have exceeded the total expenses theretofore
incurred by such organization in distributing 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.
The amount payable to the Principal Underwriter pursuant to the Plan with
respect to each day will be accrued on such day as a liability of the Fund and
will accordingly reduce the Fund's 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 the Fund's net assets on such day. The
level of the Fund's net assets changes each day and depends upon the amount of
sales and redemptions of Fund shares, the changes in the value of the
investments held by the Fund, the expenses of the Fund accrued on such day,
income on portfolio investments of the Fund accrued on such day, and any
dividends and distributions declared by the Fund. The Fund does not accrue
possible future payments as a liability of the Fund or reduce the Fund's current
net assets in respect of unknown amounts which may become payable under the Plan
in the future because the standards for accrual of a liability under such
accounting principles have not been satisfied.
The Plan provides that the Fund will receive all contingent deferred sales
charges 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. Contingent deferred sales charges and accrued amounts
will be paid to the Principal Underwriter whenever there exist Uncovered
Distribution Charges under the Plan.
The provisions of the Plan relating to payments of sales commissions and
distribution fees to the Principal Underwriter are also included in the
Distribution Agreement between the Fund and the Principal Underwriter. The Plan
continues in effect through and including April 28, 1995, and shall continue in
effect indefinitely thereafter for so long as such continuance is approved at
least annually by the vote of both a majority of (i) the Trustees of the Fund
who are not interested persons of the Fund and 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 Plan and
Distribution Agreement 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 Fund.
Periods with a high level of sales of Fund shares accompanied by a low level
of early redemptions of Fund shares resulting in the imposition of contingent
deferred sales charges will tend to increase the time during which there will
exist Uncovered Distribution Charges of the Principal Underwriter. Conversely,
periods with a low level of sales of Fund shares accompanied by a high level of
early redemptions of Fund shares resulting in the imposition of contingent
deferred sales charges will tend to reduce the time during which there will
exist Uncovered Distribution Charges of the Principal Underwriter.
Because of the NASD Rule limitation on the amount of sales commissions and
distribution fees paid to the Principal Underwriter during any fiscal year, a
high level of sales of Fund shares during the initial years of the Fund's
operations would cause a large portion of the sales commissions attributable to
a sale of Fund shares to be accrued and paid by the Fund to the Principal
Underwriter in fiscal years subsequent to the year in which such shares were
sold. This spreading of sales commissions payments under the Plan over an
extended period would result in the incurrence and payment of increased
distribution fees under the Plan.
For the fiscal year ended September 30, 1994, the Fund paid sales
commissions under the Plan equivalent to .75% (annualized) of the Fund's average
daily net assets. As of September 30, 1994 the outstanding Uncovered
Distribution Charges of the Principal Underwriter calculated under the Plan
amounted to approximately, $435,762 (which amount was equivalent to 3.34% of the
Fund's net assets on such day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Fund have initially implemented this provision of the Plan by
authorizing the Fund to make quarterly payments of service fees to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% of the
Fund's average daily net assets for any fiscal year based on the value of Fund
shares sold by such persons and remaining outstanding for at least twelve
months. As permitted by the NASD Rule, such payments are made for personal
services and/or the maintenance of shareholder accounts. Service fees are
separate and distinct from the sales commissions and distribution fees payable
by the Fund to the Principal Underwriter, and as such are not subject to
automatic discontinuance when there are no outstanding Uncovered Distribution
Charges of the Principal Underwriter. For the fiscal year ended September 30,
1994, the Fund made service fee payments to the Principal Underwriter and
Authorized Firms equivalent to 0.08% of the Fund's average daily net assets for
such year.
The Plan as currently implemented by the Trustees authorizes payments of
sales commissions and distribution fees to the Principal Underwriter and service
fees to the Principal Underwriter and Authorized Firms which may be equivalent,
on an aggregate basis during any fiscal year of the Fund, to 1% of the Fund's
average daily net assets for such year. The Fund 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.
It is anticipated that the Eaton Vance organization will profit by reason of the
operation of the Plan through increases in the Fund's assets (thereby increasing
the advisory fees payable to Eaton Vance) resulting from sale of Fund shares and
through amounts paid under the Plan to the Principal Underwriter and contingent
deferred sales charges paid to the Principal Underwriter.
The Principal Underwriter may, from time to time, at its own expense,
provide additional incentives to Authorized Firms which employ registered
representatives who sell a minimum dollar amount of the Fund's 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 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 Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares, and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
VALUING FUND SHARES
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THE 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). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT"),
(as agent for the Fund) in the manner authorized by the Trustees of the Fund.
Net asset value is computed by dividing the value of the Fund's total assets,
less its liabilities, by the number of shares outstanding. The Trustees have
established procedures for the valuation of the Fund's assets; in general, these
valuations are based on market value or fair value, with special provisions for
valuing debt obligations, short-term investments, foreign securities, hedging
instruments, direct placement securities, investments in Venture Capital
Companies, and assets not having readily available market quotations.
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. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter, which
is a wholly-owned subsidiary of Eaton Vance. Eaton Vance Corp. owns 77.3% of the
outstanding stock of IBT, the Fund's custodian.
--------------------------------------------------------------------------------
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE.
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HOW TO BUY FUND SHARES
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SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the net asset value per share of the Fund next determined after an order is
effective. The Fund may suspend the offering of shares at any time and may
refuse an order for the purchase of shares.
An initial investment in the Fund 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 Fund's Transfer Agent (the "Transfer Agent") as follows:
The Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104.
The $1,000 minimum initial investment is waived for Bank Draft 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
under which the average initial purchase by a participant of the plan is $1,000
or more, the Fund may accept initial investments 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 his or her participation in the plan, the shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Fund as described below under "How to
Redeem Fund Shares."
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent,
will receive securities acceptable to Eaton Vance, as investment adviser, in
exchange for Fund shares at their net asset value as determined above. The
minimum value of securities or securities and cash accepted for deposit is
$5,000. Securities accepted will be sold by IBT as agent for the account of
their owner on the day of their receipt by IBT 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 per Fund share on the day such proceeds are received.
Eaton Vance will use reasonable efforts to obtain the current market price for
such securities but does not guarantee the best price available. 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:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Marathon Gold & Natural Resources Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Gold & Natural Resources Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities to IBT. Eaton
Vance reserves the right to reject any securities. Exchanging securities for
Fund 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 for Fund shares.
--------------------------------------------------------------------------------
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
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HOW TO REDEEM FUND SHARES
------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO THE SHAREHOLDER SERVICES
GROUP, INC., BOS725, P.O. BOX 1559, BOSTON, MASSACHUSETTS 02104, during its
business hours a written request for redemption in good order, plus any share
certificates with executed stock powers. The redemption price will be based on
the net asset value per share next computed after such delivery. 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
regulation of the Securities and Exchange Commission (the "Commission") and
acceptable to The Shareholder Services Group, Inc. 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.
Within seven days after receipt of a redemption request in good order by The
Shareholder Services Group, Inc., the Fund 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 contingent deferred sales charges described below and Federal
income tax required to be withheld.
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 EVD, as the Fund's agent, receives the order. It is
the Authorized Firm's responsibility to transmit promptly repurchase orders to
EVD. Throughout this Prospectus, the word "redemption" is generally meant to
include a repurchase.
If shares were recently purchased, the proceeds of redemption (or
repurchase) 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 or repurchases may result in
a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem Fund accounts with balances of less than $1,000. Prior to such a
redemption, shareholders will be given 60 days written notice to make an
additional purchase. Thus, an investor making an initial investment of $1,000
would not be able to redeem shares without being subject to this policy.
However, no such redemption would be required by the Fund if the cause of the
low account balance was a reduction in the net asset value of Fund shares. No
contingent deferred sales charge will be imposed with respect to such
involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Shares redeemed within the first six years
of their purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge.
This contingent deferred sales charge 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 contingent deferred sales
charge; i.e., 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 contingent deferred sales charge which is required
to be imposed on share redemptions will be made in accordance with the following
schedule:
YEAR OF CONTINGENT
REDEMPTION DEFERRED SALES
AFTER PURCHASE CHARGE
-------------- --------------
First .............................................. 5%
Second ............................................. 5%
Third .............................................. 4%
Fourth ............................................. 3%
Fifth .............................................. 2%
Sixth .............................................. 1%
Seventh and following .............................. 0%
For shares purchased prior to August 1, 1994, the contingent deferred sales
charge for redemptions within the first year after purchase is 6%. In
calculating the contingent deferred sales charge upon the redemption of Fund
shares acquired in an exchange for shares of a fund currently listed under "The
Eaton Vance Exchange Privilege", the contingent deferred sales charge schedule
applicable to the shares at the time of purchase will apply and the purchase of
Fund shares acquired in the exchange is deemed to have occurred at the time of
the original purchase of exchanged shares. The contingent deferred sales charge
will be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton
Vance Shareholder Services") or (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).
No contingent deferred sales charge will be imposed on shares of the Fund
which have been sold to Eaton Vance, its affiliates or to their respective
employees or clients. The contingent deferred sales charge will be paid to the
Principal Underwriter or the Fund. When paid to the Principal Underwriter it
will reduce the amount of Uncovered Distribution Charges calculated under the
Fund's Distribution Plan. See "Distribution Plan."
--------------------------------------------------------------------------------
THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CONTINGENT DEFERRED
SALES CHARGE. ASSUME THAT AN INVESTOR PURCHASES $10,000 OF THE FUND'S SHARES
AND THAT 16 MONTHS LATER THE VALUE OF THE ACCOUNT HAS GROWN THROUGH INVESTMENT
PERFORMANCE AND REINVESTMENT OF DISTRIBUTIONS TO $12,000. THE INVESTOR THEN
MAY REDEEM UP TO $2,000 OF SHARES WITHOUT INCURRING A CONTINGENT DEFERRED
SALES CHARGE. IF THE INVESTOR SHOULD REDEEM $3,000 OF SHARES, A CHARGE WOULD
BE IMPOSED ON $1,000 OF THE REDEMPTION. THE RATE WOULD BE 5% BECAUSE IT WAS IN
THE SECOND YEAR AFTER THE PURCHASE WAS MADE AND THE CHARGE WOULD BE $50.
------------------------------------------------------------------------------
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 year, the Fund will furnish all shareholders with
information necessary for preparing their Federal and state income tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
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AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S TRANSFER
AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete
record of all transactions between the investor and the Fund which at all times
shows the balance of shares owned. The Fund 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 share balance in the account. (Under certain plans, statements
may be sent only quarterly). THE LIFETIME INVESTING ACCOUNT PERMITS A
SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50
OR MORE TO The Shareholder Services Group, Inc.
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 Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA 02104 (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 Fund's dividend disbursing agent, The Shareholder Services Group, Inc.,
BOS725, P.O. Box 1559, Boston, MA 02104. The currently effective option will
appear on each confirmation 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 of the Fund 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 Fund and its transfer agent.
Since the Fund 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 dealer or to an account directly with
the Fund 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 investment
firm, or transferring the account to another investment firm, an investor
wishing to reinvest distributions should determine whether the firm which will
hold the shares allows reinvestment of distributions in "street name" accounts.
--------------------------------------------------------------------------------
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL
INVESTMENTS BY SENDING A CHECK OF $50 OR MORE.
------------------------------------------------------------------------------
THE EATON VANCE EXCHANGE PRIVILEGE
------------------------------------------------------------------------------
Shares of the Fund may be exchanged for shares of one or more other funds in
the Eaton Vance Marathon Group of Funds (currently Eaton Vance Equity-Income
Trust, Eaton Vance Liquid Assets Trust (until March 31, 1995), and any EV
Marathon fund, except EV Marathon Short-Term Strategic Income Fund, Eaton Vance
Prime Rate Reserves and any EV Marathon Limited Maturity Fund which are
distributed with a contingent deferred sales charge, on the basis of the net
asset value per share of each fund at the time of the exchange, provided that
such exchange offers are available only in states where shares of such fund
being acquired may be legally sold. Effective March 31, 1995, the EV Marathon
Group of Funds will also include EV Marathon Short-Term Strategic Income Fund,
any EV Marathon Limited Maturity Fund and, when publicly available, Eaton Vance
Money Market Fund (availability expected on or about April 3, 1995).
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 Fund 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 Shareholder Services Group, Inc. makes exchanges at the next determined
net asset value after receiving an exchange request in good order (see "How to
Redeem Fund Shares"). Consult The Shareholder Services Group, Inc. 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 contingent deferred sales charge is imposed on exchanges. No contingent
deferred sales charge is imposed on exchanges. For purposes of calculating the
contingent deferred sales charge upon redemption of shares acquired in an
exchange, the contingent deferred sales charge 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. For the contingent deferred sales charge schedule
applicable to the EV Marathon Group of Funds (except EV Marathon Short-Term
Strategic Income Fund and Class I shares of any EV Marathon Limited Maturity
Fund), see "How to Redeem Fund Shares". The contingent deferred sales charge
schedule applicable to EV Marathon Short-Term Strategic Income Fund or Class I
shares of any EV Marathon Limited Maturity Fund 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.
Shares of the other funds in the Eaton Vance Marathon Group of Funds may be
exchanged for Fund shares at net asset value per share, but subject to any
restrictions or qualifications set forth in the current prospectus of any such
fund.
Telephone exchanges are accepted by The Shareholder Services Group, Inc.
provided the investor has not disclaimed in writing the use of the privilege. To
effect such exchanges, call The Shareholder Services Group, Inc. at 800-
262-1122 or, within Massachusetts, 617-573-9403, 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 Fund, the Principal Underwriter nor The Shareholder
Services Group, Inc., 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
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THE FUND 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 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
may be mailed directly to The Shareholder Services Group, Inc., BOS725, P.O. Box
1559, Boston, MA 02104 at any time -- whether or not distributions are
reinvested. The name of the shareholder, the Fund and the account number should
accompany each investment.
BANK DRAFT INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of $50
or more may be made through the shareholder's checking account via bank draft
each month or quarter. 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 in an aggregate amount that does not exceed annually
12% of the account balance at the time the Plan is established. Such amount will
not be subject to a contingent deferred sales charge. See "How to Redeem Fund
Shares". A minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST, WITH CREDIT FOR ANY CONTINGENT DEFERRED SALES CHARGES PAID ON THE
REDEEMED OR REPURCHASED SHARES, ANY PORTION OR ALL OF THE REPURCHASE OR
REDEMPTION PROCEEDS (PLUS THAT AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO
ROUND OFF THE PURCHASE TO THE NEAREST FULL SHARE) IN SHARES OF THE FUND,
provided that the reinvestment is effected within 30 days after such repurchase
or redemption. 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 Fund (or by the Fund's Transfer Agent).
To the extent that any shares are sold at a loss and the proceeds are reinvested
in shares of the Fund (or other shares of the Fund 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: Shares of the Fund are available for purchase
in connection with the following tax-sheltered retirement plans:
--Pension and Profit Sharing Plans for self-employed individuals,
corporations and non-profit organizations;
--Individual Retirement Account Plans for individuals and their non-
employed spouses; and
--403(b) Retirement Plans for employees of public school systems, hospitals,
colleges and other non-profit organizations meeting certain requirements
of the Internal Revenue Code.
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. 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 its investment
income earned, less its expenses, and (B) at least one distribution (normally in
December) of all or substantially all of the net capital gains (reduced by any
available capital loss carryforwards from prior years) realized by the Fund, if
any.
Shareholders may reinvest all distributions in shares of the Fund at net
asset value as of the close of business on the record date.
TAXES
Distributions of the Fund from its 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. A
portion of distributions from the 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 on sales of
investments and on options, futures and certain forward foreign currency
exchange transactions during the fiscal year, which ends on September 30, will
usually be distributed prior to the end of December. Distributions from the
Fund's net long-term capital gains 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 distributions to shareholders may be affected by special tax rules
governing the Fund's activities in options, futures and forward foreign currency
exchange transactions.
Certain distributions declared 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.
The Fund may be required to pay foreign taxes with respect to income
(possibly including, in some cases, capital gains) that it derives from
investments in foreign securities. If more than 50% of the value of the Fund's
total assets at the close of its taxable year (September 30) consists of
securities in foreign corporations, the Fund may make an election under Section
853 of the Code to pass through to its shareholders the right to take the credit
or deduction for qualifying foreign taxes paid by the Fund during such year. 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 proportionate share of such taxes paid to each foreign
country or U.S. possession and the portion of the distribution which represents
income derived from sources within each country or U.S. possession. Each
shareholder will include in gross income (in addition to taxable distributions
received from the Fund) the proportionate share of such taxes, and can treat
such amount as paid by such shareholder for purposes of the deduction or credit
for foreign taxes on the shareholders own Federal income tax return.
Availability of the deduction or credit for foreign taxes is subject to certain
tax restrictions.
Shareholders will receive annually one or more Forms 1099 to assist in
reporting on their Federal and state income tax returns the prior calendar
year's distributions, proceeds from the redemption or exchange of Fund shares,
and Federal income tax (if any) withheld by the Fund's Transfer Agent.
--------------------------------------------------------------------------------
AS A REGULATED INVESTMENT COMPANY UNDER THE INTERNAL REVENUE CODE, THE FUND
DOES NOT PAY FEDERAL INCOME OR EXCISE TAXES TO THE EXTENT THAT IT DISTRIBUTES
TO SHAREHOLDERS ITS NET INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS IN
THE MANNER REQUIRED BY THE CODE.
------------------------------------------------------------------------------
PERFORMANCE INFORMATION
------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS YIELD AND/OR AVERAGE ANNUAL TOTAL
RETURN. The current yield for the Fund will be calculated by dividing the net
investment income per share during a recent 30 day period by the maximum
offering price per share (net asset value) of the Fund on the last day of the
period and annualizing the resulting figure. The Fund's average annual total
return is determined by computing the average annual percentage change in value
of $1,000 invested at the maximum public offering price (net asset value) for
specified periods ending with the most recent calendar quarter, assuming
reinvestment of all distributions. The total return calculation assumes a
complete redemption of the investment and the deduction of any contingent
deferred sales charge at the end of the period. The Fund may also publish annual
and cumulative total return figures from time to time.
The Fund may also publish total return figures which do not take into
account any contingent deferred sales charge which may be imposed upon
redemptions at the end of the specified period. Any performance figure which
does not take into account the contingent deferred sales charge would be reduced
to the extent such charge is imposed upon a redemption.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's current yield or total return for
any prior period should not be considered a representation of what an investment
may earn or what an investor's yield or total return may be in any future
period.
INVESTMENT ADVISER
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
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
EV MARATHON GOLD &
NATURAL RESOURCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
NRP
EV MARATHON GOLD &
NATURAL RESOURCES
FUND
PROSPECTUS
FEBRUARY 1, 1995
EATON VANCE GROWTH TRUST
EV MARATHON GOLD & NATURAL RESOURCES FUND
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY 1, 1995
Effective August 31, 1995, EV Marathon Gold & Natural Resources Fund
was reorganized and became a series of Eaton Vance Growth Trust, a business
trust organized under the laws of the Commonwealth of Massachusetts. Prior to
the reorganization, the Fund had been a separate Massachusetts business trust.
Except for the fact that the Fund is now a series of Eaton Vance Growth Trust,
shares of the Fund represent the same interest in the Fund's assets, are of the
same class, are subject to the same terms and conditions, fees and expenses and
confer the same rights as when the Fund was a separate trust.
The fiscal year end of the Fund has been changed from September 30 to
August 31.
THE DATE OF THE ATTACHED STATEMENT OF ADDITIONAL INFORMATION IS CHANGED
TO SEPTEMBER 1, 1995.
September 1, 1995 M-NRSAIS
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
February 1, 1995
EV MARATHON GOLD & NATURAL RESOURCES FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
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TABLE OF CONTENTS Page
Investment Objective and Policies ................................. 2
Investment Restrictions ........................................... 10
Trustees and Officers ............................................. 12
Control Persons and Principal Holders of Securities ............... 14
Investment Adviser ................................................ 14
Custodian ......................................................... 16
Independent Certified Public Accountants .......................... 16
Service for Withdrawal ............................................ 16
Determination of Net Asset Value .................................. 17
Purchase and Redemption of Shares ................................. 17
Investment Performance ............................................ 17
Taxes ............................................................. 19
Principal Underwriter ............................................. 21
Distribution Plan ................................................. 21
Portfolio Security Transactions ................................... 23
Other Information ................................................. 24
Appendix .......................................................... 26
Financial Statements .............................................. 29
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THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE PROSPECTUS OF EV MARATHON GOLD & NATURAL RESOURCES FUND (THE
"FUND") DATED FEBRUARY 1, 1995, AS SUPPLEMENTED FROM TIME TO TIME. THIS
STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH
PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING THE
PRINCIPAL UNDERWRITER (SEE BACK COVER FOR ADDRESS AND PHONE NUMBER).
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of EV Marathon Gold & Resources Fund (the "Fund")
is capital appreciation and protection of the purchasing power of the
shareholder's capital. Although the Fund will derive income from some of its
investments, current income is not an investment objective and will not be a
primary consideration in selecting securities for the Fund's portfolio.
INVESTMENT POLICIES
The following investment policies supplement those set forth in the
Prospectus. They are not fundamental policies and accordingly may be changed by
the Trustees without obtaining the approval of the Fund's shareholders.
ASSET-RELATED SECURITIES
The Fund may invest in debt securities, preferred stocks or convertible
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. For the purposes of the Fund's investment policies, these securities
are referred to as "asset-related securities". The Fund's investment adviser
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, the investment adviser 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 resources
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 assets.
The Fund will not acquire asset-related securities for which no trading
market exists if at the time of acquisition more than 10% of its total assets
are invested in securities which are not readily marketable. The Fund 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 Fund 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 Fund may invest may bear interest
or pay preferred dividends at below market (or even relatively nominal) rates.
The Fund'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 Fund purchased such securities.
FOREIGN INVESTMENTS
Investing in foreign issuers involves certain special considerations,
including those set forth below, which are not typically associated with
investing in U.S. issuers. Since investments in foreign issuers may involve
currencies of foreign countries, and since the Fund may temporarily hold funds
in bank deposits in foreign currencies during completion of investment programs,
the Fund may be affected favorably or unfavorably by changes in currency rates
and in exchange control regulations and may incur costs in connection with
conversions between various currencies.
Since foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies, there may be less publicly
available information about a foreign company than about a domestic company.
Foreign stock markets, while growing in volume of trading activity, have
substantially less volume than the New York Stock Exchange, and securities of
some foreign companies are less liquid and more volatile than securities of
comparable U.S. companies. Similarly, volume and liquidity in most foreign bond
markets is less than in the United States and, at times, volatility of price can
be greater than in the United States. Fixed commissions on foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges,
although the Fund endeavors to achieve the most favorable net results on its
portfolio transactions. There is generally less government supervision and
regulation of stock exchanges, brokers and listed companies than in the United
States. Mail service between the United States and foreign countries may be
slower or less reliable than within the United States, thus increasing the risk
of delayed settlements of portfolio transactions or loss of certificates for
portfolio securities. In addition, with respect to certain foreign countries,
there is the possibility of expropriation or confiscatory taxation, political or
social instability, or diplomatic developments which could affect the Fund's
investments in those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in such respects as growth
of gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. In some countries delayed
settlements are customary which increases the risk of loss.
FORWARD FOREIGN CURRENCY EXCHANGE TRANSACTIONS
The Fund may enter into forward foreign currency exchange contracts. A
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of entering into the contract. These contracts are traded in the interbank
market conducted directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for trades.
At the maturity of a forward contract the Fund may either accept or make
delivery of the currency specified in the contract or, at or prior to maturity,
enter into a closing transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts are usually
effected with the currency trader who is a party to the original forward
contract.
The Fund may enter into forward foreign currency exchange contracts in
several circumstances. First, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the
Fund anticipates the receipt in a foreign currency of dividend or interest
payments on such a security which it holds, the Fund 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 Fund 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 Fund 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 Fund's portfolio securities 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 Fund's
foreign assets. The Fund will not enter into forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's portfolio securities or other assets denominated in that
currency.
The Fund's custodian will place cash or liquid securities into a segregated
account of the Fund in an amount equal to the value of the Fund's total assets
committed to the consummation of forward foreign currency exchange contracts
requiring the Fund to purchase foreign currencies. If the value of the
securities placed in the segregated account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of the Fund's commitments with respect to such
contracts.
The Fund generally will not enter into a forward contract with a term of
greater than one year. It also should be realized that this method of protecting
the value of the Fund's portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange which the Fund can achieve
at some future point in time.
While the Fund will enter into forward contracts to reduce currency exchange
rate risks, transactions in such contracts involve certain other risks. Thus,
while the Fund may benefit from such transactions, unanticipated changes in
currency prices may result in a poorer overall performance for the Fund than if
it had not engaged in any such transactions. Moreover, there may be imperfect
correlation between the Fund's portfolio holdings of securities denominated in a
particular currency and forward contracts entered into by the Fund. Such
imperfect correlation may prevent the Fund from achieving a complete hedge or
expose the Fund to risk of foreign exchange loss.
REPURCHASE AGREEMENTS
The Fund'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 Fund may enter into reverse repurchase agreements. Under a reverse
repurchase agreement, the Fund 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 Fund agrees to repurchase the instrument at an
agreed upon time (normally within seven days) and price, which reflects an
interest payment. The Fund 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 Fund.
The Fund 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 Fund 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 Fund's assets. As a result, such transactions may increase fluctuations
in the market value of the Fund's assets. While there is a risk that large
fluctuations in the market value of the Fund's assets could affect the Fund's
net asset value per share, this risk is not significantly increased by entering
into reverse repurchase agreements, in the opinion of the Fund's investment
adviser, Eaton Vance Management ("Eaton Vance"). Because reverse repurchase
agreements may be considered to be the practical equivalent of borrowing funds,
they constitute a form of leverage. If the Fund 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 Fund's yield.
At all times that a reverse repurchase agreement is outstanding, the Fund
will maintain cash and liquid securities in a segregated account at its
custodian bank with a value at least equal to its obligation under the
agreement. Securities and other assets held in the segregated account may not be
sold while the reverse repurchase agreement is outstanding, unless other
suitable assets are substituted. While Eaton Vance 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 Fund's investment restriction (1) set forth below.
LEVERAGE THROUGH BORROWING
The Investment Company Act of 1940 requires the Fund to maintain continuous
asset coverage of not less than 300% with respect to its borrowings. This allows
the Fund 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 Fund may be required to sell some of its portfolio holdings within
three days in order to reduce the Fund'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 Fund's 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
Fund 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.
WRITING AND PURCHASING CALL AND PUT OPTIONS
A call option written by the Fund obligates the Fund to sell specified
securities to the holder of the option at a specified price if the option is
exercised at any time before the expiration date. The Fund will write a covered
call option on a security for the purpose of increasing its return on such
security and/or to partially hedge against a decline in the value of the
security. In particular, when the Fund writes an option which expires
unexercised or is closed out by the Fund at a profit, it will retain the premium
paid for the option, which will increase its gross income and will offset in
part the reduced value of the portfolio security underlying the option, or the
increased cost of acquiring the security for its portfolio. However, if the
price of the underlying security moves adversely to the Fund's position, the
option may be exercised and the Fund will be required to purchase or sell the
underlying security at a disadvantageous price, which may only be partially
offset by the amount of the premium, if at all. The Fund 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 Fund, would be subject to
such options. The Fund will only write a put option on a security which it
intends to ultimately acquire for its portfolio. A put option written by the
Fund would obligate the Fund to purchase specified securities from the option
holder at a specified price if the option is exercised at any time before the
expiration date.
The Fund may terminate its obligations under a call or put option by
purchasing an option identical to the one it has written. Such purchases are
referred to as "closing purchase transactions."
The Fund may purchase put or call options on securities or securities
indices in anticipation of changes in the value of its existing portfolio
securities or in the prices of securities that the Fund intends to purchase at a
later date. In the event that the expected changes occur, the Fund may be able
to offset adverse changes in the value of its portfolio, in whole or in part,
through the options purchased. The premium paid for a put or call option plus
any transaction costs will reduce the benefit, if any, realized by the Fund upon
exercise or liquidation of the option. Unless the price of the underlying
security changes sufficiently, the option may expire without value to the Fund.
The Fund 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 Fund, would be so invested.
The Fund would normally purchase call options in anticipation of an increase
in the market value of securities of the type in which the Fund may invest. The
purchase of a call option would entitle the Fund, in return for the premium
paid, to purchase specified securities at a specified price during the option
period. The Fund would ordinarily realize a gain if, during the option period,
the value of such securities exceeded the sum of the exercise price, the premium
paid and transaction costs; otherwise, the Fund would realize a loss on the
purchase of the call option.
The Fund would normally purchase put options in anticipation of a decline in
the market value of securities in its portfolio ("protective puts") or
securities of the type in which it is permitted to invest. The purchase of a put
option would entitle the Fund, in exchange for the premium paid, to sell
specified securities at a specified price during the option period. The purchase
of protective puts is designed merely to offset or hedge against a decline in
the market value of the Fund's portfolio securities. The Fund would ordinarily
realize a gain if, during the option period, the value of the underlying
securities decreased below the exercise price sufficiently to cover the premium
and transaction costs; otherwise, the Fund would realize a loss on the purchase
of the put option. Gains and losses on the purchase of protective put options
would tend to be offset by countervailing changes in the value of underlying
portfolio securities.
The Fund would also be able to enter into closing sale transactions in order
to realize gains or minimize losses on options purchased by the Fund.
The Fund would write and purchase put and call options on securities indices
for the same purposes as the writing and purchase of options on securities.
Options on securities indices are similar to options on securities, except that
the exercise of securities index options requires cash payments and does not
involve the actual purchase or sale of securities. In addition, securities index
options are designed to reflect price fluctuations in a group of securities or
segment of the securities market rather than price fluctuations in a single
security.
SPECIAL RISKS ASSOCIATED WITH OPTIONS ON SECURITIES
An options position may be closed out only on an options exchange which
provides a secondary market for an option of the same series. Although the Fund
will generally purchase or write only those options for which there appears to
be an active secondary market, there is no assurance that a liquid secondary
market on an exchange will exist for any particular option, or at any particular
time. For some options no secondary market on an exchange may exist. In such
event, it might not be possible to effect closing transactions in particular
options, with the result that the Fund would have to exercise its options in
order to realize any profit and would incur transaction costs upon the sale of
underlying securities pursuant to the exercise of put options. If the Fund as a
covered call option writer is unable to effect a closing purchase transaction in
a secondary market, it will not be able to sell the underlying security until
the option expires or it delivers the underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange include
the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
the Options Clearing Corporation may not at all times be adequate to handle
current trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that exchange (or in that class or series of options)
would cease to exist, although outstanding options on that exchange that had
been issued by the Options Clearing Corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.
The Fund will pay brokerage commissions in connection with writing options
and effecting closing purchase transactions, as well as for purchases and sales
of underlying securities. The writing of options could result in significant
increases in the Fund's portfolio turnover rate, especially during periods when
market prices of the underlying securities appreciate.
There is no assurance that higher than anticipated trading activity or other
unforeseen events might not, at times, render certain of the facilities of the
Options Clearing Corporation inadequate, and thereby result in the institution
by an exchange of special procedures which may interfere with the timely
execution of customers' orders.
The amount of the premiums which the Fund may pay or receive may be
adversely affected as new or existing institutions, including other investment
companies, engage in or increase their option purchasing and writing activities.
FUTURES TRANSACTIONS
Futures Contracts. A change in the level of interest rates, currency exchange
rates or securities prices may affect the value of the Fund's portfolio
securities (or of securities that the Fund expects to purchase). To hedge
against changes in rates or prices, or for non-hedging purposes, the Fund may
enter into (i) futures contracts for the purchase or sale of securities and
currency, (ii) futures contracts on securities indices and (iii) futures
contracts on other financial instruments and indices. In the United States,
futures contracts are traded on exchanges or boards of trade that are licensed
and regulated by the Commodity Futures Trading Commission ("CFTC") and must be
executed through a futures commission merchant or brokerage firm which is a
member of the relevant exchange. The Fund may also enter into futures contracts
traded on a foreign exchange if it is determined by the investment adviser that
trading on such exchange does not subject the Fund to risks, including credit
and liquidity risks, that are materially greater than the risks associated with
trading on United States exchanges. The futures contracts may be based on
various securities and commodities in which the Fund may invest, foreign
currencies, certificates of deposit, Eurodollar time deposits, securities
indices, economic indices (such as the Consumer Price Indices compiled by the
U.S. Department of Labor) and other financial instruments and indices.
Futures Contracts on Securities and Currency. A futures contract on securities
or currency is a binding contractual commitment which, if held to maturity, will
result in an obligation to make or accept delivery, during a particular month,
of securities having a standardized face value and rate of return or of the
specified currency. By purchasing futures on securities or currency, the Fund
will legally obligate itself to accept delivery of the underlying security or
currency and pay the agreed price; by selling futures on securities or currency,
it will legally obligate itself to make delivery of the security or currency
against payment of the agreed price.
Positions taken in the futures markets are not normally held to maturity,
but are instead liquidated through offsetting transactions which may result in a
profit or a loss. While the Fund's futures contracts on securities or currency
will usually be liquidated in this manner, it may instead make or take delivery
of the underlying securities or currency whenever it appears economically
advantageous for the Fund to do so. A clearing corporation associated with the
exchange on which futures on securities or currency are traded guarantees that,
if still open, the sale or purchase will be performed on the settlement date.
Futures Contracts on Securities Indices. Futures contracts on securities or
other indices do not require the physical delivery of securities, but merely
provide for profits and losses resulting from changes in the market value of a
contract to be credited or debited at the close of each trading day to the
respective accounts of the parties to the contract. On the contract's expiration
date a final cash settlement occurs and the future positions is simply closed
out. Changes in the market value of a particular futures contract reflect
changes in the level of the index on which the futures contract is based.
Hedging Strategies. Hedging by use of futures contracts seeks to establish more
certainly than would otherwise be possible the effective price or rate of return
on portfolio securities or securities that the Fund proposes to acquire. The
Fund may, for example, take a "short" position in the futures market by selling
futures contracts in order to hedge against an anticipated rise in interest
rates or a decline in market prices or foreign currency exchange rates that
would adversely affect the value of the Fund's portfolio securities. Such
futures contracts may include contracts for the future delivery of securities
held by the Fund (or currency in which such securities are denominated) or
securities with characteristics similar to those of the Fund's portfolio
securities. If, in the opinion of Eaton Vance, there is a sufficient degree of
correlation between price trends for the Fund's portfolio securities and futures
contracts based on other financial instruments, securities indices or other
indices, the Fund may also enter into such futures contracts as part of its
hedging strategy. Although under some circumstances prices of securities in the
Fund's portfolio may be more or less volatile than prices of such futures
contracts, Eaton Vance will attempt to estimate the extent of this difference in
volatility based on historical patterns and to compensate for it by having the
Fund enter into a greater or lesser number of futures contracts or by attempting
to achieve only a partial hedge against price changes affecting the Fund's
securities portfolio. When hedging of this character is successful, any
depreciation in the value of portfolio securities will be substantially offset
by appreciation in the value of the futures position.
On other occasions, the Fund may take a "long" position by purchasing such
futures contracts. This would be done, for example, when the Fund anticipates
the subsequent purchase of particular securities when it has the necessary cash,
but expects the prices then available in the securities market or foreign
currency exchange rates to be less favorable than prices or rates that are
currently available.
Options on Futures Contracts. The Fund may purchase and write call and put
options on futures contracts which are traded on a United States exchange or
board of trade. An option on a futures contract gives the purchaser the right,
in return for the premium paid, to assume a position in a futures contract at a
specified exercise price at any time during the option period. Upon exercise of
the option, the writer of the option is obligated to convey the appropriate
futures position to the holder of the option. If an option is exercised on the
last trading day before the expiration date of the option, a cash settlement
will be made in an amount equal to the difference between the closing price of
the futures contract and the exercise price of the option.
The Fund may use options on futures contracts for bona fide hedging purposes
as defined below or for non-hedging purposes subject to the limitations imposed
by CFTC regulations. If the Fund purchases a call (put) option on a futures
contract it benefits from any increase (decrease) in the value of the futures
contract, but is subject to the risk of decrease (increase) in value of the
futures contract. The benefits received are reduced by the amount of the premium
and transaction costs paid by the Fund for the option. If market conditions do
not favor the exercise of the option, the Fund's loss is limited to the amount
of such premium and transaction costs paid by the Fund for the option.
If the Fund writes a call (put) option on a futures contract, the Fund
receives a premium but assumes the risk of a rise (decline) in value in the
underlying futures contract. If the option is not exercised, the Fund gains the
amount of the premium, which may partially offset unfavorable changes in the
value of securities (or the currency in which such securities are denominated)
held or to be acquired for the Fund's portfolio. If the option is exercised, the
Fund will incur a loss, which will be reduced by the amount of the premium it
receives. However, depending on the degree of correlation between changes in the
value of its portfolio securities (or the currency in which they are
denominated) and changes in the value of futures positions, the Fund's losses
from writing options on futures may be partially offset by favorable changes in
the value of portfolio securities or in the cost of securities to be acquired.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option of the same series. There
is no guarantee that such closing transactions can be effected. The Fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
Limitations on the Use of Futures Contracts and Options on Futures Contracts.
The Fund will engage in futures and related options transactions for bona fide
hedging or non-hedging purposes as defined in or permitted by CFTC regulations.
The Fund will determine that the price fluctuations in the futures contracts and
options on futures used for hedging purposes are substantially related to price
fluctuations in securities (or the currency in which they are denominated) held
by the Fund or which it expects to purchase. Except as stated below, the Fund's
futures transactions will be entered into for traditional hedging purposes --
i.e, futures contracts will be sold to protect against a decline in the price of
securities that the Fund owns, or futures contracts will be purchased to protect
the Fund against an increase in the price of securities it intends to purchase.
As evidence of this hedging intent, the Fund expects that on 75% or more of the
occasions on which it takes a long futures (or option) position (involving the
purchase of futures contracts), the Fund will have purchased, or will be in the
process of purchasing, equivalent amounts of related securities in the cash
market at the time when the futures (or option) position is closed out. However,
in particular cases, when it is economically advantageous for the Fund to do so,
a long futures position may be terminated (or an option may expire) without the
corresponding purchase of securities. As an alternative to compliance with the
bona fide hedging definition, a CFTC regulation now permits the Fund to elect to
comply with a different test, under which the aggregate initial margin and
premiums required to establish non-hedging positions in futures contracts and
options on futures will not exceed 5% of the Fund's net asset value after taking
into account unrealized profits and losses on such positions and excluding the
in-the-money amount of such options. The Fund will engage in transactions in
futures contracts and related options only to the extent such transactions are
consistent with the requirements of the Internal Revenue Code for maintaining
its qualification as a regulated investment company for Federal income tax
purposes (see "Taxes").
The Fund will be required, in connection with transactions in futures
contracts and the writing of options on futures, to make margin deposits, which
will be held by the Fund's custodian for the benefit of the futures commission
merchant through whom the Fund engages in such futures and options transactions.
Cash or liquid debt securities required to be segregated in connection with a
"long" futures position taken by the Fund will also be held by the custodian in
a segregated account and will be marked to market daily.
SPECIAL RISKS ASSOCIATED WITH FORWARD CONTRACTS, FOREIGN CURRENCY FUTURES
CONTRACTS AND OPTIONS THEREON AND OPTIONS ON FOREIGN CURRENCIES
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 Fund. 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.
Further, 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 Fund's trading systems will be
based may not be as complete as the comparable data on which the Fund 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 Fund from responding to such events in a timely manner.
Settlements of over-the-counter forward contracts or of an 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 SEC. 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 SEC 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 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 the
Fund 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
Fund's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Fund. 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 contracts, and the Fund 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 the Fund's ability to realize
profits or to reduce losses on open positions and could result in greater
losses.
Further, over-the-counter transactions are not backed by the guarantee of an
exchange clearing house, and the Fund will thererfore be subject to the risk of
default by, or the bankruptcy of, the financial institution serving as its
counterparty. One or more such institutions also may decide to discontinue their
role as market-makers in a particular currency, thereby restricting the Fund's
ability to enter into desired hedging transactions. A Fund will enter into
over-the-counter transactions only with parties whose creditworthiness has been
reviewed and found satisfactory by the Fund's investment adviser.
Over-the-counter options on foreign currencies, like exchange-traded
commodity futures contracts and commodity option contracts, are within the
exclusive regulatory jurisdiction of the CFTC, which currently permits the
trading of such options, but only subject to a number of conditions regarding
the commercial purpose of the purchaser of such option. The Fund is not able to
determine at this time whether or to what extent the CFTC may impose additional
restrictions on the trading of over-the-counter options on foreign currencies at
some point in the future, or the effect that any such restrictions may have on
the hedging strategies to be implemented by the Fund.
CFTC regulations require that the Fund not enter into transactions in
commodity futures contracts or commodity option contracts for which the
aggregate initial margin and premiums exceed 5% of the fair market value of the
Fund's assets. Premiums paid to purchase over-the-counter options on foreign
currencies, and margin deposited in connection with the writing of such options,
are required to be included in determining compliance with this requirement.
This could, depending upon the Fund's existing positions in futures contracts
and options on futures contracts, limit the Fund's ability to purchase or write
options on foreign currencies. Conversely, the existence of open positions in
options on foreign currencies could limit the ability of the Fund to enter into
desired transactions in other options or futures contracts.
While forward contracts are not presently subject to regulation by the CFTC,
the CFTC may in the future assert or be granted authority to regulate such
instruments. In such event, the Fund's ability to utilize forward contracts in
the manner set forth above could be restricted.
Options on foreign currencies traded on a national securities exchange are
within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation ("OCC"),
thereby reducing the risk of counterparty default. Further, a liquid secondary
market in options traded on a national securities exchange may be more readily
available than in the over-the-counter market, potentially permitting the Fund
to liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is 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 effects 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 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.
DIRECT PLACEMENT SECURITIES AND VENTURE CAPITAL INVESTMENTS
Assets of the Fund may be invested in direct placement securities of small,
unseasoned companies and in the securities of small, unseasoned Venture Capital
companies as well as in the securities of large and well known companies. There
may be little operating history and less available information about such
unseasoned companies than about large and well known companies, and it may be
more difficult to evaluate the management of a small, unseasoned company. The
securities of an unseasoned company may have a limited trading market, which may
adversely affect their disposition by the Fund. In view of the limited liquidity
of this type of investment, management will not permit a substantial portion of
the Fund to be so invested. The making of this type of investment is subject to
the policies of the Fund set forth under "Investment Restrictions" below.
CONVERTIBLE SECURITIES
The Fund 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 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
The Fund may purchase warrants, but does not intend to invest more than 5%
of its net assets at the time of purchase in warrants (other than those that
have been acquired in units or attached to other securities). 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.
PORTFOLIO TURNOVER
The Fund cannot accurately predict its portfolio turnover rate, but it is
anticipated that the annual turnover rate will generally not exceed 200%
(excluding turnover of securities having a maturity of one year or less). A 200%
annual turnover rate would occur, for example, if all the securities in the
portfolio were replaced twice in a period of one year. A high turnover rate
(such as 200%) necessarily involves greater expenses to the Fund. The Fund
engages in portfolio trading (including short-term trading) if it believes that
a transaction including all costs will help in achieving its investment
objective by enhancing the Fund's net asset value or potential performance.
INVESTMENT RESTRICTIONS
Whenever an investment policy or investment restriction set forth in the
Fund's Prospectus or Statement of Additional Information states a maximum
percentage of the Fund's 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 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 to dispose of such security or other asset.
The following investment restrictions (1) through (14) 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 Statement of Additional Information 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. The Fund will not:
(1) Borrow money, except that it may borrow
(i) from banks to purchase or carry securities, commodities,
commodities contracts or other investments, or
(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 assets,
including all borrowings then outstanding, less its liabilities, is equal to at
least 300% of the aggregate amount of borrowings then outstanding (for the
purpose of determining the 300% asset coverage, the Fund's liabilities will not
include amounts borrowed). Any such borrowings may be secured or unsecured. The
Fund may issue securities (including senior securities) appropriate to evidence
the indebtedness, including reverse repurchase agreements, which the Fund is
permitted to incur.
(2) Pledge its assets, except that 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 cash, cash equivalents, portfolio securities or other
assets in a segregated account with the Fund's custodian in connection with any
of the Fund's investment transactions is not considered to be a pledge.
(3) Purchase 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).
(4) 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.
(5) Purchase securities of any issuer 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 during periods
when management of the Fund anticipates significant economic, political or
financial instability.
(6) Purchase securities issued by any other investment company, except in
connection with a merger, consolidation, acquisition of assets or
reorganization, or by purchase in the open market of securities of closed-end
investment companies where no underwriter's or dealer's commission or profit,
other than customary broker's commission, is involved and only if immediately
thereafter not more than 10% of the Fund's total assets (taken at current value)
would be invested in such securities.
(7) 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 Fund or is a member, officer, director or trustee of any
investment adviser of the Fund, if after the purchase of the securities of such
issuer by the Fund one or more of such persons owns beneficially more than / of
1% of the shares or securities or both (all taken at current value) of such
issuer and such persons owning more than / 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).
(8) 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.
(9) Make loans to other persons, except by (a) the acquisition of money
market instruments, debt securities and other obligations in which the Fund is
authorized to invest in accordance with its investment objective and policies,
(b) entering into repurchase agreements and (c) lending its portfolio
securities.
(10) Invest for the purpose of gaining control of a company's management.
(11) 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.
(12) Buy investment securities from or sell them to any of its officers or
Trustees, its investment adviser or its principal underwriter, as principal;
provided, however, that any such person or firm may be employed as a broker upon
customary terms.
(13) Purchase oil, gas or other mineral leases or purchase partnership
interests in oil, gas or other mineral exploration or development programs; this
restriction shall not be deemed to limit or restrict the Fund's investments in
securities issued by companies that engage in oil, gas or other mineral
exploration or development activities.
(14) Knowingly (i) purchase a security issued by a Venture Capital Company
(a company the securities of which have no public market at the time the
investment is made) or which at the time of purchase cannot be readily resold
because of legal or contractual restrictions or for which at the time of
purchase there is clearly no readily available market, (ii) invest in options on
foreign currencies which are not traded on an exchange or board of trade or
(iii) enter into a repurchase agreement maturing in more than seven days if, as
a result, more than 10% of the Fund's total assets (taken at current value)
would be invested in such securities, options and repurchase agreements. The
following securities are not subject to this restriction -- securities which the
Fund has a right to convert or exchange into a readily marketable security in
which it could otherwise invest upon not less than seven days notice; securities
which the Fund has the option to put to the issuer or a stand-by bank or broker
and receive the principal amount of redemption price less transaction costs on
not more than seven days notice; and securities (purchased by the Fund at a time
when the issuer was a Venture Capital Company) of a company which has ceased to
be a Venture Capital Company provided that such securities are readily
marketable.
For the purpose of investment restrictions (1), (2) and (3), the
arrangements (including escrow, margin and collateral arrangements) made by the
Fund with respect to its transactions in all types of options, futures
contracts, options on futures contracts, forward contracts, currencies, coins,
bullion, 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 Fund, (ii) a pledge of its assets, or (iii) the purchase of a security on
margin.
In connection with investment restriction (9) above, the Fund has no present
intention of lending its portfolio securities. The Fund would lend its portfolio
securities to increase its income only if and when the Trustees determine such
activity to be appropriate, and such loans would be subject to such policies and
conditions as the Trustees may impose to safeguard the Fund's assets. The
Prospectus and Statement of Additional Information of the Fund will be amended
to describe Fund lending policies prior to the lending of portfolio securities,
except to the extent repurchase agreements may be deemed to be loans of
securities.
The Fund has adopted the following additional fundamental investment
policies which may not be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities:
(A) 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.
(B) 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.
In connection with investment policy (B) above, the Fund's present
intentions with respect to its investments in commodities and commodities
contracts are set forth in the Fund's Prospectus and elsewhere in this Statement
of Additional Information. The Fund would make other types of investments in
commodities and commodities contracts only if and when the Trustees determine
such activity is appropriate; any such additional investment activity will be
disclosed in the Fund's Prospectus or Statement of Additional Information or in
an amendment to either of them.
The Fund has adopted the following policies which may be changed without
shareholder approval. The Fund currently does not intend to purchase the
securities of any one issuer (other than securities or obligations issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result of such purchase, more than 10% of the Fund's total assets
(taken at current value) would be invested in the securities of such issuer;
this policy does not apply to or limit the Fund's investments in certificates of
deposit, bankers' acceptances or time deposits of banking and thrift
institutions. Except for obligations issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities, the Fund will not knowingly
purchase a security issued by a company (including predecessors) with less than
three years operating history (unless such security is rated at least B or a
comparable rating at the time of purchase by at least one nationally recognized
rating service or unless such company is a regulated public utility or pipeline
company) if, as a result of such purchase, more than 5% of the Fund's total
assets (taken at current value) would be invested in such securities. For a
description of the securities ratings, see the Appendix. The Fund will not
purchase warrants if, as a result of such purchase, more than 5% of the Fund's
net assets, 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. The Fund will not
purchase or sell real property (including limited partnership interests, but
excluding readily marketable interests in real estate investment trusts or
readily marketable securities of companies which invest in real estate).
In order to permit the sale of shares of the Fund in certain states, the
Fund may make commitments more restrictive than the policies described above.
Should the Fund determine that any such commitment is no longer in the best
interests of the Fund and its shareholders, it will revoke the commitment by
terminating sales of its shares in the state(s) involved.
TRUSTEES AND OFFICERS
The Fund's Trustees and officers 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 Eaton Vance Management; Eaton Vance's wholly-owned
subdisiary, Boston Management and Research ("BMR"); Eaton Vance's parent, Eaton
Vance Corp. ("EVC"); and of Eaton Vance's and BMR's trustee, Eaton Vance, Inc.
("EV"). Eaton Vance and EV are both wholly-owned subsidiaries of EVC. Those
Trustees and officers who are "interested persons" of the Fund, Eaton Vance,
BMR, EVC or EV, as defined in the Investment Company Act of 1940, by virtue of
their affiliation with any one or more of the Fund, Eaton Vance, BMR, EVC or EV,
are indicated by an asterisk(*).
JAMES B. HAWKES (53), PRESIDENT AND TRUSTEE*
Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director of EVC
and EV. Director, Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
LANDON T. CLAY (68), VICE PRESIDENT AND TRUSTEE*
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. Mr. Clay was elected a Trustee of the Fund on December 16, 1991.
DONALD R. DWIGHT (63), TRUSTEE
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988; Chairman of the Board of Newspapers of New England,
Inc., since 1983. 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 (59), 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 Business School, Soldiers Field Road, Boston, Massachusetts
02134
NORTON H. REAMER (59), TRUSTEE
President and Director, United Asset Management Corporation, a holding company
owning institutional investment management firms. Chairman, President and
Director, The Regis Fund, Inc. (mutual fund). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (68), TRUSTEE
Director, Fiduciary Trust Company. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (64), 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
THOMAS E. FAUST, JR. (36), VICE PRESIDENT*
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS OTIS (63), SECRETARY*
Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (49), TREASURER*
Vice President of Eaton Vance, BMR and EV. Officer of various other investment
companies managed by Eaton Vance or BMR.
WILLIAM J. AUSTIN, JR. (43), ASSISTANT TREASURER*
Assistant Vice President of Eaton Vance, BMR and EV. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Austin was elected
Assistant Treasurer of the Fund on June 22, 1992.
JANET E. SANDERS (59), ASSISTANT TREASURER AND ASSISTANT SECRETARY* Vice
President of Eaton Vance, BMR and EV. Officer of various investment companies
managed by Eaton Vance or BMR.
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the Special
Committee of the Board of Trustees of the Fund. The Special Committee's
functions include a continuous review of the Fund's contractual relationship
with the investment adviser, making recommendations to the Trustees regarding
the compensation of those Trustees who are not members of the investment
adviser's organization, and making recommendations to the Trustees regarding
candidates to fill vacancies, as and when they occur, in the ranks of those
Trustees who are not "interested persons" of the Fund or the investment adviser.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees. The Audit Committee's functions include making
recommendations to the Trustees regarding the selection of the independent
certified public accountants, and reviewing with such accountants and the
Treasurer of the Fund matters relative to 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
Fund.
The fees and expenses of those Trustees of the Fund who are not members of
the Eaton Vance organization are paid by the Fund. During the fiscal year ended
September 30, 1994, the Trustees of the Fund earned the following compensation
in their capacities as Trustees from the Fund and other funds in the Eaton Vance
fund complex:
[Enlarge/Download Table]
AGGREGATE RETIREMENT TOTAL COMPENSATION
COMPENSATION BENEFIT ACCRUED FROM FUND AND
NAME FROM FUND FROM FUND COMPLEX FUND COMPLEX<F1>
---- ------------ ----------------- ------------------
Donald R. Dwight .................. $102 -- 0 -- $132,500
Samuel L. Hayes, III .............. 99 -- 0 -- 140,000
Norton H. Reamer .................. 94 -- 0 -- 132,500
John L. Thorndike ................. 96 -- 0 -- 137,500
Jack L. Treynor ................... 102 -- 0 -- 137,500
<FN>
<F1> The Eaton Vance fund complex consists of 201 registered investment companies or series thereof.
Trustees of the Fund that 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 "Plan"). Under the
Plan, an eligible Trustee may elect to have his deferred fees invested by the
Fund in the shares of one or more funds in the Eaton Vance Family of Funds, and
the amount paid to the Trustees under the Plan will be determined based upon the
performance of such investments. Deferral of Trustees' fees in accordance with
the Plan will have a negligible effect on the Fund's assets, liabilities, and
net income per share, and will not obligate the Fund to retain the services of
any Trustee or obligate the Fund to pay any particular level of compensation to
the Trustee.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at December 31, 1994, the Trustees and officers of the Fund, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
December 31, 1994, Merrill Lynch, Pierce, Fenner & Smith, Inc., New Brunswick,
NJ was the record owner of approximately 19.5% of the outstanding shares, which
they 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 Fund, no other person beneficially owns
5% or more of its outstanding shares.
INVESTMENT ADVISER
The Fund engages Eaton Vance as investment adviser pursuant to an Investment
Advisory Agreement originally made on October 21, 1987 and re- executed on
November 1, 1990. Eaton Vance or its affiliates acts as investment adviser to
investment comanies and various individual and institutional clients with
combined assets under management of approximately $15 billion. Eaton Vance is a
wholly-owned subsidiary of EVC, a holding company.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. It maintains a large staff of experienced fixed-income and
equity investment professionals to service the needs of its 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 manages the investments and affairs of the Fund subject to the
supervision of the Fund's Board of Trustees. Eaton Vance furnishes to the Fund
investment advice and assistance, administrative services, office space,
equipment and clerical personnel, and investment advisory, statistical and
research facilities, and has arranged for certain members of the Eaton Vance
organization to serve without salary as officers or Trustees of the Fund. The
Fund is responsible for all expenses not expressly stated to be payable by Eaton
Vance under the Investment Advisory Agreement, including, without limitation,
the fees and expenses of its custodian and transfer agent, including those
incurred for determining the Fund's net asset value and keeping its books; the
cost of share certificates; membership dues in investment company organizations;
brokerage commissions and fees; fees and expenses of registering its shares;
expenses of reports to shareholders, proxy statements, and other expenses of
shareholders' meetings; insurance premiums; printing and mailing expenses;
interest, taxes and corporate fees; legal and accounting expenses; and
compensation and expenses of Trustees not affiliated with Eaton Vance. The Fund
will also bear expenses incurred in connection with litigation in which the Fund
is a party and the legal obligation the Fund may have to indemnify its officers
and Trustees with respect thereto.
The Fund pays Eaton Vance as compensation under the Investment Advisory
Agreement a monthly fee based on average daily net assets as follows:
[Enlarge/Download Table]
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%
As at September 30, 1994, the Fund had net assets of $13,055,315. For the
fiscal year ended September 30, 1994, the Fund paid Eaton Vance advisory fees of
$70,439 (equivalent to 0.75% of the Fund's average daily net assets for such
period). For the fiscal year ended September 30, 1993, Eaton Vance would have
earned, absent a fee reduction, advisory fees of $32,300 (equivalent to 0.75%,
of the Fund's average daily net assets for such period). To enhance the net
income of the Fund and to satisfy certain state expense limitations, Eaton Vance
reduced its fee by $32,300. For the fiscal year ended September 30, 1992, Eaton
Vance would have earned, absent a fee reduction, advisory fees of $29,517
(equivalent to 0.75% of the Fund's average daily net assets for such period. To
enhance the net income of the Fund and to satisfy certain state expense
limitations, Eaton Vance reduced its fee by $29,517 and $25,207 of additional
expenses related to the operations of the Fund were allocated to Eaton Vance.
A commitment has been made to a state securities authority that Eaton Vance
will take certain actions, if necessary, so that the Fund's expenses will not
exceed expense limitation requirements of such state. The commitment may be
amended or rescinded by Eaton Vance in response to changes in the requirements
of the state or for other reasons.
The Investment Advisory Agreement with Eaton Vance remains in effect until
February 28, 1995. It may be continued indefinitely thereafter so long as such
continuance after February 28, 1995 is approved at least annually (i) by the
vote of a majority of the Trustees who are not interested persons of the Fund or
of Eaton Vance 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 Fund or by
vote of a majority of the outstanding voting securities of the Fund. The
Agreement may be terminated at any time without penalty on sixty (60) days'
written notice by the Board of Trustees of either party, or by vote of the
majority of the outstanding voting securities of the Fund, and the Agreement
will terminate automatically in the event of its assignment. The Agreement
provides that Eaton Vance may render services to others and may permit other
fund clients and other corporations and organizations to use the words "Eaton
Vance" in their names. 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 Eaton Vance, Eaton
Vance shall not be liable to the Fund 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.
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, H. Day Brigham, Jr., 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
and Mr. Gardner is president and chief executive officer of EVC, Eaton Vance,
BMR 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, 1996, the Voting Trustees of which
are Messrs. Clay, Brigham, Gardner, Hawkes and Rowland. 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 and
Directors of EVC and EV. As of December 31, 1994, Messrs. Clay, Gardner and
Hawkes each owned 24% of such voting trust receipts, and Messrs. Rowland and
Brigham owned 15% and 13%, respectively, of such voting trust receipts. Messrs.
Clay, Hawkes and Otis who are officers or Trustees of the Fund are members of
the EVC, Eaton Vance, BMR and EV organizations. Messrs. Austin, Faust and
O'Connor and Ms. Sanders, are officers of the Fund, and are also members of the
Eaton Vance, BMR and EV organizations. Eaton Vance will receive the fees paid
under the Investment Advisory Agreement and its wholly-owned subsidiary, Eaton
Vance Distributors, Inc., as Principal Underwriter, will receive its portion of
the sales charge on shares of the Fund sold through Authorized Firms.
Eaton Vance owns all of the stock of Energex Corporation, which is engaged
in oil and gas operations. EVC owns all of the stock of Marblehead Energy Corp.
(which engages in oil and gas operations) and owns 77.3% of the stock of
Investors Bank & Trust Company, custodian of the Fund, which provides custodial,
trustee and other fiduciary services to investors, including individuals,
employee benefit plans, corporations, investment companies, savings banks and
other institutions. Eaton Vance owns all the stock of Northeast Properties,
Inc., which is engaged in real estate investment, consulting and management. EVC
owns all the stock of Fulcrum Management, Inc. and MinVen, Inc., which are
engaged in the development of precious metal properties. 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 Fund's custodian. Investors
Bank & Trust Company. 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
Investors Bank & Trust Company ("IBT"), 24 Federal Street, Boston,
Massachusetts (a 77.3% owned subsidiary of EVC) acts as custodian for the Fund.
IBT has the custody of all cash and securities of the Fund, maintains the Fund's
general ledger and computes the daily per share net asset value. In such
capacity it attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the Fund's investments, receives
and disburses all funds and performs various other ministerial duties upon
receipt of proper instructions from the Fund. 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 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
the 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. In view of
the ownership of EVC in IBT, the Fund is treated as a self- custodian pursuant
to Rule 17f-2 under the Investment Company Act of 1940, and the Fund's
investments held by IBT as custodian are thus subject to the additional
examinations by the Fund's independent certified public accountants as called
for by such Rule. For the fiscal year ended September 30, 1994, the Fund paid
Investors Bank & Trust Company $16,072 under these arrangements.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
Fund's independent certified public accountants, providing audit services, tax
return preparation, and assistance and consultation with respect to the
preparation of filings with the Securities and Exchange Commission. A recent
Internal Revenue Service ruling requires that sales commissions paid by the Fund
pursuant to its Distribution Plan be expensed for tax purposes (rather than
charged to paid-in capital as the Fund has done in the past). The Fund changed
its tax accounting practice to conform to the ruling on November 16, 1994. The
change will have no effect on the Fund's current yield or total return.
SERVICE FOR WITHDRAWAL
By a standard agreement, the Fund's Transfer Agent will send to the
shareholder regular monthly or quarterly payments of any designated amount 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 give rise to
gain or loss for tax purposes. Income dividends and capital gains distributions
in connection with withdrawal accounts will be credited at net asset value as of
the record for each distribution. Continued withdrawals in excess of current
income will eventually use up principal, particularly in a period of declining
market prices.
To use this service, at least $5,000 in cash or shares at the public
offering price (i.e., net asset value) will have to be deposited with the
Transfer Agent. A shareholder may not have a withdrawal plan in effect at the
same time he has authorized Bank Draft 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
Shares of the Fund are offered and sold at their net asset value. For a
description of how the Fund values its shares, see "Valuing Fund Shares" in the
Fund's current prospectus. The Fund will be closed for business and will not
price its shares on the following business holidays: New Year's Day,
Washington's Birthday, Good Friday (a New York Stock Exchange holiday), Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Trustees have established the following procedures for the valuation of
the Fund's assets. Marketable securities listed on 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 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. 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 are valued at amortized cost, which approximates
value. 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.
Generally, trading in the foreign securities owned by the Fund is
substantially completed each day at various times prior to the close of the New
York Stock Exchange. The values of these securities used in determining the net
asset value of the Fund'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 Fund's net asset value (unless the Fund 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
Fund will be valued in U.S. dollars.
Physical commodities, including bullion, will generally be valued at fair
value based on prevailing market prices.
PURCHASE AND REDEMPTION OF SHARES
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares and paid the Principal Underwriter $262.50 for the fiscal
year ended September 30, 1994 (being $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 Fund will
exceed the amounts paid therefor by the Fund.
For information regarding the purchase of shares, see "How to Buy Fund
Shares" in the Fund's current Prospectus.
For a description of how a shareholder may have the Fund redeem his shares,
see "How to Redeem Fund Shares" in the Fund's current Prospectus.
INVESTMENT PERFORMANCE
The average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and dividends and distributions
paid and reinvested) for the stated period and annualizing the result. The
calculation assumes that all dividends and distributions are reinvested at net
asset value on the reinvestment dates during the period, and a complete
redemption of the investment and the deduction of the maximum contingent
deferred sales charge at the end of the period. The Fund's average annual total
return for the period from the start of business October 21, 1987 through fiscal
year ended September 30, 1994 was 10.48%.
The Fund's yield is computed pursuant to a standardized formula by dividing
its net investment income per share earned during a recent thirty-day period by
the maximum offering price (net asset value) per share on the last day of the
period and annualizing the resulting figure. Net investment income per share is
equal to the dividends and interest earned during the period, reduced by accrued
expenses for the period with the resulting number being divided by the average
daily number of shares outstanding and entitled to receive dividends during the
period. This yield figure does not reflect the deduction of any contingent
deferred sales charges which are imposed upon certain redemptions at the rates
set forth under "How to Redeem Fund Shares" in the Prospectus.
The table below indicates the total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in the
Fund covering the life of the Fund from October 21, 1987 through September 30,
1994, the five year period and for the one year period ended September 30, 1994.
[Enlarge/Download Table]
VALUE OF A $1,000 INVESTMENT<F3>
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER
DEDUCTING DEDUCTING
THE THE TOTAL RETURN BEFORE DEDUCTING TOTAL RETURN AFTER DEDUCTING
CONTINGENT CONTINGENT THE CONTINGENT DEFERRED THE CONTINGENT DEFERRED
DEFERRED DEFERRED SALES CHARGE SALES CHARGE<F2>
INVESTMENT INVESTMENT AMOUNT OF SALES CHARGE SALES CHARGE<F2> ---------------------------- ----------------------------
PERIOD DATE INVESTMENT ON 9/30/94 ON 9/30/94 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
------------ ---------- ---------- -------------- ---------------- ---------- ---------- ---------- ----------
Life of
the Fund<F1> 10/21/87 $1,000 $1,999.25 $1,999.25 99.93% 10.48% 99.93% 10.48%
5 Years
Ended
9/30/94 9/30/89 $1,000 $1,409.12 $1,389.12 40.91% 7.10% 38.91% 6.79%
1 Year
Ended
9/30/94 9/30/93 $1,000 $1,204.72 $1,154.72 20.47% 20.47% 15.47% 15.47%
PERCENTAGE CHANGES 10/21/87 -- 9/30/94<F3>
NET ASSET VALUE TO NET ASSET VALUE BEFORE NET ASSET VALUE TO NET ASSET VALUE AFTER
DEDUCTING THE CONTINGENT DEFERRED SALES CHARGE DEDUCTING THE CONTINGENT DEFERRED SALES CHARGE
FISCAL WITH ALL DISTRIBUTIONS REINVESTED WITH ALL DISTRIBUTIONS REINVESTED
YEAR ----------------------------------------------------- --------------------------------------------------
ENDED ANNUAL CUMULATIVE AVERAGE ANNUAL ANNUAL CUMULATIVE AVERAGE ANNUAL
----- ------ ---------- -------------- ------ ---------- --------------
9/30/88<F1> -- 15.39% -- -- 10.39% --
9/30/89 22.96% 41.88% 19.70% 17.96% 36.88% 17.51%
9/30/90 0.01% 41.90% 12.62% -4.50% 37.90% 11.53%
9/30/91 -4.36% 35.71% 8.05% -8.94% 32.71% 7.44%
9/30/92 9.44% 48.53% 8.32% 4.44% 46.53% 8.03%
9/30/93 11.73% 65.95% 8.89% 6.73% 64.95% 8.78%
9/30/94 20.47% 99.93% 10.48% 15.47% 99.93% 10.48%
Past performance is not indicative of future results. Investment return and principal value will fluctuate and shares, when
redeemed, may be worth more or less than their original cost.
---------
<FN>
<F1> Investment operations began on October 21, 1987.
<F2> No contingent deferred sales charge is imposed on shares purchased more than six years prior to the redemption, shares
acquired through the reinvestment of dividends and distributions and any appreciation in value of other shares in the account,
and no such charge is imposed on exchanges of Fund shares for shares of one or more other funds listed under "The Eaton Vance
Exchange Privilege" in the Prospectus.
<F3> Some of the expenses related to the operation of the Fund for the periods up to and including September 30, 1993, were
allocated to Eaton Vance, the adviser, which increased total return/yield.
The Fund's total return may be compared to 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.
From time to time evaluations of the Fund's performance made by independent
sources may be used in advertisements and in information furnished to present or
prospective shareholders.
From time to time, information about the Fund's portfolio allocation and
holdings may be included in advertisements and other material furnished to
present and prospective shareholders.
The Fund's portfolio allocation on October 31, 1994 was:
PERCENT OF
NET ASSETS
-----------
Common stock 92.4%
Gold 25.7%
Oil & gas 17.3
Paper & Forest Products 17.0
Industrial Metals 13.0
Industrial Minerals 10.3
Iron & Steel 9.1
Preferred Stock -- Gold 3.9
Cash and Commercial Paper 3.7
Total 100.0%
The Fund's 10 largest common stock holdings on October 31, 1994 were:
PERCENT OF
COMPANY NET ASSETS
----- ----------
RTZ Corp. PLC ADR 3.7%
Placer Dome Inc. 3.2
American Barrick Resources Corp. 3.1
Anadarko Petroleum Corp. 3.0
Firstmiss Gold, Inc. 3.0
Phillips Petroleum Co. 2.9
Freeport McMoRan Copper & Gold, Inc. 2.8
Longview Fibre 2.8
Apache Corp. 2.6
Rouge Steel Company 2.6
Total 29.7%
From time to time, information, 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. For example: After 10 years, the purchasing power of $25,000 would
shrink to $16,621, $14,968, $13,465 and $12,100, respectively, if the annual
rates of inflation during such period were 4%, 5%, 6% and 7%, respectively. (To
calculate the purchasing power, the value at the end of each year is reduced by
the above inflation rates for 10 consecutive years.)
Information used in advertisements and in materials furnished to present and
prospective shareholders may include statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds which may be employed
to meet specific financial goals, such as (1) funding retirement, (2) paying for
children's education, and (3) financially supporting aging parents. These three
financial goals may be referred to in such advertisements or materials at the
"Triple Squeeze."
TAXES
FEDERAL INCOME TAXES
See "Distributions and Taxes" in the Fund's current Prospectus.
The Fund has elected to be treated, has qualified, and intends to continue
to qualify each year as a regulated investment company under the Internal
Revenue Code (the "Code"). Accordingly, the Fund intends to satisfy certain
requirements relating to sources of its income and diversification of its assets
and to distribute its net investment income (including tax-exempt income) and
net realized capital gains in accordance with the timing requirements imposed by
the Code, so as to avoid any Federal income or excise tax on the Fund. The Fund
so qualified for its fiscal year ended September 30, 1994 (see Note 1B to
Financial Statements).
In order to avoid Federal excise tax, 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, at least 98% of 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 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 the Fund qualifies as a
regulated investment company for Federal income tax purposes, the Fund is not
liable for any income, corporate excise or franchise tax in the Commonwealth of
Massachusetts.
The Fund'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 Fund, defer Fund losses, cause adjustments in the holding periods of Fund
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
the Fund will be governed by Section 1256 of the Code. Absent a tax election for
"mixed straddles" (see below), each such position held by the Fund 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
Fund 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 Fund
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. The Fund may make certain tax
elections for its "mixed straddles" which could alter certain effects of these
rules. In order to qualify as a regulated investment company for Federal income
tax purposes, the Fund must derive less than 30% of its annual gross income from
the sale or other disposition of securities and certain other investments held
for less than three months and will limit its activities in options, futures
contracts and forward contracts to the extent necessary to comply with this
requirement.
The Fund may be subject to foreign withholding or other foreign taxes with
respect to income (possibly including, in some cases, capital gains) derived
from securities of foreign issuers and may be able to pass such taxes through to
shareholders along with foreign tax credits or deductions relating to these
taxes. These taxes may be reduced or eliminated under the terms of an applicable
U.S. income tax treaty. Certain foreign exchange gains and losses realized by
the Fund will be treated as ordinary income and losses. Certain uses of foreign
currency and options, futures or forward contracts thereon and investment by the
Fund in the stock of certain "passive foreign investment companies" may be
limited or a tax election may be made, if available, in order to avoid
imposition of a tax on the Fund.
The Fund'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 distribute this
income and avoid a tax on the Fund, the Fund may be required to liquidate
portfolio securities that it might otherwise have continued to hold.
The portion of distributions made by the Fund which is attributable to
dividends received by the Fund from U.S. domestic corporations may qualify for
the dividends-received deduction for corporations. The dividends-received
deduction is reduced to the extent the shares 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.
Distributions of net investment income, the excess of net short-term capital
gain over net long-term capital loss, and certain foreign exchange gains are
taxable to shareholders as ordinary income, whether received in cash or
reinvested in additional shares. 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) are taxable to shareholders as long-term
capital gains, whether received in cash or in additional shares and regardless
of the length of time their shares of the Fund have been held.
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 period beginning 30 days before and ending 30 days after
the date of such disposition.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number and
certain required certifications, as well as shareholders with respect to whom
the Fund has received notification from the Internal Revenue Service or a
broker, may be subject to "backup" withholding of Federal income tax from the
Fund's dividends and distributions and the proceeds of redemptions (including
repurchases and exchanges), at a rate of 31%. An individual's taxpayer
identification number is generally his or her social security number.
Non-resident alien individuals and certain foreign corporations and 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 treaty. 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 result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding 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.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and other
retirement plans and persons investing through such plans should consult their
tax advisers for more information.
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 or foreign tax consequences
of investing in the Fund.
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to financial service 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 shares under Federal and state securities laws
are borne by the Fund. In addition, the Fund makes payments to the Principal
Underwriter pursuant to its Distribution Plan as described in the Fund's current
Prospectus; the provisions of the plan relating to such payments are included in
the Distribution Agreement. The Distribution Agreement is renewable annually by
the Fund's Board of Trustees (including a majority of its Trustees who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Fund's 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 voting securities of the Fund or on six
months' notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter currently distributes Fund shares on a
"best efforts" basis under which it is required to take and pay for only such
shares as may be sold.
DISTRIBUTION PLAN
The Distribution Plan (the "Plan") is described in the Prospectus and is
designed to meet the requirements of Rule 12b-1 under the 1940 Act and the sales
charge rule of the National Association of Securities Dealers, Inc. (the "NASD
Rule"). The purpose of the Plan is to compensate the Principal Underwriter for
its distribution services and facilities provided to the Fund by paying the
Principal Underwriter sales commissions and a separate distribution fee in
connection with sales of Fund shares. The following supplements the discussion
of the Plan contained in the Fund's Prospectus.
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 Plan since its inception. Payments theretofore paid and
payable under the Plan by the Fund to the Principal Underwriter and contingent
deferred sales charges theretofore paid and 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.
It is anticipated that the Eaton Vance organization will profit by reason of
the operation of the Plan through an increase in the Fund's assets (thereby
increasing the advisory fee payable to Eaton Vance) resulting from sale of Fund
shares and through amounts paid to the Principal Underwriter, including
contingent deferred sales charges pursuant to the Plan. The Eaton Vance
organization may be considered to have realized a profit under the Plan if at
any point in time the aggregate amounts theretofore received by the Principal
Underwriter pursuant to the Plan and from contingent deferred sales charges have
exceeded the total expenses theretofore incurred by such organization in
distributing 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 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 Fund 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 Fund shares upon which
a contingent deferred sales charge will be imposed, the level and timing of
redemptions of Fund shares upon which no contingent deferred sales charge will
be imposed (including redemptions involving exchanges of Fund shares for shares
of another fund in the Eaton Vance Marathon Group of Funds which result in a
reduction of uncovered distribution charges), changes in the level of the net
assets of the Fund, and changes in the interest rate used in the calculation of
the distribution fee under the Plan.
For the fiscal year ended September 30, 1994, the Fund made sales commission
payments under the Plan to the Principal Underwriter aggregating $70,406, which
amount was used by the Principal Underwriter to defray sales commissions
aggregating $206,788 paid during such period by the Principal Underwriter to
Authorized Firms on sales of Fund shares. During such period contingent deferred
sales charges aggregating approximately $35,518 were imposed on early redeeming
shareholders and paid to the Principal Underwriter to partially defray such
sales commissions. As at September 30, 1994, the outstanding uncovered
distribution charges of the Principal Underwriter calculated under the Plan
amounted to approximately $435,762 (which amount was equivalent to 3.34% of the
Fund's net assets on such day). The Plan also authorizes the Fund to make
payments of service fees. For the fiscal year ending September 30, 1994, the
Fund made service fee payments under the Plan aggregating $7,063, of which
$6,934 was paid to Authorized Firms and the balance of which was retained by the
Principal Underwriter.
The Plan and Distribution Agreement remain in effect until April 28, 1995
and may be continued as described under "Distribution Plan" in the Prospectus.
Pursuant to Rule 12b-1, the Plan has been approved by the Fund's initial sole
shareholder (Eaton Vance) and by the Board of Trustees of the Fund, as required
by Rule 12b-1. Under the Plan the President or a Vice President of the Fund
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 therein without approval of the
shareholders of the Fund, and all material amendments of the Plan must also be
approved by the Trustees as required by Rule 12b-1. So long as the Plan is in
effect, the selection and nomination of the Trustees who are not interested
persons of the Fund shall be committed to the discretion of the Trustees who are
not such interested persons.
The Trustees believe that the Plan has been and will be a significant factor
in the growth of the Fund's assets, resulting in increased investment
flexibility and advantages which have benefited and will continue to benefit the
Fund and its shareholders. Payments for sales commissions and distribution fees
made to the Principal Underwriter under the Plan will compensate the Principal
Underwriter for its services and expenses in distributing shares of the Fund.
Service fee payments made to the Principal Underwriter and Authorized Firms
under the Plan 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 Plan is 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 have
determined that in their judgment there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of Fund portfolio security transactions,
including the selection of the market and the broker-dealer firm, are made by
Eaton Vance. Eaton Vance is also responsible for the execution of transactions
for all other accounts managed by it.
Eaton Vance places the portfolio transactions of the Fund and of all other
accounts managed by it for execution with many broker-dealer firms. Eaton Vance
uses its best efforts to obtain execution of portfolio transactions at prices
which are advantageous to the Fund and (when a disclosed commission is being
charged) at reasonably competitive commission rates. In seeking such execution,
Eaton Vance 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 United
States stock exchanges and other agency transactions involve the payment by the
Fund 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 Fund
usually includes an undisclosed dealer markup or markdown. In an underwritten
offering, the price paid by the Fund 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 Eaton Vance, 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 Fund and Eaton
Vance's other clients for providing brokerage and research services to Eaton
Vance.
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 Fund 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 Eaton
Vance 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 Eaton Vance and its affiliates have for
accounts over which they exercise investment discretion. In making any such
determination, Eaton Vance 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, Eaton Vance receives Research Services from many broker-dealer firms
with which Eaton Vance places the Fund's 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, 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
Eaton Vance 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 Eaton Vance 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 Fund is not reduced because Eaton Vance receives such Research
Services. Eaton Vance 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 Eaton Vance believes are useful or of value to it in rendering
investment advisory services to its clients.
Subject to the requirement that Eaton Vance shall use its best efforts to
seek to execute Fund portfolio security transactions at advantageous prices and
at reasonably competitive commission rates or spreads, Eaton Vance is authorized
to consider as a factor in the selection of any broker-dealer firm with whom
Fund 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 National Association
of Securities Dealers, Inc., which rule provides that no firm which is a member
of the Association 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 Fund may also be appropriate
for other investment accounts managed by Eaton Vance or its affiliates. Eaton
Vance will attempt to allocate equitably portfolio security transactions among
the Fund and the portfolios of its other investment accounts whenever decisions
are made to purchase or sell securities by the Fund 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 Fund and such
other accounts, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Fund and
such accounts, the size of investment commitments generally held by the Fund and
such accounts and the opinions of the persons responsible for recommending
investments to the Fund and such accounts. While this procedure could have a
detrimental effect on the price or amount of the securities available to the
Fund from time to time, it is the opinion of the Trustees that the benefits
available from the Eaton Vance organization outweigh any disadvantage that may
arise from exposure to simultaneous transactions.
During the fiscal year ending September 30, 1994 the Fund paid brokerage
commissions of $ $19,482, all of which was paid in respect of portfolio security
transactions aggregating approximately $6,856,282 to firms which provided some
research services to Eaton Vance (although many of such firms may have been
selected in any particular transactions primarily because of their execution
capabilities). During the fiscal years ended September 30, 1993 and 1992, the
Fund paid brokerage commissions of $15,436 and $8,355, respectively.
OTHER INFORMATION
The Fund, which is a Massachusetts business trust established in 1987, was
originally called Eaton Vance Natural Resources Trust. The Fund changed its name
to EV Marathon Gold & Natural Resources Fund on April 1, 1994.
Eaton Vance, pursuant to the Investment Advisory Agreement, controls the use
of the Fund's name and may use the words "Eaton Vance" in other connections and
for other purposes. Eaton Vance may require the Fund to cease using such words
in its name if Eaton Vance or any other subsidiary or affiliate of Eaton Vance
ceases to act as investment adviser of the Fund.
The Fund's Declaration of Trust may not be amended without the affirmative
vote of a majority of the outstanding shares of the Fund, except that the
Declaration of Trust may be amended by the Trustees to change the name of the
Fund, to make such other changes as do not have a materially adverse effect on
the rights or interests of shareholders and to conform the Declaration of Trust
to applicable federal laws or regulations. The Fund may be terminated (i) upon
the merger or consolidation with or sale of the Fund's assets to another
company, if approved by the holders of two-thirds of the outstanding shares of
the Fund, except that if the Trustees recommend such transaction, the approval
by vote of the holders of a majority of the outstanding shares will be
sufficient, or (ii) upon liquidation and distribution of the assets of the Fund,
if approved by a majority of the Trustees or by the holders of a majority of the
Fund's outstanding shares. If not so terminated, the Fund may continue
indefinitely.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law; but nothing in the
Declaration of Trust protects a Trustee against any liability to the Fund or its
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. In addition, the By-Laws of the Fund
provide that no natural person shall serve as a Trustee of the Fund after the
holders of record of not less than two-thirds of the outstanding shares have
declared that he be removed from that office either by a declaration in writing
signed by such holders and filed with the custodian of the assets of the Fund or
by votes cast in person or by proxy at a meeting called for the purpose. The
By-Laws also provide that the Trustees shall promptly call a meeting of
shareholders for the purpose of voting upon a question of removal of a Trustee
when requested so to do by the record holders of not less than 10 per centum of
the outstanding shares.
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 Fund holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Fund's by-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The right to redeem can be suspended and the payment of the redemption price
deferred when the New York Stock Exchange is closed (other than for customary
weekend and holiday closings), during periods when trading on the New York Stock
Exchange is restricted as determined by the Securities and Exchange Commission,
or during any emergency as determined by the Securities and Exchange Commission
which makes it impracticable for the Fund to dispose of its securities or value
its assets, or during any other period permitted by order of the Securities and
Exchange Commission for the protection of investors.
APPENDIX
FIXED-INCOME SECURITY RATINGS
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP CORPORATE BOND RATINGS:
INVESTMENT GRADE
AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
SPECULATIVE GRADE
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.
The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC: The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Bonds may lack a Standard & Poor's rating because no public rating has been
requested, because there is insufficient information on which to base a rating,
or because Standard & Poor's does not rate a particular type of obligation as a
matter of policy.
NOTES: Bonds which are unrated expose the investor to risks with respect to
capacity to pay interest or repay principal which are similar to the risks of
lower-rated speculative obligations. The Fund is dependent on the Investment
Adviser's judgment, analysis and experience in the evaluation of such bonds.
Investors should note that the assignment of a rating to a bond by a rating
service may not reflect the effect of recent developments on the issuer's
ability to make interest and principal payments.
--------------------------------------------------------------------------
EV MARATHON GOLD & NATURAL
RESOURCES FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1995
(UNAUDITED)
--------------------------------------------------------------------------
COMMON STOCKS - 96.1%
--------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
--------------------------------------------------------------------------
GOLD & PRECIOUS METALS - 24.3%
Ashanti Goldfields Ltd. GDR 12,000 $ 292,500
Battle Mountain Gold Co. 24,000 288,000
Barrick Gold Corp.+ 17,000 425,000
Dayton Mining Corp.+ 55,000 160,754
Firstmiss Gold, Inc.* 40,000 400,000
Hecla Mining Co. 25,000 287,500
Newmont Mining Corp. 6,237 266,631
Placer Dome, Inc.+ 19,000 463,125
Santa Fe Pacific Gold Corp. 33,000 416,625
TVX Gold, Inc.*+ 45,000 298,125
-----------
$ 3,298,260
-----------
INDUSTRIAL METALS - 17.4%
Aluminum Co. of America 2,600 $ 107,575
ASARCO Inc. 10,000 263,750
Commonwealth Aluminum Corp. 12,000 168,000
Cyprus Amax Minerals Co. 12,500 354,688
Freeport McMoRan Copper & Gold 16,300 356,562
Inco Limited+ 5,600 156,100
Phelps Dodge Corp. 4,700 267,312
Reynolds Metals Co. 5,000 246,250
RTZ Corp. PLC ADR+ 8,424 438,048
-----------
$ 2,358,285
-----------
INDUSTRIAL MINERALS - 6.1%
Minerals Technologies, Inc. 10,500 $ 338,625
National Gypsum Co. 4,500 226,125
Potash Corp. of Saskatchewan+ 6,000 267,000
-----------
$ 831,750
-----------
IRON & STEEL - 6.9%
Geneva Steel Company Class A 15,000 $ 178,125
J & L Specialty Steel, Inc.* 16,000 318,000
Lukens Inc. 4,000 122,000
Rouge Steel Company Class A 13,000 318,500
-----------
$ 936,625
-----------
OIL & GAS - 27.4%
Amerada Hess Corp. 2,000 $ 98,750
Anadarko Petroleum Corp. 8,000 350,000
Apache Corp. 12,000 327,000
Arakis Energy Corp.*+ 35,000 251,563
Burlington Resources, Inc. 3,000 122,250
Cabot Oil & Gas Corp. 13,000 203,125
Mobil Corp. 1,500 138,937
PORTFOLIO OF INVESTMENTS (Continued)
--------------------------------------------------------------------------
COMMON STOCKS (Continued)
--------------------------------------------------------------------------
NAME OF COMPANY SHARES VALUE
--------------------------------------------------------------------------
OIL & GAS (Continued)
Noble Affiliates, Inc. 15,000 $ 410,625
Phillips Petroleum Co. 10,100 369,913
Plains Resources, Inc. 17,000 131,750
Royal Dutch Petroleum PLC ADR 1,800 216,000
Triton Energy Corp. 14,000 535,500
Unocal Corp. 8,500 244,375
Western Co. of North America 15,000 315,000
-----------
$ 3,714,788
-----------
PAPER & FOREST PRODUCTS - 14.0%
International Paper Co. 1,300 $ 97,663
Jefferson Smurfit Corp. 20,000 322,500
Mead Corporation 3,300 176,963
Pacific Forest Products*+ 10,000 86,437
Rayonier Inc.* 5,000 155,625
Temple Inland Inc. 6,500 291,687
Timberwest Forest Ltd.*+ 18,000 170,022
Weyerhaeuser Co. 6,100 237,138
Willamette Inds Inc. 6,600 359,700
-----------
$ 1,897,735
-----------
TOTAL COMMON STOCKS
(Identified cost, $11,377,090) $13,037,443
--------------------------------------------------------------------------
PREFERRED STOCKS - 3.6%
--------------------------------------------------------------------------
Amax Gold, Inc., Conv. Pfd. 5,000 $ 245,000
Freeport McMoRan Copper & Gold, Inc. Var. Pfd. 7,000 241,500
-----------
TOTAL PREFERRED STOCKS
(Identified cost, $528,670) $ 486,500
-----------
TOTAL INVESTMENTS
(Identified cost, $11,905,760) $13,523,943
OTHER ASSETS, LESS LIABILITIES - 0.3% 45,625
-----------
NET ASSETS - 100% $13,569,568
===========
*Non-income producing security.
+Foreign Security.
See notes to financial statements
EV MARATHON GOLD & NATURAL RESOURCES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
March 31, 1995 (Unaudited)
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$11,905,760) $13,523,943
Cash 705
Receivable for investments sold 122,276
Receivable for Trust shares sold 76,608
Dividends receivable 14,547
-----------
Total assets $13,738,079
LIABILITIES:
Due to bank $ 14,000
Payable for Trust shares redeemed 149,105
Payable to affiliates --
Custodian fee 100
Trustees' fees 45
Accrued expenses 5,261
--------
Total liabilities 168,511
-----------
NET ASSETS for 936,209 shares of beneficial interest
outstanding $13,569,568
===========
SOURCES OF NET ASSETS:
Paid-in capital $11,964,658
Accumulated net realized gain on investment
transactions 1,963
Net investment loss (15,236)
Unrealized appreciation of investments (computed on
the basis of identified cost) 1,618,183
-----------
Total $13,569,568
===========
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PRICE (NOTE 6)
PER SHARE ($13,569,568 / 936,209 shares of beneficial interest) $14.49
======
See notes to financial statements
PORTFOLIO OF INVESTMENTS (Continued)
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended March 31, 1995 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividends (less withholding taxes of $2,270) $ 107,694
Interest 13,144
---------
Total income $ 120,838
Expenses --
Investment adviser fee (Note 4) $ 48,165
Compensation of Trustees not members of the
Investment Adviser's organization 81
Custodian fee (Note 4) 4,171
Distribution fees (Note 5) 54,062
Registration costs 10,643
Printing and postage 8,002
Legal and accounting services 12,505
Transfer and dividend disbursing agent fees 6,568
Miscellaneous 4,129
---------
Total expenses 148,326
---------
Net investment loss $ (27,488)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments, computed on the
basis of identified cost $ 63,188
Decrease in unrealized appreciation of investments (375,066)
---------
Net realized and unrealized loss on
investments (311,878)
---------
Net decrease in net assets from operations $(339,366)
=========
See notes to financial statements
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, 1995 SEPTEMBER 30,
(UNAUDITED) 1994
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment loss $ (27,488) $ (89,807)
Net realized gain (loss) on investments 63,188 (61,225)
Increase (decrease) in unrealized appreciation
of investments (375,066) 1,765,546
----------- -----------
Net increase (decrease) in net assets from
operations $ (339,366) $ 1,614,514
----------- -----------
Distributions to shareholders from (Note 2) --
In excess of net investment income $ -- $ (10,924)
In excess of net realized gain on investment
transactions -- (508,281)
----------- -----------
Total $ -- $ (519,205)
----------- -----------
Transactions in shares of beneficial interest
(exclusive of amounts allocated to
net investment income) (Note 3) --
Proceeds from sales of shares $ 2,502,217 $10,163,553
Net asset value of shares issued to
shareholder in payment of distributions
declared -- 378,380
Cost of shares redeemed (1,648,598) (4,374,063)
----------- -----------
Increase in net assets from Trust share
transactions $ 853,619 $ 6,167,870
----------- -----------
Net increase in net assets $ 514,253 $ 7,263,179
NET ASSETS:
At beginning of year 13,055,315 5,792,136
----------- -----------
At end of year $13,569,568 $13,055,315
=========== ===========
See notes to financial statements
FINANCIAL STATEMENTS (Continued)
[Enlarge/Download Table]
FINANCIAL HIGHLIGHTS
----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, 1995 -------------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
----------- ------- ------- ------- ------- -------
NET ASSET VALUE, beginning of year $14.890 $13.240 $11.850 $11.140 $12.140 $13.460
------- ------- ------- ------- ------- -------
INCOME FROM OPERATIONS:
Net investment income (loss) $(0.016) $(0.050) $(0.090) $(0.083) $ 0.020 $ 0.069
Net realized and unrealized gain (loss)
on investments (0.384) 2.650 1.480 1.103 (0.570) (0.009)
------- ------- ------- ------- ------- -------
Total income from investment operations $(0.400) $ 2.600 $ 1.390 $ 1.020 $(0.550) $ 0.060
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income $ -- $ -- $ -- $ -- $(0.020) $(0.069)
Net realized gain on investments -- -- -- (0.060) (0.320) (1.220)
Paid-in capital -- -- -- (0.250) (0.110) (0.091)
In excess of net investment income -- (0.020) -- -- -- --
In excess of realized gain on investment -- (0.930) -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions $ -- $(0.950) $ -- $(0.310) $(0.450) $(1.380)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, end of year $14.490 $14.890 $13.240 $11.850 $11.140 $12.140
======= ======= ======= ======= ======= =======
TOTAL RETURN (2.69)% 20.47% 11.73% 9.44% (4.36)% 0.01%
RATIOS/SUPPLEMENTAL DATA:<F1>
Net assets, end of year (000's omitted) $13,570 $13,055 $ 5,792 $ 3,775 $ 4,042 $4,391
Ratio of net expenses to average net assets 2.31%<F2> 2.64% 3.15% 3.26% 3.29% 2.50%
Ratio of net investment income (loss) to
average net assets (0.43)%<F2> (0.96)% (0.92)% (0.67)% 0.17% 0.33%
PORTFOLIO TURNOVER 13% 17% 57% 32% 27% 35%
<FN>
<F1> For the four years ended September 30, 1993, the operating expenses of the
Trust 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 income per share and the ratios would have been as
follows:
NET INVESTMENT INCOME (LOSS) PER SHARE $(0.210) $(0.240) $(0.110) $(0.300)
======= ======= ======= =======
RATIOS (As a percentage of average net assets):
Expenses 3.90% 5.23% 4.42% 5.23%
Net investment income (loss) (1.67)% (2.06)% (0.96)% (2.40)%
<F2> Annualized
</FN>
See notes to financial statements
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) SIGNIFICANT ACCOUNTING POLICIES
The Trust is an entity of the type commonly known as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended, as
a non-diversified open-end management investment company. The following is a
summary of significant accounting policies consistently followed by the Trust in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Investments, other than fixed income securities,
listed on securities exchanges or in the NASDAQ National Market System are
valued at closing sale prices. Unlisted securities or listed securities for
which closing sale prices are not available are valued at the mean between the
latest bid and asked prices.Options are valued at the last quoted sale price on
the exchange or board of trade on which they are primarily traded or, in the
absence of a sale, the mean between the last bid and asked price. Futures
positions on investments or currencies are generally valued at closing
settlement prices. Short-term obligations are valued at amortized cost, which
approximates value. 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 appraised at fair value as determined in good faith by
or pursuant to procedures established by the Trustees.
B. FEDERAL TAXES -- The Trust's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal income
or excise tax is necessary. At September 30, 1994, the Trust, for federal income
tax purposes, had a capital loss carryover of $61,225 which will reduce the
Trust's taxable income arising from future net realized gain on investments, if
any, to the extent permitted by the Internal Revenue Code, and thus will reduce
the amount of the distributions to shareholders which would otherwise be
necessary to relieve the Trust of any liability for federal income or excise
tax. Such capital loss carryovers will expire on September 30, 2002.
C. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of
Trust shares and other distribution costs are charged to operations. For tax
purposes, commissions paid were charged to paid-in capital prior to November 16,
1994 and subsequently charged to operations. The change in the tax accounting
practice was prompted by a recent Internal Revenue Service ruling and has no
effect on either the Trust's current yield or total return (Note 5).
D. OTHER -- Investment security transactions are accounted for on a trade date
basis. Dividend income, distributions to shareholders and shares issued to
shareholders electing to receive distributions in shares are recorded on the
ex-dividend date.
E. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
March 31, 1995 and for the six-month period then ended have not been audited by
independent certified public accountants, but in the opinion of the Trust's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for fair presentation of the financial statements.
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
It is the present policy of the Trust to make (A) at least one distribution
annually (normally in December) of substantially all of the investment income
earned by the Trust, less its expenses (other than sales commissions incurred in
the sale of Trust shares, which commissions are charged to the Trust's paid-in
capital for tax purposes), and (B) at least one distribution annually of
substantially all of the capital gains realized by the Trust, if any.
Distributions are paid in the form of additional shares of the Trust or, at the
election of the shareholder, in cash. The Trust distinguishes between
distributions on a tax basis and a financial reporting basis. Generally accepted
accounting principles require that only distributions in excess of tax basis
earnings and profits be reported in the financial statements as a return of
capital. Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in
overdistributions only for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. Permanent differences between book and tax accounting relating to
distributions are reclassified to paid in capital.
--------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Trust shares were as follows:
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, 1995 SEPTEMBER 30,
(UNAUDITED) 1994
-------------- -------------
Sales 181,002 731,556
Issued to shareholders electing to receive
payment of distribution in Trust shares -- 28,365
Redemptions (121,675) (320,555)
-------- --------
Net increase 59,327 439,366
======== ========
--------------------------------------------------------------------------------
(4) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee was paid to Eaton Vance Management (EVM) as
compensation for management and investment advisory services rendered to the
Trust. The fee is computed at the monthly rate of 0.0625% (0.75% per annum) of
the Trust's average daily net assets up to $500 million and at reduced rates as
daily net assets exceed that level. For the six months ended March 31, 1995, the
effective annual rate, based on average daily net assets, was 0.75%.
Except as to Trustees of the Trust who are not members of EVM's organization,
officers and Trustees receive remuneration for their services to the Trust out
of such investment adviser fee. Investors Bank & Trust Company (IBT), an
affiliate of EVM, serves as custodian of the Trust. Pursuant to the custodian
agreement, IBT receives a fee reduced by credits which are determined based on
the average daily cash balances the Trust maintains with IBT. Certain of the
officers and Trustees of the Trust are officers and directors/trustees of the
above organizations (See Note 5).
Trustees of the Portfolio that are not affiliated with the Investment Advisor
may elect to defer receipt of all or a percentage of their annual fees in
accordance with the terms of the Trustees Deferred Compensation Plan. For the
six months ended March 31, 1995, no significant amounts have been deferred.
--------------------------------------------------------------------------------
(5) DISTRIBUTION PLAN
The Trust has adopted a distribution plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The Plan requires the Trust to pay the Principal
Underwriter, Eaton Vance Distributors, Inc. (EVD) amounts equal to 1/365 of
0.75% of the Trust's daily net assets, for providing ongoing distribution
services and facilities to the Trust. The Trust will automatically discontinue
payments to EVD during any period in which there are no outstanding Uncovered
Distribution Charges, which are equivalent to the sum of (i) 5% of the aggregate
amount received by the Trust for shares sold plus (ii) distribution fees
calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges of EVD, reduced by the
aggregate amount of contingent deferred sales charges (see Note 6) and daily
amounts theretofore paid to EVD. The amount payable to EVD with respect to each
day is accrued on such day as a liability of the Trust and, accordingly, reduces
the Trust's net assets. The Trust accrued $48,056 as payable to EVD for the year
ended March 31, 1995, representing 0.75% (annualized) of daily average net
assets. At March 31, 1995, the amount of Uncovered Distribution Charges of EVD
calculated under the Plan was approximately $457,581.
In addition, the Plan authorizes the Trust to make payments of service fees to
the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Trust's average daily net assets for each fiscal year.
The Trustees have initially implemented the Plan by authorizing the Trust to
make quarterly payments of service fees to the Principal Underwriter and
Authorized Firms in amounts not expected to exceed 0.25% per annum of the
Trust's average daily net assets based on the value of Trust shares sold by such
persons and remaining outstanding for at least one year. Service fee payments
will be made for personal services and/or the maintenance of shareholder
accounts. Service fees are separate and distinct from the sales commissions and
distribution fees payable by the Trust to EVD, and, as such, are not subject to
automatic discontinuance where there are no outstanding Uncovered Distribution
Charges of EVD. Provision for service fees payments amounted to $6,006 for the
year ended March 31, 1995.
Certain officers and Trustees of the Trust are officers or directors of EVD.
--------------------------------------------------------------------------------
(6) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of Trust
shares made within six years of purchase. Generally, the CDSC is based upon the
lower of net asset value at date of redemption or date of purchase. No charge is
levied on shares acquired by reinvesetment of dividends or capital gain
distributions. The CDSC is imposed at declining rates that begin at 5% in the
case of redemptions in the first and second year after purchase (6% and 5%,
respectively for shares acquired prior to August 1, 1994), declining one
percentage point each year. No CDSC is levied on shares which have been sold to
EVM or its affiliates or to their respective employees or clients. CDSC charges
are paid to EVD to reduce the amount of Uncovered Distribution Charges
calculated under the Trust's Distribution Plan. If no Uncovered Distribution
Charges exist, the CDSC will be credited to operations. EVD received
approximately $24,176 of CDSC paid by shareholders for the six months ended
March 31, 1995.
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
(7) LINE OF CREDIT
The Trust participates with other funds managed by EVM in a $120 million
unsecured line of credit aggrement with a bank. The line of credit consists of a
$20 million committed facility and a $100 million discretionary facility.
Borrowings will be made by the Trust solely to facilitate the handling of
unusual and/or unanticipated short-term cash requirements. Interest is charged
to each fund based on its borrowings at an amount above either the bank's
adjusted certificate of deposit rate, a variable adjusted certificate of deposit
rate, or a federal funds effective rate. In addition, a fee computed at an
annual rate of 1/4 of 1% on the $20 million committed facility and on the daily
unused portion of the $100 million discretionary facility is allocated among the
participating funds at the end of each quarter. The Trust did not have any
significant borrowings or allocated fees during the period.
--------------------------------------------------------------------------------
(8) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term obligations,
aggregated $3,009,253 and $1,571,699, respectively.
--------------------------------------------------------------------------------
(9) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investment
securities owned at March 31, 1995, as computed on a federal income tax basis,
are as follows:
Aggregate cost $11,905,760
===========
Gross unrealized appreciation $ 2,063,458
Gross unrealized depreciation 445,275
-----------
Net unrealized appreciation $ 1,618,183
===========
EV MARATHON GOLD & NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1994
[Download Table]
SHARES VALUE
COMMON STOCKS -- 90.8%
GOLD & PRECIOUS METALS -- 24.6%
American Barrick Resources Corp. 17,000 $ 452,625
Ashanti Goldfields Ltd. GDR 12,000 232,500
Battle Mountain Gold Co. 24,000 306,000
Cambior Inc. 17,000 269,875
Dayton Mining Corp.*# 55,000 192,715
Firstmiss Gold, Inc.* 40,000 325,000
Hecla Mining Co.* 25,000 331,250
Newmont Mining Corp. 6,237 280,665
Placer Dome, Inc. 19,000 477,375
TVX Gold, Inc.* 45,000 348,750
$ 3,216,755
INDUSTRIAL METALS -- 16.3%
Aluminum Co. of America 1,300 $ 110,175
Cyprus Amax Minerals Co. 12,500 390,625
Freeport McMoRan Copper & Gold 16,300 407,500
Inco Limited 5,600 168,700
Phelps Dodge Corp. 4,700 291,988
Reynolds Metals Co. 5,000 283,125
RTZ Corp. PLC ADR 8,424 481,221
$ 2,133,334
INDUSTRIAL MINERALS -- 8.4%
Minerals Technologies, Inc. 10,500 $ 311,062
National Gypsum Co. 8,500 323,000
Potash Corp. of Saskatchewan 6,000 245,250
Vulcan Materials, Inc. 4,000 215,500
$ 1,094,812
IRON & STEEL -- 7.0%
J & L Specialty Steel, Inc. 16,000 $ 304,000
Lukens Inc. 4,000 140,000
Rouge Steel Company Class A 9,000 264,375
WHX Corp. 12,000 205,500
$ 913,875
OIL & GAS -- 16.1%
Amerada Hess Corp. 2,000 $ 93,000
Amoco Corp. 2,000 118,500
Anadarko Petroleum Corp. 8,000 358,000
Apache Corp. 12,000 303,000
Arakis Energy Corp.* 35,000 214,375
Burlington Resources, Inc. 3,000 112,500
Mobil Corp. 1,500 118,687
Phillips Petroleum Co. 10,100 345,925
Royal Dutch Petroleum PLC ADR 1,800 193,275
Unocal Corp. 8,500 240,125
$ 2,097,387
PAPER & FOREST PRODUCTS -- 18.4%
International Paper Co. 1,300 $ 102,050
Longview Fibre Co. 22,000 401,500
Mead Corporation 3,300 171,600
Pacific Forest Products*# 10,000 93,190
Rayonier Inc. 10,000 322,500
Scott Paper Co. 3,000 183,375
Temple Inland Inc. 6,500 359,125
Timberwest Forest Ltd.*# 18,000 157,676
Weyerhaeuser Co. 6,100 272,213
Willamette Industries, Inc. 6,600 338,250
$ 2,401,479
TOTAL COMMON STOCKS
(identified cost, $9,876,348) $11,857,642
PREFERRED STOCKS -- 4.1%
Amax Gold Inc., Conv. Pfd. 5,000 $ 278,125
Freeport McMoRan Copper & Gold, Inc. Var.
Pfd. 7,000 262,500
TOTAL PREFERRED STOCKS
(identified cost, $528,670) $ 540,625
SHORT-TERM OBLIGATIONS -- 8.4%
PRINCIPAL
AMOUNT
(000 OMITTED)
CXC Inc., 5.05s, 10/3/94 $500 $ 499,860
Heller Financial, Inc. 4.9s, 10/5/94 600 599,673
TOTAL SHORT-TERM OBLIGATIONS,
AT AMORTIZED COST $ 1,099,533
TOTAL INVESTMENTS
(identified cost, $11,504,551) $13,497,800
OTHER ASSETS, LESS LIABILITIES -- (3.3%) (442,485)
NET ASSETS -- 100.0% $13,055,315
<FN>
* Non-income producing security.
# Foreign Security
See notes to financial statements
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1994
[Download Table]
ASSETS:
Investments, at value (Note 1A) (identified cost,
$11,504,551) $13,497,800
Cash 157,725
Receivable for investments sold 162,505
Receivable for Trust shares sold 196,731
Dividends receivable 10,166
Total assets $14,024,927
LIABILITIES:
Payable for investment purchased $938,832
Payable for Trust shares redeemed 26,229
Payable to affiliates --
Custodian fee 645
Trustees' fees 45
Accrued expenses 3,861
Total liabilities 969,612
NET ASSETS for 876,882 shares of beneficial interest
outstanding $13,055,315
SOURCES OF NET ASSETS:
Paid-in capital $11,123,291
Accumulated net realized loss on investment trans-
actions (computed on the basis of identified
cost) (61,225)
Unrealized appreciation of investments (computed
on the basis of identified cost) 1,993,249
Total $13,055,315
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION
PRICE (NOTE 6) PER SHARE ($13,055,315 / 876,882
shares of beneficial interest) $14.89
See notes to financial statements
STATEMENT OF OPERATIONS
For the Year Ended September 30, 1994
[Download Table]
INVESTMENT INCOME:
Income --
Dividends $ 146,257
Interest 10,761
Total income $ 157,018
Expenses --
Investment adviser fee (Note 4) $ 70,439
Compensation of Trustees not members of the In-
vestment Adviser's organization 744
Custodian fee (Note 4) 16,072
Distribution fees (Note 5) 78,196
Registration costs 25,344
Printing and postage 21,288
Legal and accounting services 16,628
Transfer and dividend disbursing agent fees 11,564
Miscellaneous 6,550
Total expenses 246,825
Net investment loss $ (89,807)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments, computed on the
basis of identified cost $ (61,225)
Increase in unrealized appreciation of investments 1,765,546
Net realized and unrealized gain on
investments 1,704,321
Net increase in net assets from
operations $1,614,514
See notes to financial statements
STATEMENTS OF CHANGES IN NET ASSETS
[Download Table]
YEAR ENDED SEPTEMBER 30,
1994 1993
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment loss $ (89,807) $ (39,887)
Net realized gain (loss) on investments (61,225) 501,513
Increase (decrease) in unrealized appreciation
of investments 1,765,546 (78,433)
Net increase in net assets from operations $ 1,614,514 $ 383,193
Distributions to shareholders from (Note 2) --
In excess of net investment income $ (10,924) $ --
In excess of net realized gain on investment
transactions (508,281) --
Total $ (519,205) $ --
Transactions in shares of beneficial interest (ex-
clusive of amounts allocated to net investment
income) (Note 3) --
Proceeds from sales of shares $10,163,553 $ 3,275,450
Net asset value of shares issued to shareholder
in payment of distributions
declared 378,380 --
Cost of shares redeemed (4,374,063) (1,641,795)
Increase in net assets from Trust share trans-
actions $ 6,167,870 $ 1,633,655
Net increase in net assets $ 7,263,179 $ 2,016,848
NET ASSETS:
At beginning of year 5,792,136 3,775,288
At end of year (including accumulated net invest-
ment loss of $82,877 and $52,552, respectively) $13,055,315 $ 5,792,136
See notes to financial statements
FINANCIAL HIGHLIGHTS
[Enlarge/Download Table]
YEAR ENDED SEPTEMBER 30,
1994 1993 1992 1991 1990
NET ASSET VALUE, beginning of year $ 13.240 $11.850 $11.140 $12.140 $13.460
INCOME FROM OPERATIONS:
Net investment income (loss) $ (0.050) $(0.090) $(0.083) $ 0.020 $ 0.069
Net realized and unrealized gain (loss)
on investments 2.650 1.480 1.103 (0.570) (0.009)
Total income from investment opera-
tions $ 2.600 $ 1.390 $ 1.020 $(0.550) $ 0.060
LESS DISTRIBUTIONS FROM:
Net investment income $ -- $ -- -- $(0.020) $(0.069)
Net realized gain on investments -- -- (0.060) (0.320) (1.220)
Paid-in capital -- -- (0.250) (0.110) (0.091)
In excess of net investment income (0.020) -- -- -- --
In excess of realized gain on investment (0.930) -- -- -- --
Total distributions $ (0.950) $ -- $(0.310) $(0.450) $(1.380)
NET ASSET VALUE, end of year $ 14.890 $13.240 $11.850 $11.140 $12.140
TOTAL RETURN 20.47% 11.73% 9.44% (4.36)% 0.01%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000 omitted) $13,055 $5,792 $3,775 $4,042 $4,391
Ratio of net expenses to average net as-
sets 2.64% 3.15% 3.26% 3.29% 2.50%
Ratio of net investment income (loss) to
average net assets (0.96)% (0.92)% (0.67)% 0.17% 0.33%
PORTFOLIO TURNOVER 17% 57% 32% 27% 35%
* For the four years ended September 30, 1993, the operating expenses of the
Trust reflect a reduction of the investment adviser fee, an allocation of ex-
penses to the Investment Adviser, or both. Had such actions not been taken,
net investment income per share and the ratios would have been as follows:
NET INVESTMENT INCOME (LOSS) PER SHARE $(0.210) $(0.240) $(0.110) $(0.300)
RATIOS (As a percentage of average net as-
sets):
Expenses 3.90% 4.65% 4.42% 5.23%
Net investment income (loss) (1.67)% (2.06)% (0.96)% (2.40)%
See notes to financial statements
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
The Trust is an entity of the type commonly known as a Massachusetts busi-
ness trust and is registered under the Investment Company Act of 1940, as
amended, as a non-diversified open-end management investment company. The
following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Investments, other than fixed income securi-
ties, listed on securities exchanges or in the NASDAQ National Market Sys-
tem are valued at closing sale prices. Unlisted securities or listed secu-
rities for which closing sale prices are not available are valued at the
mean between the latest bid and asked prices. Options are valued at the
last quoted sale price on the exchange or board of trade on which they are
primarily traded or, in the absence of a sale, the mean between the last
bid and asked price. Futures positions on investments or currencies are
generally valued at closing settlement prices. Short-term obligations are
valued at amortized cost, which approximates value. 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
appraised at fair value as determined in good faith by or pursuant to pro-
cedures established by the Trustees.
B. FEDERAL TAXES -- The Trust's policy is to comply with the provisions of
the Internal Revenue Code available to regulated investment companies and
to distribute to shareholders each year all of its taxable income, includ-
ing any net realized gain on investments. Accordingly, no provision for
federal income or excise tax is necessary. At September 30, 1994, the
Trust, for federal income tax purposes, had a capital loss carryover of
$61,225 which will reduce the Trust's taxable income arising from future
net realized gain on investments, if any, to the extent permitted by the
Internal Revenue Code, and thus will reduce the amount of the distribu-
tions to shareholders which would otherwise be necessary to relieve the
Trust of any liability for federal income or excise tax. Such capital loss
carryovers will expire on September 30, 2002.
C. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale
of Trust shares and other distribution costs are charged to operations.
For tax purposes, commissions paid are charged to paid-in capital (See
Note 5).
D. EQUALIZATION -- Prior to October 1, 1993, the Trust followed the ac-
counting practice known as equalization by which a portion of the proceeds
from the sales and costs of redemptions of Trust shares was allocated to
undistributed net investment income. As of October 1, 1993, the Trust dis-
continued the use of equalization. This change had no effect on the
Trust's net asset, net asset value per share, or its net increase or (de-
crease) in net assets from operations. Discontinuing the use of equaliza-
tion will result in a simpler and more meaningful financial statement pre-
sentation.
E. OTHER -- Investment security transactions are accounted for on a trade
date basis. Dividend income, distributions to shareholders and shares is-
sued to shareholders electing to receive distributions in shares are re-
corded on the ex-dividend date.
(2) DISTRIBUTIONS TO SHAREHOLDERS
It is the present policy of the Trust to make (A) at least one distribu-
tion annually (normally in December) of substantially all of the invest-
ment income earned by the Trust, less its expenses (other than sales com-
missions incurred in the sale of Trust shares, which commissions are
charged to the Trust's paid-in capital for tax purposes), and (B) at least
one distribution annually of substantially all of the capital gains real-
ized by the Trust, if any. Distributions are paid in the form of addi-
tional shares of the Trust or, at the election of the shareholder, in
cash. The Trust distinguishes between distributions on a tax basis and a
financial reporting basis. Generally accepted accounting principles re-
quire that only distributions in excess of tax basis earnings and profits
be reported in the financial statements as a return of capital. Differ-
ences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in overdistributions
only for financial statement purposes are classified as distributions in
excess of net investment income or accumulated net realized gains. Perma-
nent differences between book and tax accounting relating to distributions
are reclassified to paid in capital. During the year ended September 30,
1994, $70,406 was reclassified from accumulated loss to paid in capital
due to the fact such losses would never be utilized for tax purposes. In
addition, $82,877 was reclassified from accumulated investment loss and
$52,635 from realized loss to paid in capital for the same reason.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in Trust shares were as follows:
[Download Table]
YEAR ENDED SEPTEMBER 30,
1994 1993
Sales 731,556 250,369
Issued to shareholders electing to receive pay-
ment of
distributions in Trust shares 28,365 --
Redemptions (320,555) (131,463)
Net increase 439,366 118,906
(4) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee was paid to Eaton Vance Management (EVM) as
compensation for management and investment advisory services rendered to
the Trust. The fee is computed at the monthly rate of 0.0625% (0.75% per
annum) of the Trust's average daily net assets up to $500 million and at
reduced rates as daily net assets exceed that level. For the year ended
September 30, 1994, the effective annual rate, based on average daily net
assets, was 0.75%.
Except as to Trustees of the Trust who are not members of EVM's organiza-
tion, officers and Trustees receive remuneration for their services to the
Trust out of such investment adviser fee. Investors Bank & Trust Company
(IBT), an affiliate of EVM, serves as custodian of the Trust. Pursuant to
the custodian agreement, IBT receives a fee reduced by credits which are
determined based on the average daily cash balances the Trust maintains
with IBT. Certain of the officers and Trustees of the Trust are officers
and directors/trustees of the above organizations (See Note 5).
(5) DISTRIBUTION PLAN
The Trust has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The Plan requires the
Trust to pay the Principal Underwriter, Eaton Vance Distributors, Inc.
(EVD) amounts equal to 1/365 of 0.75% of the Trust's daily net assets, for
providing ongoing distribution services and facilities to the Trust. The
Trust will automatically discontinue payments to EVD during any period in
which there are no outstanding Uncovered Distribution Charges, which are
equivalent to the sum of (i) 5% of the aggregate amount received by the
Trust for shares sold plus (ii) distribution fees calculated by applying
the rate of 1% over the prevailing prime rate to the outstanding balance
of Uncovered Distribution Charges of EVD, reduced by the aggregate amount
of contingent deferred sales charges (see Note 6) and daily amounts there-
tofore paid to EVD. The amount payable to EVD with respect to each day is
accrued on such day as a liability of the Trust and, accordingly, reduces
the Trust's net assets. The Trust accrued $70,406 as payable to EVD for
the year ended September 30, 1994, representing 0.75% (annualized) of
daily average net assets. At September 30, 1994, the amount of Uncovered
Distribution Charges of EVD calculated under the Plan was approximately
$435,762.
In addition, the Plan authorizes the Trust to make payments of service
fees to the Principal Underwriter, Authorized Firms and other persons in
amounts not exceeding 0.25% of the Trust's average daily net assets for
each fiscal year. The Trustees have initially implemented the Plan by au-
thorizing the Trust to make quarterly payments of service fees to the
Principal Underwriter and Authorized Firms in amounts not expected to
exceed 0.25% per annum of the Trust's average daily net assets based on
the value of Trust shares sold by such persons and remaining outstanding
for at least one year. Service fee payments will be made for personal ser-
vices and/or the maintenance of shareholder accounts. Service fees are
separate and distinct from the sales commissions and distribution fees
payable by the Trust to EVD, and, as such, are not subject to automatic
discontinuance where there are no outstanding Uncovered Distribution
Charges of EVD. Provision for service fees payments amounted to $7,790 for
the year ended September 30, 1994.
Certain officers and Trustees of the Trust are officers or directors of
EVD.
(6) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of
Trust shares made within six years of purchase. Generally, the CDSC is
based upon the lower of net asset value at date of redemption or date of
purchase. No charge is levied on shares acquired by reinvestment of divi-
dends or capital gain distributions. The CDSC is imposed at declining
rates that begin at 5% in the case of redemptions in the first and second
year after purchase (6% and 5%, respectively for shares acquired prior to
August 1, 1994), declining one percentage point each year. No CDSC is lev-
ied on shares which have been sold to EVM or its affiliates or to their
respective employees or clients. CDSC charges are paid to EVD to reduce
the amount of Uncovered Distribution Charges calculated under the Trust's
Distribution Plan. If no Uncovered Distribution Charges exist, the CDSC
will be credited to operations. EVD received approximately $35,518 of CDSC
paid by shareholders for the year ended September 30, 1994.
(7) LINE OF CREDIT
The Trust participates with other funds managed by EVM in a $120 million
unsecured line of credit agreement with a bank. The line of credit con-
sists of a $20 million committed facility and a $100 million discretionary
facility. Borrowings will be made by the Trust solely to facilitate the
handling of unusual and/or unanticipated short-term cash requirements. In-
terest is charged to each fund based on its borrowings at an amount above
either the bank's adjusted certificate of deposit rate, a variable ad-
justed certificate of deposit rate, or a federal funds effective rate. In
addition, a fee computed at an annual rate of 1/4 of 1% on the $20 million
committed facility and on the daily unused portion of the $100 million
discretionary facility is allocated among the participating funds at the
end of each quarter. The Trust did not have any significant borrowings or
allocated fees during the period.
(8) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short- term obligations,
aggregated $6,829,517 and $1,505,768, respectively.
(9) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the invest-
ment securities owned at September 31, 1994, as computed on a federal in-
come tax basis, are as follows:
[Download Table]
Aggregate cost $11,504,551
Gross unrealized appreciation $ 2,114,469
Gross unrealized depreciation 121,220
Net unrealized appreciation $ 1,993,249
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of
EV Marathon Gold and Natural Resources Fund:
We have audited the accompanying statement of assets and liabilities, in-
cluding the portfolio of investments, of EV Marathon Gold and Natural Re-
sources Fund (formerly Eaton Vance Natural Resources Trust) as of Septem-
ber 30, 1994, the related statement of operations for the year then ended,
the statement of changes in net assets for the years ended September 30,
1994 and 1993, and the financial highlights for each of the years in the
five- year period ended September 30, 1994. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and fi-
nancial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclo-
sures in the financial statements. Our procedures included confirmation of
securities owned at September 30, 1994, by correspondence with the custo-
dian and brokers; where replies were not received from brokers, we per-
formed other auditing procedures. An audit also includes assessing the ac-
counting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We be-
lieve that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of EV Marathon
Gold and Natural Resources Fund at September 30, 1994, the results of its
operations, the changes in its net assets, and its financial highlights
for the respective stated periods in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
November 2, 1994
INVESTMENT ADVISER
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
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
EV MARATHON GOLD &
NATURAL RESOURCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
[LOGO]
EV MARATHON GOLD &
NATURAL RESOURCES
FUND
STATEMENT OF
ADDITIONAL
INFORMATION
FEBRUARY 1, 1995
NRSAI
OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
INCLUDED IN PART A:
For EV Marathon Gold & Natural Resources Fund:
Financial Highlights for the six months ended March 31, 1995
(Unaudited) and for the five years ended September 30, 1994
INCLUDED IN PART B:
FOR EV MARATHON GOLD & NATURAL RESOURCES FUND:
Financial Statements for EV Marathon Gold & Natural Resources Fund:
Portfolio of Investments as of March 31, 1995 (Unaudited)
Statement of Assets and Liabilities as of March 31, 1995 (Unaudited)
Statement of Operations for the six months ended March 31, 1995
(Unaudited)
Statement of Changes in Net Assets for the six months ended March
31, 1995 (Unaudited)
Financial Highlights for the six months ended March 31, 1995
(Unaudited) and for the five years ended September 30, 1994
Notes to Financial Statements (Unaudited)
Portfolio of Investments as of September 30, 1994
Statement of Assets and Liabilities as of September 30, 1994
Statement of Operations for the year ended, September 30, 1994
Statements of Changes in Net Assets for the year ended, September
30, 1994, and for the year ended September 30, 1993
Financial Highlights for the five years ended September 30, 1994
Notes to Financial Statements
Independent Auditors' Report
(B) EXHIBITS:
[Enlarge/Download Table]
(1)(a) Declaration of Trust dated May 25, 1989. Filed herewith.
(b) Amendment to the Declaration of Trust Filed herewith.
dated August 18, 1992.
(c) Amendment and Restatement of Filed herewith.
Establishment and Designation of Series
of Shares dated June 19, 1995.
(d) Form of Amendment and Restatement of Filed as Exhibit (1)(h) to Post-Effective
Establishment and Designation of Series Amendment No. 57 and incorporated herein by
of Shares. reference.
(2)(a) By-Laws Filed herewith.
(b) Amendment to By-Laws dated December 13, Filed herewith.
1993.
(3) Not applicable
(4) Not applicable
(5)(a) Investment Advisory Agreement with Eaton Filed herewith.
Vance Management for EV Marathon Gold &
Natural Resources Fund dated August 15,
1995.
(b) Management Contract with Eaton Vance Filed herewith.
Management for Eaton Vance Greater China
Growth Fund.
(c) Management Contract with Eaton Vance Filed herewith.
Management for EV Marathon Greater China
Growth Fund dated June 7, 1993.
(d) Management Contract with Eaton Vance Filed herewith.
Management for EV Classic Greater China
Growth Fund dated December 17, 1993.
(e) Form of Management Contract with Eaton Filed as Exhibit (5)(e) to Post-Effective
Vance Management for EV Marathon Amendment No. 57 and incorporated herein by
Information Age Fund. reference.
(f) Form of Management Contract with Eaton Filed as Exhibit (5)(f) to Post-Effective
Vance Management for EV Traditional Amendment No. 57 and incorporated herein by
Information Age Fund. reference.
(6)(a)(1)Distribution Agreement with Eaton Vance Filed herewith.
Distributors, Inc. dated August 30,
1989.
(a)(2)Distribution Agreement with Eaton Vance Filed herewith.
Distributors, Inc. for Eaton Vance
Greater China Growth Fund.
(a)(3)Distribution Agreement with Eaton Vance Filed herewith.
Distributors, Inc. for EV Marathon
Greater China Growth Fund dated June
7,1993.
(a)(4)Distribution Agreement with Eaton Vance Filed herewith.
Distributors, Inc. for EV Classic
Greater China Growth Fund.
(a)(5)Distribution Agreement with Eaton Vance Filed herewith.
Distributors, Inc. for EV Classic Growth
Fund.
(a)(6)Distribution Agreement with Eaton Vance Filed herewith.
Distributors, Inc. for EV Marathon
Growth Fund.
(a)(7)Form of Distribution Agreement with Filed as Exhibit (6)(a)(7) to Post-Effective
Eaton Vance Distributors, Inc. for EV Amendment No. 57 and incorporated herein by
Marathon Information Age Fund. reference.
(a)(8)Form of Distribution Agreement with Filed as Exhibit (6)(a)(8) to Post-Effective
Eaton Vance Distributors, Inc. for EV Amendment No. 57 and incorporated herein by
Traditional Information Age Fund. reference.
(a)(9)Distribution Agreement with Eaton Vance Filed herewith.
Distributors, Inc. for EV Marathon Gold
& Natural Resources Fund dated August
15, 1995.
(b) Selling Group Agreement between Eaton Filed herewith.
Vance Distributors, Inc. and Authorized
Firms.
(c) Schedule of Dealer Discounts and Sales Filed herewith.
Charges.
(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 indepen- dent
Trustees. See in the Matter of Capital
Exchange Fund, Inc., Release No. IC-
20671 (November 1, 1994).
(8) Custodian Agreement with Investors Bank Filed herewith.
& Trust Company dated November 7, 1994.
(9)(a) Administrative Services Agreement with Filed herewith.
Eaton Vance Management for EV
Traditional Growth Fund.
(b) Administrative Services Agreement with Filed herewith.
Eaton Vance Management for EV Classic
Growth Fund.
(c) Administrative Services Agreement with Filed herewith.
Eaton Vance Management for EV Marathon
Growth Fund.
(d) Transfer Agency Agreement dated June 7, Filed herewith.
1989.
(e) Amendment to Transfer Agency Agreeement Filed herewith.
dated February 1, 1993.
(10) Not applicable
(11) Consent of Independent Auditors for EV Filed herewith.
Marathon Gold & Natural Resources Fund.
(12) Not applicable
(13) Not applicable
(14) (1)Vance, Sanders Profit Sharing Retirement Filed as Exhibit (8)(b)(1) to Post-Effective
Plan for Self-Employed Persons with Amendment No. 28 and incorporated herein by
Adoption Agreement and instructions. reference.
(2)Eaton & Howard, Vance Sanders Defined Filed as Exhibit (14)(2) to Post-Effective
Contribution Prototype Plan and Trust Amendment No. 29 and incorporated herein by
with Adoption Agreements: reference.
(1) Basic Profit-Sharing Retirement
Plan.
(2) Basic Money Purchase Pension Plan.
(3) Thrift Plan Qualifying as Profit-
Shar$ing Plan.
(4) Thrift Plan Qualifying as Money
Purchase Plan.
(5) Integrated Profit-Sharing Retirement
Plan.
(6) Integrated Money Purchase Pension
Plan.
(3)Individual Retirement Custodian Account Filed as Exhibit 18 to Post-Effective Amendment
(Form 5305A) and Instructions. No. 24 on Form S-5, File #2-22019 and
incorporated herein by reference.
(15)(a) Service Plan dated July 7, 1993 pursuant Filed herewith.
to Rule 12b-1 under the Investment
Company Act of 1940 for EV Traditional
Growth Fund.
(b) Distribution Plan pursuant to Rule 12b-1 Filed herewith.
under the Investment Company Act of 1940
for Eaton Vance Greater China Growth
Fund.
(c) Distribution Plan pursuant to Rule 12b-1 Filed herewith.
under the Investment Company Act of 1940
for EV Marathon Greater China Growth
Fund dated June 7, 1993.
(d) Distribution Plan pursuant to Rule 12b-1 Filed herewith.
under the Investment Company Act of 1940
for EV Classic Greater China Growth
Fund.
(e) Distribution Plan for EV Classic Growth Filed herewith.
Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940.
(f) Distribution Plan for EV Marathon Growth Filed herewith.
Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940.
(g) Form of Distribution Plan for Eaton Filed as Exhibit (15)(g) to Post-Effective
Vance Growth Trust pursuant to Rule Amendment No. 57 and incorporated herein by
12b-1 under the Investment Company Act reference.
of 1940, as amended, on behalf of EV
Marathon Information Age Fund.
(h) Form of Distribution Plan for Eaton Filed as Exhibit (15)(g) to Post-Effective
Vance Growth Trust pursuant to Rule Amendment No. 57 and incorporated herein by
12b-1 under the Investment Company Act reference.
of 1940, as amended, on behalf of EV
Traditional Information Age Fund.
(i) Distribution Plan for Eaton Vance Growth Filed herewith.
Trust pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as
amended, on behalf of EV Marathon Gold &
Natural Resources Fund dated June 19,
1995.
(16) Schedule for Computation of Performance Filed herewith.
Quotations.
(17)(a) Power of Attorney dated August 7, 1995 Filed herewith.
for Eaton Vance Growth Trust.
(b) Power of Attorney dated March 30, 1993 Filed herewith.
for Greater China Growth Portfolio.
(c) Power of Attorney dated August 7, 1995 Filed herewith
for Growth Portfolio.
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, 1995
-------------- ----------------
Shares of beneficial interest without par value
EV Traditional Growth Fund 11,251
EV Marathon Growth Fund 120
EV Classic Growth Fund 13
EV Traditional Greater China Growth Fund 20,719
EV Marathon Greater China Growth Fund 29,214
EV Classic Greater China Growth Fund 1,270
EV Marathon Gold & Natural Resources Fund 938
ITEM 27. INDEMNIFICATION
No change from the information set forth in Item 27 of Form N-1A, filed as
Post-Effective Amendment No. 41 to the Registration Statement under the
Securities Act of 1933 and Amendment No. 14 under the Investment Company Act
of 1940, which information is incorporated herein by reference.
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.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the information set forth under the caption
"Investment Adviser and Administrator" 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:
[Enlarge/Download Table]
EV Classic Alabama Tax Free Fund EV Classic Florida Limited Maturity
EV Classic Arizona Tax Free Fund Tax Free Fund
EV Classic Arkansas Tax Free Fund EV Classic Florida Tax Free Fund
EV Classic California Limited Maturity EV Classic Georgia Tax Free Fund
Tax Free Fund EV Classic Government Obligations Fund
EV Classic California Municipals Fund EV Classic Greater China Growth Fund
EV Classic Colorado Tax Free Fund EV Classic Growth Fund
EV Classic Connecticut Limited Maturity EV Classic Hawaii Tax Free Fund
Tax Free Fund EV Classic High Income Fund
EV Classic Connecticut Tax Free Fund EV Classic Investors Fund
EV Classic Florida Insured Tax Free Fund EV Classic Kansas Tax Free Fund
EV Classic Kentucky Tax Free Fund EV Marathon Georgia Tax Free Fund
EV Classic Louisiana Tax Free Fund EV Marathon Gold & Natural Resources Fund
EV Classic Maryland Tax Free Fund EV Marathon Government Obligations Fund
EV Classic Massachusetts Limited Maturity EV Marathon Greater China Growth Fund
Tax Free Fund EV Marathon Greater India Fund
EV Classic Massachusetts Tax Free Fund EV Marathon Growth Fund
EV Classic Michigan Limited Maturity EV Marathon Hawaii Tax Free Fund
Tax Free Fund EV Marathon High Income Fund
EV Classic Michigan Tax Free Fund EV Marathon High Yield Municipals Fund
EV Classic Minnesota Tax Free Fund EV Marathon Investors Fund
EV Classic Mississippi Tax Free Fund EV Marathon Kansas Tax Free Fund
EV Classic Missouri Tax Free Fund EV Marathon Kentucky Tax Free Fund
EV Classic National Limited Maturity Tax Free Fund EV Marathon Louisiana Tax Free Fund
EV Classic National Municipals Fund EV Marathon Maryland Tax Free Fund
EV Classic New Jersey Limited Maturity EV Marathon Massachusetts Limited Maturity
Tax Free Fund Tax Free Fund
EV Classic New Jersey Tax Free Fund EV Marathon Massachusetts Tax Free Fund
EV Classic New York Limited Maturity EV Marathon Michigan Limited Maturity
Tax Free Fund Tax Free Fund
EV Classic New York Tax Free Fund EV Marathon Michigan Tax Free Fund
EV Classic North Carolina Tax Free Fund EV Marathon Minnesota Tax Free Fund
EV Classic Ohio Limited Maturity Tax Free Fund EV Marathon Mississippi Tax Free Fund
EV Classic Ohio Tax Free Fund EV Marathon Missouri Tax Free Fund
EV Classic Oregon Tax Free Fund EV Marathon National Limited Maturity
EV Classic Pennsylvania Limited Maturity Tax Free Fund
Tax Free Fund EV Marathon National Municipals Fund
EV Classic Pennsylvania Tax Free Fund EV Marathon New Jersey Limited Maturity
EV Classic Rhode Island Tax Free Fund Tax Free Fund
EV Classic Strategic Income Fund EV Marathon New Jersey Tax Free Fund
EV Classic South Carolina Tax Free Fund EV Marathon New York Limited Maturity
EV Classic Special Equities Fund Tax Free Fund
EV Classic Senior Floating-Rate Fund EV Marathon New York Tax Free Fund
EV Classic Stock Fund EV Marathon North Carolina Limited Maturity
EV Classic Tennessee Tax Free Fund Tax Free Fund
EV Classic Texas Tax Free Fund EV Marathon North Carolina Tax Free Fund
EV Classic Total Return Fund EV Marathon Ohio Limited Maturity Tax Free Fund
EV Classic Virginia Tax Free Fund EV Marathon Ohio Tax Free Fund
EV Classic West Virginia Tax Free Fund EV Marathon Oregon Tax Free Fund
EV Marathon Alabama Tax Free Fund EV Marathon Pennsylvania Limited Maturity
EV Marathon Arizona Limited Maturity Tax Free Fund
Tax Free Fund EV Marathon Pennsylvania Tax Free Fund
EV Marathon Arizona Tax Free Fund EV Marathon Rhode Island Tax Free Fund
EV Marathon Arkansas Tax Free Fund EV Marathon Strategic Income Fund
EV Marathon California Limited Maturity EV Marathon South Carolina Tax Free Fund
Tax Free Fund EV Marathon Special Equities Fund
EV Marathon California Municipals Fund EV Marathon Stock Fund
EV Marathon Colorado Tax Free Fund EV Marathon Tennessee Tax Free Fund
EV Marathon Connecticut Limited Maturity EV Marathon Texas Tax Free Fund
Tax Free Fund EV Marathon Total Return Fund
EV Marathon Connecticut Tax Free Fund EV Marathon Virginia Limited Maturity
EV Marathon Emerging Markets Fund Tax Free Fund
Eaton Vance Equity - Income Trust EV Marathon Virginia Tax Free Fund
EV Marathon Florida Insured Tax Free Fund EV Marathon West Virginia Tax Free Fund
EV Marathon Florida Limited Maturity EV Traditional California Municipals Fund
Tax Free Fund EV Traditional Connecticut Tax Free Fund
EV Marathon Florida Tax Free Fund EV Traditional Emerging Markets Fund
EV Traditional Florida Insured Tax Free Fund EV Traditional New Jersey Tax Free Fund
EV Traditional Florida Limited Maturity EV Traditional New York Limited Maturity
Tax Free Fund Tax Free Fund
EV Traditional Florida Tax Free Fund EV Traditional New York Tax Free Fund
EV Traditional Government Obligations Fund EV Traditional Pennsylvania Tax Free Fund
EV Traditional Greater China Growth Fund EV Traditional Special Equities Fund
EV Traditional Greater India Fund EV Traditional Stock Fund
EV Traditional Growth Fund EV Traditional Total Return Fund
EV Traditional High Yield Municipals Fund Eaton Vance Cash Management Fund
Eaton Vance Income Fund of Boston Eaton Vance Liquid Assets Trust
EV Traditional Investors Fund Eaton Vance Money Market Fund
Eaton Vance Municipal Bond Fund L.P. Eaton Vance Prime Rate Reserves
EV Traditional National Limited Maturity Eaton Vance Short-Term Treasury Fund
Tax Free Fund Eaton Vance Tax Free Reserves
EV Traditional National Municipals Fund Massachusetts Municipal Bond Portfolio
[Enlarge/Download Table]
(b)
(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
Howard D. Barr Vice President None
2750 Royal View Court
Oakland, Michigan
Nancy E. Belza Vice President None
463-1 Buena Vista East
San Francisco, California
Chris Berg Vice President None
45 Windsor Lane
Palm Beach Gardens, Florida
H. Day Brigham, Jr.* Vice President None
Susan W. Bukima Vice President None
106 Princess Street
Alexandria, Virginia
Jeffrey W. Butterfield Vice President None
9378 Mirror Road
Columbus, Indiana
Mark A. Carlson* Vice President None
Jeffrey Chernoff Vice President None
115 Concourse West
Bright Waters, New York
William A. Clemmer* Vice President None
James S. Comforti Vice President None
1859 Crest Drive
Encinitas, California
Mark P. Doman Vice President None
107 Pine Street
Philadelphia, Pennsylvania
Michael A. Foster Vice President None
850 Kelsey Court
Centerville, Ohio
William M. Gillen Vice President None
280 Rea Street
North Andover, Massachusetts
Hugh S. Gilmartin Vice President None
1531-184th Avenue, NE
Bellevue, Washington
Richard E. Houghton* Vice President None
Brian Jacobs* Senior Vice President None
Stephen D. Johnson Vice President None
13340 Providence Lake Drive
Alpharetta, Georgia
Thomas J. Marcello Vice President None
553 Belleville Avenue
Glen Ridge, New Jersey
Timothy D. McCarthy Vice President None
9801 Germantown Pike
Lincoln Woods Apt. 416
Lafayette Hill, Pennsylvania
Morgan C. Mohrman* Senior Vice President None
Gregory B. Norris Vice President None
6 Halidon Court
Palm Beach Gardens, Florida
Thomas Otis* Secretary and Clerk Secretary
George D. Owen Vice President None
1911 Wildwood Court
Blue Springs, Missouri
F. Anthony Robinson Vice President None
510 Gravely Hill Road
Wakefield, Rhode Island
Benjamin A. Rowland, Jr.* Vice President, None
Treasurer and Director
John P. Rynne* Vice President None
George V.F. Schwab, Jr. Vice President None
9501 Hampton Oaks Lane
Charlotte, North Carolina
Cornelius J. Sullivan* Vice President None
Maureen C. Tallon Vice President None
518 Armistead Drive
Nashville, Tennessee
David M. Thill Vice President None
126 Albert Drive
Lancaster, New York
Chris Volf Vice President None
6517 Thoroughbred Loop
Odessa, Florida
Donald E. Webber* Senior Vice President None
Sue Wilder Vice President None
141 East 89th Street
New York, New York
----------
*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, 24 Federal Street,
Boston, MA 02110 and 89 South Street, Boston, MA 02111, and its transfer
agent, The Shareholder Services Group, Inc., 53 State Street, Boston, MA
02104, 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. 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, using
financial statements which need not be certified, within four to six months
from the effective date of Post-Effective Amendment No. 57.
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 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 16th day of August, 1995.
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 16, 1995
------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer August 16, 1995
------------------------------------
JAMES L. O'CONNOR
/s/ LANDON T. CLAY Trustee August 16, 1995
------------------------------------
LANDON T. CLAY
/s/ DONALD R. DWIGHT Trustee August 16, 1995
------------------------------------
DONALD R. DWIGHT
/s/ SAMUEL L. HAYES, III Trustee August 16, 1995
------------------------------------
SAMUEL L. HAYES, III
/s/ NORTON H. REAMER Trustee August 16, 1995
------------------------------------
NORTON H. REAMER
/s/ JOHN L. THORNDIKE Trustee August 16, 1995
------------------------------------
JOHN L. THORNDIKE
/s/ JACK L. TREYNOR Trustee August 16, 1995
------------------------------------
JACK L. TREYNOR
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[Enlarge/Download Table]
EXHIBIT INDEX
PAGE IN
SEQUENTIAL
NUMBERING
EXHIBIT NO. DESCRIPTION ---------
----------- ----------- SYSTEM
(1)(a) Declaration of Trust dated May 25, 1989.
(b) Amendment to the Declaration of Trust dated August 18, 1992.
(c) Amendment and Restatement of Establishment and Designation of Series
dated June 19, 1995.
(2)(a) By-Laws.
(b) Amendment to By-Laws of Eaton Vance Growth Trust dated December 13,
1993.
(5)(a) Investment Advisory Agreement with Eaton Vance Management for EV
Marathon Gold & Natural Resources Fund dated August 15, 1995.
(b) Management Contract with Eaton Vance Management for Eaton Vance
Greater China Growth Fund.
(c) Management Contract with Eaton Vance Management for EV Marathon
Greater China Growth Fund.
(d) Management Contract with Eaton Vance Management for EV Classic Greater
China Growth Fund.
(6)(a)(1) Distribution Agreement with Eaton Vance Distributors, Inc. dated
August 30, 1989.
(2) Distribution Agreement with Eaton Vance Distributors, Inc. for Eaton
Vance Greater China Growth Fund.
(3) Distribution Agreement with Eaton Vance Distributors, Inc. for EV
Marathon Greater China Growth Fund.
(4) Distribution Agreement with Eaton Vance Distributors, Inc. for EV
Classic Greater China Growth Fund.
(5) Distribution Agreement with Eaton Vance Distributors, Inc. for EV
Classic Growth Fund.
(6) Distribution Agreement with Eaton Vance Distributors, Inc. for EV
Marathon Growth Fund.
(9) Distribution Agreement with Eaton Vance Distributors, Inc. for EV
Marathon Gold & Natural Resources Fund.
(b) Selling Group Agreement between Eaton Vance Distributors, Inc. and
Authorized Firms.
(c) Schedule of Dealer Discounts and Sales Charges.
(8) Custodian Agreement with Investors Bank & Trust Company dated November
7, 1994.
(9)(a) Administrative Services Agreement with Eaton Vance Management for EV
Traditional Growth Fund.
(b) Administrative Services Agreement with Eaton Vance Management for EV
Classic Growth Fund.
(c) Administrative Services Agreement with Eaton Vance Management for EV
Marathon Growth Fund.
(d) Transfer Agency Agreement dated June 7, 1989.
(e) Amendment to Transfer Agency Agreement dated February 1, 1993.
(11) Consent of Independent Auditors for EV Gold & Natural Resources Fund
dated July 14, 1995.
(15)(a) Service Plan dated July 7, 1993 for EV Traditional Growth Fund.
(b) Distribution Plan for Eaton Vance Greater China Growth Fund.
(c) Distribution Plan for EV Marathon Greater China Growth Fund.
(d) Distribution Plan for EV Classic Greater China Growth Fund.
(e) Distribution Plan for EV Classic Growth Fund.
(f) Distribution Plan for EV Marathon Growth Fund.
(i) Distribution Plan for EV Marathon Gold & Natrual Resources Fund.
(16) Schedule for Computation of Performance Quotations.
(17)(a) Power of Attorney for Eaton Vance Growth Trust dated August 7, 1995.
(b) Power of Attorney for Greater China Growth Portfolio.
(c) Power of Attorney for Growth Portfolio.
Dates Referenced Herein and Documents Incorporated by Reference
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