<PAGE>
EV MARATHON GROWTH FUND
EV MARATHON GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING GROWTH OF
CAPITAL. THE FUND INVESTS ITS ASSETS IN GROWTH PORTFOLIO (THE "PORTFOLIO"), A
DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS
THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN PORTFOLIO OF
SECURITIES AS WITH HISTORICALLY STRUCTURED MUTUAL FUNDS. THE FUND IS A SERIES OF
EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of some
or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated May 1, 1995 for the Fund, as supplemented from
time to time, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. This Statement of Additional Information is
available without charge from the Fund's principal underwriter, Eaton Vance
Distributors, Inc. (the "Principal Underwriter"), 24 Federal Street, Boston, MA
02110 (telephone (800) 225-6265). The Portfolio's investment adviser is Boston
Management and Research (the "Investment Adviser"), a wholly-owned subsidiary of
Eaton Vance Management, and Eaton Vance Management is the administrator (the
"Administrator") of the Fund. The offices of the Investment Adviser and the
Administrator are located at 24 Federal Street, Boston, MA 02110.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses ............ 2 How to Buy Fund Shares ................... 11
The Fund's Financial Highlights .......... 3 How to Redeem Fund Shares ................ 12
The Fund's Investment Objective .......... 4 Reports to Shareholders .................. 14
How the Fund and the Portfolio Invest The Lifetime Investing Account/
their Assets; Investment Risks ......... 4 Distribution Options ................... 14
Organization of the Fund and the Portfolio 5 The Eaton Vance Exchange Privilege ....... 15
Management of the Fund and the Portfolio.. 7 Eaton Vance Shareholder Services ......... 16
Distribution Plan ........................ 8 Distributions and Taxes .................. 17
Valuing Fund Shares ....................... 10 Performance Information .................. 18
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PROSPECTUS DATED MAY 1, 1995
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDER AND FUND EXPENSES<F1>
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SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
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 Redemptions 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 AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(as a percentage of average daily net assets)
Investment Adviser Fee 0.625%
Rule 12b-1 Distribution (and Service) Fees<F3> 0.750%
Other Expenses 0.875%
-----
Total Operating Expenses 2.25 %
=====
EXAMPLE 1 YEAR 3 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
time period: $73 $110
An investor would pay the following expenses on the same investment, assuming (a) 5%
annual return and (b) no redemptions: $23 $ 70
Notes:
<FN>
<F1>The purpose of the above table and Example is to summarize the aggregate expenses of the Fund and the
Portfolio and to assist investors in understanding the various costs and expenses that investors in the Fund
will bear directly or indirectly. The Trustees of the Trust believe that over time the aggregate per share
expenses of the Fund and the Portfolio should be approximately equal to or less than the per share expenses
which the Fund would incur if the Trust retained the services of an investment adviser and the assets of the
Fund were invested directly in the type of securities being held by the Portfolio. Because the Fund does not
yet have a sufficient operating history, the percentages indicated as Annual Fund and Allocated Portfolio
Operating Expenses in the table and the amounts included in the Example are based on the Fund's and the
Portfolio's projected fees and expenses for the current fiscal year ending August 31, 1995. The Example
should not be considered a representation of past or future expenses and actual expenses may be greater or
less than those shown. The Example assumes a 5% annual return and the Fund's actual performance may result in
an annual return greater or less than 5%. For further information regarding the expenses of both the Fund and
the Portfolio see "The Fund's Financial Highlights", "Organization of the Fund and the Portfolio",
"Management of the Fund and the Portfolio" 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 distributions or (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 one or more other funds listed under "The Eaton Vance Exchange Privilege".
<F3>The Fund expects to begin accruing for its service fee payments during the quarter ending December 31, 1995.
<F4>Other investment companies with different distribution arrangements and fees are investing in the Portfolio
and additional such companies may do so in the future. See "Organization of the Fund and the Portfolio".
</TABLE>
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
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The following information should be read in conjunction with the financial
statements included in the Statement of Additional Information. 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 Principal Underwriter.
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FOR THE PERIOD FROM THE START OF BUSINESS, SEPTEMBER 13, 1994 TO FEBRUARY 28,
(UNAUDITED)
NET ASSET VALUE -- Beginning of period ........................ $10.000
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ......................................... $(0.037)
Net realized and unrealized gain on investments ............. 0.327
-------
Total income from investment operations ................... $ 0.290
-------
NET ASSET VALUE, end of period ................................ $10.290
=======
TOTAL RETURN(1) ............................................... 2.90%
RATIOS/SUPPLEMENTAL DATA (to average daily net assets):*
Expenses(2) ................................................. 3.13%+
Net investment loss ......................................... (1.61)%+
NET ASSETS AT END OF PERIOD (000'S OMITTED) ................... $ 729
*The expenses related to the operation of the Fund reflect an allocation of
expenses to the Administrator. Had such action not been taken, the ratios
would have been as follows:
RATIOS (to average daily net assets)
Expenses(2) ................................................. 6.76%+
Net investment loss ......................................... (5.24)%+
+ Computed on an annualized basis.
(1) Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of the period
reported. Dividends and distributions, if any, are assumed to be reinvested
at the net asset value on the record date.
(2) Includes the Fund's share of Growth Portfolio's allocated expenses.
Note: Certain of the per share amounts have been computed using average shares
outstanding.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
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EV MARATHON GROWTH FUND'S INVESTMENT OBJECTIVE IS TO ACHIEVE CAPITAL GROWTH. The
Fund currently seeks to meet its investment objective by investing its assets in
the Growth Portfolio, a separate registered investment company. The Portfolio
has the same investment objective as the Fund and invests in a carefully
selected and continuously managed portfolio consisting primarily of equity
securities. The Fund's and the Portfolio's investment objectives are
nonfundamental and may be changed when authorized by a vote of the Trustees of
the Trust or the Portfolio, respectively, without obtaining the approval of the
Fund's shareholders or the investors in the Portfolio, as the case may be. The
Trustees of the Trust have no present intention to change the Fund's objective
and intend to submit any proposed material change in the investment objective to
shareholders in advance for their approval.
HOW THE FUND AND THE PORTFOLIO INVEST THEIR ASSETS; INVESTMENT RISKS
- --------------------------------------------------------------------------------
THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING IN THE
PORTFOLIO. The policy of the Portfolio is to invest in a carefully selected and
continuously managed portfolio consisting primarily of domestic and foreign
securities. It may invest in all kinds of companies. The Portfolio will invest
primarily in common stocks or securities convertible into common stocks
(including convertible debt), which the Investment Adviser believes meet the
criteria for capital appreciation. The criteria for investments in convertible
debt are the same as used for the common stock of an issuer. The Portfolio does
not currently intend to invest more than 5% of its net assets in convertible
debt. It may also invest in other securities and obligations of all kinds. These
include preferred stocks, rights, warrants, bonds, repurchase agreements and
other evidences of indebtedness; however, the Portfolio does not currently
intend to invest more than 5% of its net assets in each of such investments and
currently intends to limit its investments in non-convertible debt to
non-convertible debt rated investment grade (i.e., rated Baa or higher by
Moody's Investors Service, Inc. or BBB or higher by Standard & Poor's Ratings
Group) or, if unrated, determined to be of comparable quality by the Portfolio's
Investment Adviser. The Portfolio may also invest in money market instruments.
While income is a subordinate consideration to capital growth, the Portfolio
will earn dividend or interest income to the extent that it receives dividends
or interest from its investments.
The Portfolio may invest in securities issued by foreign companies
(including American Depository Receipts and Global Depository Receipts). Such
investments may be subject to various risks such as fluctuations in currency and
exchange rates, foreign taxes, social, political and economic conditions in the
countries in which such companies operate, and changes in governmental, economic
or monetary policies both here and abroad. There may be less publicly available
information about a foreign company than about a comparable domestic company.
Since the securities markets in many foreign countries are not as developed as
those in the United States, the securities of many foreign companies are less
liquid and their prices are more volatile than securities of comparable domestic
companies. In order to hedge against possible variations in foreign exchange
rates pending the settlement of foreign securities transactions, the Portfolio
may buy or sell foreign currencies or may enter into forward foreign currency
exchange contracts to purchase or sell a specified currency at a specified price
and future date.
The Portfolio may purchase and sell exchange-traded futures contracts on
stock indices and options thereon to hedge against fluctuations in securities
prices or as a substitute for the purchase or sale of securities. Such
transactions involve a risk of loss or depreciation due to unanticipated adverse
changes in securities prices, which may exceed the Portfolio's initial
investment in these contracts. Futures contracts involve transactions costs. To
the extent that the Portfolio enters into futures contracts and options thereon
traded on an exchange regulated by the Commodity Futures Trading Commission, in
each case that are not for bona fide hedging purposes (as defined by the CFTC),
the aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the liquidation value of the Portfolio's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into. There can be no assurance that the Investment Adviser's use of
stock index futures will be advantageous to the Portfolio.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio's investments in equity
securities are subject to the risk of adverse developments affecting particular
companies or industries and the stock market generally.
The Fund and the Portfolio have adopted certain fundamental investment
restrictions which are enumerated in detail in the Statement of Additional
Information and which may not be changed unless authorized by a shareholder vote
and an investor vote, respectively. Except for such enumerated restrictions and
as otherwise indicated in this Prospectus, the investment objective and policies
of the Fund and the Portfolio are not fundamental policies and accordingly may
be changed by the Trustees of the Trust and the Portfolio without obtaining the
approval of the Fund's shareholders or the investors in the Portfolio, as the
case may be. If any change were made in the Fund's investment objective, the
Fund might have an investment objective different from the objective which an
investor considered appropriate at the time the investor became a shareholder of
the Fund.
- --------------------------------------------------------------------------------
THE FUND IS NOT INTENDED TO BE A COMPLETE INVESTMENT PROGRAM, AND
PROSPECTIVE INVESTORS SHOULD TAKE INTO ACCOUNT THEIR OBJECTIVES AND OTHER
INVESTMENTS WHEN CONSIDERING THE PURCHASE OF FUND SHARES. THE FUND CANNOT
ASSURE ACHIEVEMENT OF ITS CAPITAL GROWTH OBJECTIVE.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST, A BUSINESS TRUST
ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST DATED MAY
25, 1989, AS AMENDED, AND ORGANIZED AS THE SUCCESSOR TO A MASSACHUSETTS
CORPORATION WHICH COMMENCED ITS INVESTMENT COMPANY OPERATIONS IN 1954. THE TRUST
IS A MUTUAL FUND -- AN OPEN-END, MANAGEMENT INVESTMENT COMPANY. The Trustees of
the Trust are responsible for the overall management and supervision of its
affairs. The Trust may issue an unlimited number of shares of beneficial
interest (no par value per share) in one or more series and because the Trust
can offer separate series (such as the Fund) it is known as a "series company."
Each share represents an equal proportionate beneficial interest in the Fund.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust 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. In the event of the liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets of the Fund
available for distribution to shareholders.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW
YORK AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The
Portfolio, as well as the Trust, intends to comply with all applicable Federal
and state securities laws. The Portfolio's Declaration of Trust provides that
the Fund and other entities permitted to invest in the Portfolio (e.g., other
U.S. and foreign investment companies, and common and commingled trust funds)
will each be liable for all obligations of the Portfolio. However, the risk of
the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio itself
is unable to meet its obligations. Accordingly, the Trustees of the Trust
believe that neither the Fund nor its shareholders will be adversely affected by
reason of the Fund investing in the Portfolio.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in
the Fund should be aware that the Fund, unlike mutual funds which directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing its assets in an interest in the Portfolio
(although the Fund may temporarily hold a de minimus amount of cash), which is a
separate investment company with an identical investment objective. Therefore,
the Fund's interest in the securities owned by the Portfolio is indirect. In
addition to selling an interest to the Fund, the Portfolio may sell interests to
other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the various funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures,
including funds that have multiple classes of shares. For information regarding
the investment objective, policies and restrictions, see "The Fund's Investment
Objective" and "How the Fund and the Portfolio Invest their Assets; Investment
Risks". Further information regarding investment practices may be found in the
Statement of Additional Information.
The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of the Fund in the Portfolio, as well as the advantages
and disadvantages of the two-tier format. The Trustees believe that the
structure offers opportunities for substantial growth in the assets of the
Portfolio, and affords the potential for economies of scale for the Fund, at
least when the assets of the Portfolio exceed $300 million.
The Fund may withdraw (completely redeem) all its assets from the Portfolio
at any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. The investment objective and the
nonfundamental investment policies of the Fund and the Portfolio may be changed
by the Trustees of the Trust and the Portfolio without obtaining the approval of
the shareholders of the Fund or the investors in the Portfolio. Any such change
of the investment objective will be preceded by thirty days' advance written
notice to the shareholders of the Fund or the investors in the Portfolio, as the
case may be. If a shareholder redeems shares because of a change in the
nonfundamental objective or policies of the Fund, those shares may be subject to
a contingent deferred sales charge, as described in "How to Redeem Fund Shares".
In the event the Fund withdraws all of its assets from the Portfolio, or the
Board of Trustees of the Trust determines that the investment objective of the
Portfolio is no longer consistent with the investment objective of the Fund,
such Trustees would consider what action might be taken, including investing the
assets of the Fund in another pooled investment entity or retaining an
investment adviser to manage the Fund's assets in accordance with its investment
objective. The Fund's investment performance may be affected by a withdrawal of
all its assets from the Portfolio.
Information regarding other pooled investment entities or funds which invest
in the Portfolio may be obtained by contacting Eaton Vance Distributors, Inc.
(the "Principal Underwriter" or "EVD"), 24 Federal Street, Boston, MA 02110,
(617) 482-8260. Smaller investors in the Portfolio may be adversely affected by
the actions of larger investors in the Portfolio. For example, if a large
investor withdraws from the Portfolio, the remaining investors may experience
higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio may become less diverse, resulting in increased
portfolio risk, and experience decreasing economies of scale. However, this
possibility exists as well for historically structured funds which have large or
institutional investors.
Until recently, the Administrator sponsored and advised historically
structured funds. Funds which invest all their assets in interests in a separate
investment company are a relatively new development in the mutual fund industry
and, therefore, the Fund may be subject to additional regulations than
historically structured funds.
The Declaration of Trust of the Portfolio provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for Federal income tax purposes. See
"Distributions and Taxes" for further information. Whenever the Fund as an
investor in the Portfolio is requested to vote on matters pertaining to the
Portfolio (other than the termination of the Portfolio's business, which may be
determined by the Trustees of the Portfolio without investor approval), the Fund
will hold a meeting of Fund shareholders and will vote its interest in the
Portfolio for or against such matters proportionately to the instructions to
vote for or against such matters received from Fund shareholders. The Fund shall
vote shares for which it receives no voting instructions in the same proportion
as the shares for which it receives voting instructions. Other investors in the
Portfolio may alone or collectively acquire sufficient voting interests in the
Portfolio to control matters relating to the operation of the Portfolio, which
may require the Fund to withdraw its investment in the Portfolio or take other
appropriate action. Any such withdrawal could result in a distribution "in kind"
of portfolio securities (as opposed to a cash distribution from the Portfolio).
If securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Trustees of the Trust, including a majority of the noninterested
Trustees, have approved written procedures designed to identify and address any
potential conflicts of interest arising from the fact that the Trustees of the
Trust and the Trustees of the Portfolio are the same. Such procedures require
each Board to take action to resolve any conflict of interest between the Fund
and the Portfolio, and it is possible that the creation of separate Boards may
be considered. For further information concerning the Trustees and officers of
the Trust and the Portfolio, see the Statement of Additional Information.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------
THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the
Portfolio, BMR manages the Portfolio's investments and affairs. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of the average daily
net assets of the Portfolio up to and including $300 million, and 1/24 of 1%
(equivalent to 0.50% annually) of the average daily net assets over $300
million. For the period from the start of business, August 2, 1994, to February
28, 1995, the Portfolio paid BMR advisory fees equivalent to 0.625% (annualized)
of the Portfolio's average daily net assets for such period.
BMR furnishes for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the investments of the
Portfolio. BMR also places the portfolio transactions of the Portfolio with many
broker-dealer firms and uses its best efforts to obtain execution of such
transactions at prices which are advantageous to the Portfolio and at reasonably
competitive commission rates. Subject to the foregoing, BMR may consider sales
of shares of the Fund or of other investment companies sponsored by BMR or Eaton
Vance as a factor in the selection of broker-dealer firms to execute portfolio
transactions.
Peter F. Kiely has acted as the portfolio manager of the Portfolio since it
commenced operations. He has been a Vice President of Eaton Vance since 1980 and
of BMR since 1992.
BMR OR EATON VANCE 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.
The Trust has retained the services of Eaton Vance to act as Administrator
of the Fund. The Trust has not retained the services of an investment adviser
since the Trust seeks to achieve the investment objective of the Fund by
investing the Fund's assets in the Portfolio. As Administrator, Eaton Vance
provides the Fund with general office facilities and supervises the overall
administration of the Fund. For these services Eaton Vance currently receives no
compensation. The Trustees of the Trust may determine, in the future, to
compensate Eaton Vance for such services.
The Portfolio and the Fund, as the case may be, will each be responsible
for all of its respective costs and expenses not expressly stated to be payable
by BMR under the investment advisory agreement, by Eaton Vance under the
administrative services agreement, or by EVD under the distribution agreement.
Such costs and expenses to be borne by the Portfolio and the Fund, as the case
may be, include, without limitation: custody and transfer agency fees and
expenses, including those incurred for determining net asset value and keeping
accounting books and records; expenses of pricing and valuation services; the
cost of share certificates; membership dues in investment company organizations;
expenses of acquiring, holding and disposing of securities and other
investments; fees and expenses of registering under the securities laws and the
governmental fees; expenses of reporting to shareholders and investors; proxy
statements and other expenses of shareholders' or investors' meetings; insurance
premiums; printing and mailing expenses; interest, taxes and corporate fees;
legal and accounting expenses; compensation and expenses of Trustees not
affiliated with BMR or Eaton Vance; and investment advisory fees, and, if any,
administrative services fees. The Portfolio or the Fund, as the case may be,
will also each bear expenses incurred in connection with litigation in which the
Portfolio or the Fund, as the case may be, is a party and any legal obligation
to indemnify its respective officers and Trustees with respect thereto.
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 subject to, and complies with,
the sales charge rule of the National Association of Securities Dealers, Inc.
(the "NASD Rule"). The Plan is described further in the Statement of Additional
Information, and the following is a 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.
Under its Plan 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.
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 commission 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 period from the start of business,
September 13, 1994, to February 28, 1995, the Fund paid sales commissions under
the Plan equivalent to .75% (annualized) of the Fund's average daily net assets
for such period. As at February 28, 1995, the Uncovered Distribution Charges of
the Principal Underwriter calculated under the Plan amounted to approximately
$27,052 (equivalent to 3.7% 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 Trust have initially implemented 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.
The Fund expects to begin accruing for its service fee payments during the
quarter ending December 31, 1995.
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
- --------------------------------------------------------------------------------
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 Trust.
Net asset value is computed by dividing the value of the Fund's total assets,
less its liabilities, by the number of shares outstanding. Because the Fund
invests its assets in an interest in the Portfolio, the Fund's net asset value
will reflect the value of its interest in the Portfolio (which, in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter, which
is a wholly-owned subsidiary of Eaton Vance.
The Portfolio's net asset value is also determined as of the close of
regular trading on the Exchange by IBT (as custodian and agent for the
Portfolio) in the manner authorized by the Trustees of the Portfolio. Net asset
value is computed by subtracting the liabilities of the Portfolio from the value
of its total assets. Investments listed on securities exchanges or in the NASDAQ
National Market are valued at closing sale prices. For further information
regarding the valuation of the Portfolio's assets, see "Determination of Net
Asset Value" in the Statement of Additional Information. Eaton Vance Corp. owns
77.3% of the outstanding stock of IBT, the Fund's and the Portfolio's custodian.
- ------------------------------------------------------------------------------
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
- ------------------------------------------------------------------------------
HOW TO BUY FUND SHARES
- --------------------------------------------------------------------------------
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 Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans
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 participation in the plan, his or her shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Fund as described 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 Administrator, 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 then current market price for such securities
but does not guarantee the best available price. Eaton Vance will absorb any
transaction costs, such as commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry
or physically delivered, in proper form for transfer, through an Authorized
Firm, together with a completed and signed Letter of Transmittal in approved
form (available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Marathon Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Growth 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, are advised to 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.
- --------------------------------------------------------------------------------
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, MA 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 Fund 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 any
Federal income tax required to be withheld. Although the Fund normally expects
to make payment in cash for redeemed shares, the Trust, subject to compliance
with applicable regulations, has reserved the right to pay the redemption price
of shares of the Fund, either totally or partially, by a distribution in kind of
readily marketable securities withdrawn by the Fund from the Portfolio. The
securities so distributed would be valued pursuant to the Portfolio's valuation
procedures. If a shareholder received a distribution in kind, the shareholder
could incur brokerage or other charges in converting the securities to cash.
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 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. That is, each redemption will be assumed to have been made first from
the exempt amounts referred to in clauses (a), (b) and (c) above, and second
through liquidation of those shares in the account referred to in clause (c) on
a first-in-first-out basis. Any 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%
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 the exchanged shares. The contingent
deferred sales charge will be waived for shares redeemed (1) pursuant to a
Withdrawal Plan (see "Eaton Vance Shareholder Services"), (2) as part of a
required distribution from a tax-sheltered retirement plan, or (3) following the
death of all beneficial owners of such shares, provided the redemption is
requested within one year of death (a death certificate and other applicable
documents may be required).
No contingent deferred sales charge will be imposed on Fund shares which
have been sold to Eaton Vance or its affiliates, or to their respective
employees or clients. The contingent deferred sales charge will be paid to the
Principal Underwriter or the Fund.
- --------------------------------------------------------------------------------
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 THE REDEMPTION WAS MADE 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 accountants. Shortly after the end of each
calendar year, the Fund will furnish all shareholders with information necessary
for preparing Federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
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 balance in the account. (Under certain plans, statements may be
sent only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER
TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to
The 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 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
- ------------------------------------------------------------------------------
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL
INVESTMENTS BY SENDING A CHECK FOR $50 OR MORE.
- ------------------------------------------------------------------------------
THE EATON VANCE EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of one or more other
funds in the Eaton Vance Marathon Group of Funds (which includes Eaton Vance
Equity-Income Trust and any EV Marathon fund, except Eaton Vance Prime Rate
Reserves) or Eaton Vance Money Market Fund, which are distributed subject to 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 offer is available
only in states where shares of the fund being acquired may be legally sold.
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 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. For purposes
of calculating the contingent deferred sales charge upon the 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 Eaton Vance Marathon Group of Funds
(except EV Marathon 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 Strategic Income Fund and 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 and
shares of Eaton Vance Money Market Fund may be exchanged for Fund shares on the
basis of the net asset value per share of each fund at the time of the exchange,
but subject to any restrictions or qualifications set forth in a 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
- --------------------------------------------------------------------------------
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 EV
Marathon Growth 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.
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.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
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 net asset
value next determined 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.
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 of 1986, as amended (the
"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
- --------------------------------------------------------------------------------
The Fund's present policy is to distribute semi-annually substantially all of
the net investment income allocated to the Fund by the Portfolio, less the
Fund's direct and allocated expenses, and to distribute at least annually any
net realized capital gains. A portion of distributions from net investment
income may be eligible for the dividends-received deduction for corporations.
The Fund's distributions from its net investment income, net short-term capital
gains, and certain net foreign exchange gains will be taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
the Fund. The Fund's distributions from its long-term capital gains are taxable
to shareholders as such, whether received in cash or reinvested in additional
shares of the Fund and regardless of the length of time shares have been owned
by shareholders. If shares are purchased shortly before the record date of a
distribution, the shareholder will pay the full price for the shares and then
receive some portion of the price back as a taxable distribution. Certain
distributions, if declared in October, November or December and paid the
following January, will be taxed to shareholders as if received on December 31
of the year in which they are declared.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their Federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of Fund
shares, and Federal income tax (if any) withheld by the Fund's Transfer Agent.
In order to qualify as a regulated investment company under the Code, the
Fund must satisfy certain requirements relating to the sources of its income,
the distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
- ------------------------------------------------------------------------------
AS A REGULATED INVESTMENT COMPANY UNDER THE CODE THE FUND DOES NOT PAY
FEDERAL INCOME OR EXCISE TAXES TO THE EXTENT THAT IT DISTRIBUTES TO
SHAREHOLDERS ITS NET INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS IN
ACCORDANCE WITH THE TIMING REQUIREMENTS IMPOSED BY THE CODE. AS A
PARTNERSHIP UNDER THE CODE, THE PORTFOLIO DOES NOT PAY FEDERAL INCOME OR
EXCISE TAXES.
- ------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. 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 average annual
total return calculation assumes a complete redemption of the investment and the
deduction of any applicable 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 total return for any prior period
should not be considered as a representation of what an investment may earn or
what the Fund's total return may be in any future period. If the expenses
related to the operation of the Fund or the Portfolio are allocated to Eaton
Vance, the Fund's performance will be higher.
<PAGE>
INVESTMENT ADVISER OF
GROWTH PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV MARATHON GROWTH FUND
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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV MARATHON GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
M-GFP
EV MARATHON
GROWTH FUND
PROSPECTUS
MAY 1, 1995
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1995
EV MARATHON GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Marathon Growth Fund (the "Fund") and certain
other series of Eaton Vance Growth Trust (the "Trust"). Part II provides
information solely about the Fund. Where appropriate, Part I includes
cross-references to the relevant sections of Part II that provide additional,
Fund-specific information.
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TABLE OF CONTENTS
PART I
Investment Objective, Policies and Restrictions ................... 1
Trustees and Officers ............................................. 4
Investment Adviser and Administrator .............................. 6
Custodian ......................................................... 8
Service for Withdrawal ............................................ 8
Determination of Net Asset Value .................................. 8
Investment Performance ............................................ 9
Taxes ............................................................. 10
Portfolio Security Transactions ................................... 12
Other Information ................................................. 14
Independent Accountants ........................................... 15
PART II
Fees and Expenses ................................................. a-1
Principal Underwriter ............................................. a-1
Distribution Plan ................................................. a-2
Performance Information ........................................... a-4
Additional Tax Matters ............................................ a-4
Control Persons and Principal Holders of Securities ............... a-4
Financial Statements .............................................. a-5
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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 CURRENT PROSPECTUS OF EV MARATHON GROWTH FUND DATED MAY 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 EATON VANCE DISTRIBUTORS, INC. (THE
"PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND PHONE NUMBER).
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STATEMENT OF ADDITIONAL INFORMATION
PART I
This Part I provides information about the Fund and certain other series of
the Trust.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The investment objective of the Fund, a diversified series of the Trust, is
to achieve capital growth. The Fund currently seeks to achieve its investment
objective by investing its assets in the Growth Portfolio (the "Portfolio"), a
separate registered investment company with the same investment objective as the
Fund and substantially the same investment policies and restrictions as the
Fund. The Portfolio seeks to achieve its investment objective by investing in a
carefully selected and continuously managed portfolio consisting primarily of
equity securities.
The Trustees of the Trust may withdraw the Fund's investment from the
Portfolio at any time, if they determine that it is in the best interests of the
Fund to do so. Upon any such withdrawal, the Fund's assets would be invested in
another investment company with substantially the same investment objective,
policies and restrictions as those of the Fund or directly in investment
securities in accordance with the Portfolio's investment policies, as described
below. Except as indicated below, the approval of the Fund's shareholders would
not be required to change the Portfolio's investment policies discussed below,
including those concerning security transactions.
The Portfolio's investment policy is flexible, and the Portfolio may invest
in all kinds of domestic and foreign companies in seeking to achieve its
objective of capital growth. Income is subordinate to growth; however, the
Portfolio will earn dividend or interest income to the extent that it receives
dividends or interest from its investments. As in any investment which
fluctuates in value, the management of the Portfolio cannot, of course, assure
the achievement of this objective or eliminate risk. It is believed, however,
that through broad and selective diversification and through informed and
discriminating investment supervision, the risks of investing will be reduced
and the shareholder's opportunities for a rewarding participation in the capital
growth sought by the Portfolio will be enhanced.
The Portfolio will invest primarily in common stocks or securities
convertible into common stocks (including convertible debt). The Portfolio may
also invest in other securities and obligations of all kinds, including
preferred stocks, warrants, rights, bonds, repurchase agreements, money market
instruments and other evidences of indebtedness. The Portfolio's holdings of
debt securities, preferred stocks, short-term obligations or cash would normally
be employed to provide a reserve for future equity purchases or when the adviser
believes a more defensive investment posture is warranted.
It is the policy of the Portfolio to diversify its investments among
industries and accordingly no investment shall be made which will cause
investments in any one industry to exceed 25% of the Portfolio's assets (at
market).
While it is not the policy of the Portfolio to trade actively in securities
for quick profits, the management will dispose of securities without regard to
the time they have been held if such action seems advisable, subject to
satisfaction of certain tax requirements.
FOREIGN SECURITIES. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the United States
securities laws. Foreign issuers are generally not bound by uniform accounting,
auditing, and financial reporting requirements and standards of practice
comparable to those applicable to domestic issuers. Investments in foreign
securities also involve the risk of possible adverse changes in investment or
exchange control regulations, expropriation or confiscatory taxation, limitation
on the removal of funds or other assets of the Portfolio, political or financial
instability or diplomatic and other developments which could affect such
investments. Furthermore, economies of particular countries or areas of the
world may differ favorably or unfavorably from the economy of the United States.
It is anticipated that in most cases the best available market for foreign
securities will be on exchanges or in over-the-counter markets located outside
of the United States. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the United States,
and securities of some foreign issuers (particularly those located in developing
countries) may be less liquid and more volatile than securities of comparable
U.S. companies. In addition, foreign brokerage commissions are generally higher
than commissions on securities traded in the United States and may be
non-negotiable. In general, there is less overall governmental supervision and
regulation of foreign securities markets, broker-dealers, and issuers than in
the United States.
Since investments in companies whose principal business activities are
located outside of the United States will frequently involve currencies of
foreign countries, and since assets of the Portfolio may temporarily be held in
bank deposits in foreign currencies during the completion of investment
programs, the value of the assets of the Portfolio as measured in U.S. dollars
may be affected favorably or unfavorably by changes in foreign currency exchange
rates and exchange control regulations. The Portfolio may conduct its foreign
currency exchange transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or through entering into
contracts to purchase or sell foreign currencies at a future date (i.e., a
"forward foreign currency exchange" contract or "forward" contract). It may
convert currency on a spot basis from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Portfolio at one rate, while offering a lesser rate of exchange should
the Portfolio desire to resell that currency to the dealer. Forward 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. When the Portfolio enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock in"
the U.S. dollar price of the security. By entering into a forward contract for
the purchase or sale, for a fixed amount of U.S. dollars, of the amount of
foreign currency involved in the underlying security transaction, the Portfolio
will be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date the security is purchased or sold
and the date on which payment is made or received. Although a forward contract
will minimize the risk of loss due to a decline in the value of the hedged
currency, it also limits any potential gain which might result should the value
of such currency increase.
STOCK INDEX FUTURES. Entering into a derivative instrument involves a risk that
the applicable market will move against the Portfolio's position and that the
Portfolio will incur a loss. This loss may exceed the amount of the initial
investment made or the premium received by the Portfolio. Derivative instruments
may sometimes increase or leverage the Portfolio's exposure to a particular
market risk. Leverage enhances the Portfolio's exposure to the price volatility
of derivative instruments it holds. The Portfolio's success in using derivative
instruments to hedge portfolio assets depends on the degree of price correlation
between the derivative instruments and the hedged asset. Imperfect correlation
may be caused by several factors, including temporary price disparities among
the trading markets for the derivative instrument, the assets underlying the
derivative instrument and the Portfolio's assets. During periods of market
volatility, a commodity exchange may suspend or limit trading in an
exchange-traded derivative instrument, which may make the contract temporarily
illiquid and difficult to price. Commodity exchanges may also establish daily
limits on the amount that the price of a futures contract or futures can vary
from the previous day's settlement price. Once the daily limit is reached, no
trades may be made that day at a price beyond the limit. This may prevent the
Portfolio from closing out positions and limiting its losses. Certain provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), limit the extent
to which the Portfolio may purchase and sell derivative instruments. The
Portfolio will engage in transactions in futures contracts and related options
only to the extent such transactions are consistent with the requirements of the
Code for maintaining the qualification of the Fund as a regulated investment
company ("RIC") for Federal income tax purposes.
Transactions using futures contracts and options thereon (other than options
that the Portfolio has purchased) expose the Portfolio to an obligation to
another party. The Portfolio will not enter into any such transactions unless it
owns either (1) an offsetting ("covered") position in securities or futures
contracts, or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. The Portfolio will comply with Securities and Exchange
Commission guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. Government securities or other
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding futures contract or option is open, unless
they are replaced with other appropriate assets. As a result, the commitment of
a large portion of the Portfolio's assets to cover or segregated accounts could
impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.
The Portfolio may enter into futures contracts, and options on futures
contracts, traded on an exchange regulated by the Commodities Futures Trading
Commission ("CFTC") and on foreign exchanges, but, with respect to foreign
exchange-traded futures contracts and options on such futures contracts, only if
the Investment Adviser determined that trading on each such foreign exchange
does not subject the Portfolio to risks, including credit and liquidity risks,
that are materially greater then the risks associated with trading on
CFTC-regulated exchanges.
REPURCHASE AGREEMENTS. The Portfolio may purchase U.S. Government securities and
concurrently enter into repurchase agreements with the seller under which the
seller agrees to repurchase such securities at the Portfolio's cost plus
interest within a specified time (normally one day). While repurchase agreements
involve certain risks not associated with direct investments in U.S. Government
securities, the Portfolio follows procedures designed to minimize such risks.
These procedures include effecting repurchase transactions only with large,
well-capitalized banks. In addition, the Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreement
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling bank, the Portfolio will seek to liquidate such
collateral. However, the exercise of the Portfolio's right to liquidate such
collateral could involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase are less
than the repurchase price, the Portfolio could suffer a loss.
The following investment restrictions have been adopted by the Fund and may
be changed only by the vote of a majority of the Fund's outstanding voting
securities as defined in the Investment Company Act of 1940 (the "1940 Act").
As a matter of fundamental investment policy, the Fund may not:
(1) With respect to 75% of the total assets of the Fund, purchase the securities
of any issuer if such purchase at the time thereof would cause more than 5% of
its total assets (taken at market value) to be invested in the securities of
such issuer, or purchase securities of any issuer if such purchase at the time
thereof would cause more than 10% of the total voting securities of such issuer
to be held by the Fund, except obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and except securities of other
investment companies;
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchase and sales of
securities);
(4) Underwrite or participate in the marketing of securities of others;
(5) Make an investment in any one industry if such investment would cause
investments in such industry to exceed 25% of the Fund's total assets, at market
value at the time of such investment (other than securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities);
(6) Purchase or sell real estate, although it may purchase and sell securities
which are secured by real estate and securities of companies which invest or
deal in real estate;
(7) Purchase or sell commodities or commodity contracts for the purchase or
sale of physical commodities; or
(8) Make loans to any person except by (a) the acquisition of debt securities
and making portfolio investments (b) entering into repurchase agreements or (c)
lending portfolio securities.
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund.
The Fund will not issue bonds, debentures or senior equity securities, and
this policy will not be changed unless authorized by a vote of the shareholders
of the Fund.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing numbered investment restrictions adopted by the
Fund; such restrictions cannot be changed without the approval of a "majority of
the outstanding voting securities" of the Portfolio, which as used in this
Statement of Additional Information means the lesser of (a) 67% of the
outstanding voting securities of the Portfolio present or represented by proxy
at a meeting if the holders of more than 50% of the outstanding voting
securities of the Portfolio are present or represented at the meeting or (b)
more than 50% of the outstanding voting securities of the Portfolio. The term
"voting securities" as used in this paragraph has the same meaning as in the
1940 Act. Whenever the Trust is requested to vote on a change in the investment
restrictions of the Portfolio, the Trust will hold a meeting of Fund
shareholders and will cast its vote as instructed by the shareholders.
The Fund and the Portfolio have each adopted the following nonfundamental
investment policies which may be changed with respect to the Fund by the
Trustees of the Trust without approval by the Fund's shareholders or may be
changed with respect to the Portfolio by the Trustees of the Portfolio without
the approval of the Fund or the Portfolio's other investors. As a matter of
nonfundamental policy, neither the Fund nor the Portfolio may: (a) purchase
securities of companies which, including predecessors, have not been in
continuous operation for at least three years, except that 5% of its total
assets (taken at market value) may be invested in such companies and exempted
from this restriction are U.S. Government securities, securities of issuers
which are rated by at least one nationally recognized rating organization,
municipal obligations and obligations issued or guaranteed by any foreign
government or its agencies or instrumentalities; (b) purchase or retain in its
portfolio any securities issued by an issuer any of whose officers, directors,
trustees or security holders is an officer or trustee of the Trust or the
Portfolio or is a member, officer, director or trustee of any investment adviser
of the Trust or the Portfolio, if after the purchase of the securities of such
issuer by the Fund or the Portfolio one or more of such persons owns
beneficially more than 1/2 of 1% of the shares or securities or both (all taken
at market value) of such issuer and such persons owning more than 1/2 of 1% of
such shares or securities together own beneficially more than 5% of such shares
or securities or both (all taken at market value); (c) sell or contract to sell
any security which it does not own unless by virtue of its ownership of other
securities it has at the time of sale a right to obtain securities equivalent in
kind and amount to the securities sold and provided that if such right is
conditional the sale is made upon the same conditions; or (d) invest more than
15% of net assets in investments which are not readily marketable, including
restricted securities and repurchase agreements maturing in more than seven
days. Restricted securities for the purposes of this limitation do not include
securities eligible for resale pursuant to Rule 144A of the Securities Act of
1933 that the Board of Trustees of the Trust or the Portfolio, or its delegate,
determine to be liquid, based upon the trading markets for the specific
security.
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 Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Fund's investment adviser,
Boston Management and Research ("BMR" or the "Investment Adviser"), a
wholly-owned subsidiary of Eaton Vance Management ("Eaton Vance"); of Eaton
Vance's parent, Eaton Vance Corp. ("EVC"); and of BMR's and Eaton Vance's
trustee, Eaton Vance, Inc. ("EV"). Eaton Vance and EV are both wholly-owned
subsidiaries of EVC. Those Trustees who are "interested persons" of the Trust,
the Portfolio, BMR, Eaton Vance, EVC or EV as defined in the 1940 Act by virtue
of their affiliation with any one or more of the Trust, the Portfolio, BMR,
Eaton Vance, EVC or EV, are indicated by an asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (53), PRESIDENT AND TRUSTEE*
Executive Vice President of BMR, Eaton Vance, EVC and EV, and a Director of EVC
and EV. Director or Trustee and officer of various investment companies
managed by Eaton Vance or BMR.
LANDON T. CLAY (69), VICE PRESIDENT AND TRUSTEE*
Chairman of BMR, Eaton Vance, EVC and EV and a Director of EVC and EV. Director
or Trustee and officer of various investment companies managed by Eaton Vance
or BMR.
PETER F. KIELY (58), VICE PRESIDENT AND TRUSTEE*
Vice President of BMR, Eaton Vance and EV. Director or Trustee and officer of
various investment companies managed by Eaton Vance or BMR. Mr. Kiely was
elected Trustee of the Trust on December 16, 1991.
DONALD R. DWIGHT (64), 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 (60), TRUSTEE
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (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 of Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (65), TRUSTEE
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
M. DOZIER GARDNER (61), VICE PRESIDENT
President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV, and
Director of EVC and EV. Director or Trustee and officer of various investment
companies managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (50), TREASURER
Vice President of BMR, Eaton Vance, and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
WILLIAM J. AUSTIN, JR. (43), ASSISTANT TREASURER
Assistant Vice President of BMR, Eaton Vance and EV. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Austin was elected
Assistant Treasurer of the Trust on December 16, 1991.
THOMAS OTIS (63), SECRETARY
Vice President and Secretary of BMR, Eaton Vance, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (59), ASSISTANT TREASURER AND ASSISTANT SECRETARY
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (32), ASSISTANT SECRETARY
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993) and Registration Specialist, Fidelity Management &
Research Co. (1986-1991). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust
and the Portfolio on March 27, 1995.
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
Special Committee's functions include a continuous review of the Trust's
contractual relationship with the Administrator, the Portfolio's contractual
relationship with the Investment Adviser, making recommendations to the Trustees
regarding the compensation of those Trustees who are not members of the Eaton
Vance 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 Trust, the Portfolio, or the
Eaton Vance organization.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust and of the Portfolio. The Audit Committee's
functions include making recommendations to the Trustees regarding the selection
of the independent accountants, and reviewing with such accountants and the
Treasurer of the Trust and of the Portfolio matters relative to accounting and
auditing practices and procedures, accounting records, internal accounting
controls, and the functions performed by the custodian and transfer agent of the
Trust and of the Portfolio.
Trustees of the Portfolio who are not affiliated with the Investment Adviser
may elect to defer receipt of all or a percentage of their annual fees in
accordance with the terms of a Trustees Deferred Compensation Plan (the "Plan").
Under the Plan, an eligible Trustee may elect to have his deferred fees invested
by the Portfolio in the shares of one or more funds in the Eaton Vance Family of
Funds, and the amount paid to the Trustees under the 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 Portfolio's
assets, liabilities, and net income per share, and will not obligate the
Portfolio to retain the services of any Trustee or obligate the Portfolio to pay
any particular level of compensation to the Trustee.
For the compensation earned by the noninterested Trustees of the Trust and
the Portfolio, see "Fees and Expenses" in Part II of this Statement of
Additional Information.
INVESTMENT ADVISER AND ADMINISTRATOR
The Portfolio engages BMR as its investment adviser pursuant to an
Investment Advisory Agreement dated August 1, 1994. BMR or Eaton Vance acts as
investment adviser to investment companies and various individual and
institutional clients with combined assets under management of approximately $15
billion.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of 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.
BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the Portfolio
investment research, advice and supervision, furnishes an investment program and
determines what securities will be purchased, held or sold by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested. The
Investment Advisory Agreement requires BMR to pay the salaries and fees of all
officers and Trustees of the Portfolio who are members of the BMR organization
and all personnel of BMR performing services relating to research and investment
activities. The Portfolio is responsible for all expenses not expressly stated
to be payable by BMR under the Investment Advisory Agreement, including, without
implied limitation, (i) expenses of maintaining the Portfolio and continuing its
existence, (ii) registration of the Portfolio under the 1940 Act, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale and redemption of interests in the Portfolio, (viii) expenses of
registering and qualifying the Portfolio and interests in the Portfolio under
Federal and state securities laws and of preparing and printing registration
statements or other offering statements or memoranda for such purposes and for
distributing the same to investors, and fees and expenses of registering and
maintaining registrations of the Portfolio and of the Portfolio's placement
agent as broker-dealer or agent under state securities laws, (ix) expenses of
reports and notices to investors and of meetings of investors and proxy
solicitations therefor, (x) expenses of reports to governmental officers and
commissions, (xi) insurance expenses, (xii) association membership dues, (xiii)
fees, expenses and disbursements of custodians and subcustodians for all
services to the Portfolio (including without limitation safekeeping of funds,
securities and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax capital
account balances), (xiv) fees, expenses and disbursements of transfer agents,
dividend disbursing agents, investor servicing agents and registrars for all
services to the Portfolio, (xv) expenses for servicing the accounts of
investors, (xvi) any direct charges to investors approved by the Trustees of the
Portfolio, (xvii) compensation and expenses of Trustees of the Portfolio who are
not members of BMR's organization, and (xviii) such non-recurring items as may
arise, including expenses incurred in connection with litigation, proceedings
and claims and the obligation of the Portfolio to indemnify its Trustees,
officers and investors with respect thereto.
Under the Investment Advisory Agreement with the Portfolio, BMR receives a
monthly advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of average
daily net assets of the Portfolio up to and including $300 million, and 1/24 of
1% (equivalent to 0.50% annually) of average daily net assets over $300 million.
As at February 28, 1995, the Portfolio had net assets of $122,814,547. For the
period from the start of business, August 2, 1994, to February 28, 1995, BMR
received advisory fees of $384,275 (equivalent to 0.625% (annualized) of the
Portfolio's average daily net assets for such period). For additional
information about the fees paid to the Investment Adviser, see "Fees and
Expenses" in Part II of this Statement of Additional Information.
The Investment Advisory Agreement with BMR remains in effect until February
28, 1996. It may be continued indefinitely thereafter so long as such
continuance after February 28, 1996 is approved at least annually (i) by the
vote of a majority of the Trustees of the Portfolio who are not interested
persons of the Portfolio or of BMR cast in person at a meeting specifically
called for the purpose of voting on such approval and (ii) by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio. The Agreement may be terminated at any time without
penalty on sixty days' written notice by the Board of Trustees of either party
or by vote of the majority of the outstanding voting securities of the
Portfolio, and the Agreement will terminate automatically in the event of its
assignment. The Agreement provides that BMR may render services to others and
may permit other fund clients and other corporations and organizations to use
the words "Eaton Vance" or "Boston Management and Research" in their names. The
Agreement also provides that BMR shall not be liable for any loss incurred in
connection with the performance of its duties, or action taken or omitted under
that Agreement, in the absence of willful misfeasance, bad faith, gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses sustained
in the acquisition, holding or disposition of any security or other investment.
As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Fund, but receives no compensation for providing administrative services to the
Fund. Under its agreement with the Fund, Eaton Vance has been engaged to
administer the Fund's affairs, subject to the supervision of the Trustees of the
Trust, and shall furnish for the use of the Fund office space and all necessary
office facilities, equipment and personnel for administering the affairs of the
Fund.
The Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) registration
of the Trust under the 1940 Act, (iii) commissions, fees and other expenses
connected with the purchase or sale of securities and other investments, (iv)
auditing, accounting and legal expenses, (v) taxes and interest, (vi)
governmental fees, (vii) expenses of issue, sale, repurchase and redemption of
shares, (viii) expenses of registering and qualifying the Fund and its shares
under federal and state securities laws and of preparing and printing
prospectuses for such purposes and for distributing the same to shareholders and
investors, and fees and expenses of registering and maintaining registrations of
the Fund and of the Fund's principal underwriter, if any, as broker-dealer or
agent under state securities laws, (ix) expenses of reports and notices to
shareholders and of meetings of shareholders and proxy solicitations therefor,
(x) expenses of reports to governmental officers and commissions, (xi) insurance
expenses, (xii) association membership dues, (xiii) fees, expenses and
disbursements of custodians and subcustodians for all services to the Fund
(including without limitation safekeeping of funds, securities and other
investments, keeping of books and accounts and determination of net asset
values), (xiv) fees, expenses and disbursements of transfer agents, dividend
disbursing agents, shareholder servicing agents and registrars for all services
to the Fund, (xv) expenses for servicing shareholder accounts, (xvi) any direct
charges to shareholders approved by the Trustees of the Trust, (xvii)
compensation and expenses of Trustees of the Trust who are not members of the
Eaton Vance organization, and (xviii) such non-recurring items as may arise,
including expenses incurred in connection with litigation, proceedings and
claims and the obligation of the Trust to indemnify its Trustees and officers
with respect thereto.
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.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. BMR and Eaton Vance are both
Massachusetts business trusts, and EV is the trustee of BMR and Eaton Vance.
The Directors of EV are Landon T. Clay, 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, BMR, Eaton Vance and EV. All of the issued and outstanding shares of
Eaton Vance and of EV are owned by EVC. All of the issued and outstanding
shares of BMR are owned by Eaton Vance. All shares of the outstanding Voting
Common Stock of EVC are deposited in a Voting Trust, which expires December
31, 1996, the Voting Trustees of which are Messrs. Brigham, Clay, 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 BMR and
Eaton Vance who are also officers or Directors of EVC and EV. As of March 31,
1995, 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, Gardner, Hawkes and Otis, who are
officers or Trustees of the Trust and the Portfolio, are members of the EVC,
Eaton Vance, BMR and EV organizations. Messrs. Austin, Kiely, Murphy and
O'Connor and Ms. Sanders are officers of the Trust and the Portfolio and all
are also members of the BMR, Eaton Vance and EV organizations. BMR will
receive the fees paid under the Investment Advisory Agreement.
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 is engaged in oil and gas operations) and 77.3% of the stock of Investors
Bank & Trust Company, the custodian of the Fund and the Portfolio, which
provides custodial, trustee and other fiduciary services to investors, including
individuals, employee benefit plans, corporations, investment companies, savings
banks and other institutions. In addition, Eaton Vance owns all of the stock of
Northeast Properties, Inc., which is engaged in real estate investment,
consulting and management. EVC owns all of the stock of Fulcrum Management, Inc.
and MinVen, Inc., which are engaged in the development of precious metal
properties. EVC, BMR, Eaton Vance and EV may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, 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 or the Portfolio 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
and the Portfolio. IBT has the custody of all cash and securities representing
the Fund's interest in the Portfolio, has custody of all the Portfolio's assets,
maintains the general ledger of the Portfolio and the Fund, and computes the
daily net asset value of interests in the Portfolio and the net asset value of
shares of the Fund. In such capacity it attends to details in connection with
the sale, exchange, substitution, transfer or other dealings with the
Portfolio's investments, receives and disburses all funds, and performs various
other ministerial duties upon receipt of proper instructions from the Fund and
the Portfolio. IBT charges fees which are believed to be competitive within the
industry. A portion of the fee relates to custody, bookeeping and valuation
services and is based upon a percentage of Fund and Portfolio net assets and a
portion of the fee relates to activity charges, primarily the number of
portfolio transactions. These fees are then reduced by a credit for cash
balances of the particular investment company at the custodian equal to 75% of
the 91-day, U.S. Treasury Bill auction rate applied to the particular investment
company's average daily collected balances for the week. In view of the
ownership of EVC in IBT, the Portfolio is treated as a self-custodian pursuant
to Rule 17f-2 under the 1940 Act, and the Portfolio's investments held by IBT as
custodian are thus subject to additional examinations by the Portfolio's
independent auditors as called for by such Rule. For the period from the start
of business, August 2, 1994, to February 28, 1995, the Portfolio paid IBT
$37,310. For the custody fees that the Fund paid to IBT, see "Fees and Expenses"
in Part II of this Statement of Additional Information.
SERVICE FOR WITHDRAWAL
By a standard agreement, the Trust's Transfer Agent will send to the
shareholder regular monthly or quarterly payments of any permitted amount
designated by the shareholder (see "Eaton Vance Shareholder Services --
Withdrawal Plan" in the Fund's current Prospectus) based upon the value of the
shares held. The checks will be drawn from share redemptions and hence are a
return of principal. Income dividends and capital gain distributions in
connection with withdrawal accounts will be credited at net asset value as of
the record date for each distribution. Continued withdrawals in excess of
current income will eventually use up principal, particularly in a period of
declining market prices.
To use this service, at least $5,000 in cash or shares at the public
offering price will have to be deposited with the Transfer Agent. The
maintenance of a withdrawal plan concurrently with purchases of additional Fund
shares would be disadvantageous if a sales charge is included in such purchases.
A shareholder may not have a withdrawal plan in effect at the same time he or
she has authorized Bank Automated Investing or is otherwise making regular
purchases of Fund shares. Either the shareholder, the Transfer Agent or the
Principal Underwriter will be able to terminate the withdrawal plan at any time
without penalty.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Fund is determined by IBT (as agent
and custodian for the Fund) in the manner described under "Valuing Fund Shares"
in the Fund's current Prospectus. The Fund and the Portfolio will be closed for
business and will not price their respective shares or interests on the
following business holidays: New Year's Day, Presidents' Day, Good Friday (a New
York Stock Exchange holiday), Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Securities listed on securities exchanges or in the NASDAQ National Market
are valued at closing sale prices. Unlisted or listed securities for which
closing sale prices are not available are valued at the mean between the latest
bid and asked prices. Fixed-income securities (other than short-term
obligations), including listed securities and securities for which price
quotations are available, will normally be valued on the basis of market
valuations furnished by a pricing service. The pricing service uses information
with respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities, various relationships between securities,
and yield to maturity in determining value. Short-term obligations maturing in
sixty days or less are valued at amortized cost, which approximates market.
Foreign securities are valued in U.S. Dollars at the current exchange rate.
Other assets are valued at fair value using methods determined in good faith by
the Trustees.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "Portfolio Valuation Time"). The value of
each investor's interest in the Portfolio will be determined by multiplying the
net asset value of the Portfolio by the percentage, determined on the prior
Portfolio Business Day, which represented that investor's share of the aggregate
interests in the Portfolio on such prior day. Any additions or withdrawals for
the current Portfolio Business Day will then be recorded. Each investor's
percentage of the aggregate interest in the Portfolio will then be recomputed as
a percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the Portfolio Valuation Time on the
prior Portfolio Business Day plus or minus, as the case may be, the amount of
any additions to or withdrawals from the investor's investment in the Portfolio
on the current Portfolio Business Day and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of the Portfolio Valuation Time on
the prior Portfolio Business Day plus or minus, as the case may be, the amount
of the net additions to or withdrawals from the aggregate investment in the
Portfolio on the current Portfolio Business Day by all investors in the
Portfolio. The percentage so determined will then be applied to determine the
value of the investor's interest in the Portfolio for the current Portfolio
Business Day.
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, if necessary, annualizing the
result. The calculation assumes that all dividends from net investment income
and capital gain distributions are reinvested at net asset value on the
reinvestment dates during the period (and either (i) the deduction of the
maximum sales charge from the initial $1,000 purchase order, or (ii) a complete
redemption of the investment and, if applicable, the deduction of any contingent
deferred sales charge at the end of the period). For information concerning the
total return of the Fund, see "Performance Information" in Part II of this
Statement of Additional Information.
The Fund's total return may be compared to the Consumer Price Index and
various domestic securities indices, for example: Standard & Poor's 400 Stock
Index, Standard & Poor's 500 Stock Index, Merrill Lynch U.S. Treasury (15-year
plus) Index, Lehman Brothers Government/Corporate Bond Index, and the Dow Jones
Industrial Average. The Fund's total return and comparisons with these indices
may be used in advertisements and in information furnished to present or
prospective shareholders. The Fund's performance may differ from that of other
investors in the Portfolio, including any other investment companies.
Information used in advertisements and in materials furnished to present or
prospective shareholders may include statistics, data and performance studies
prepared by independent organizations, (e.g., Ibbotson Associates, Standard &
Poor's Ratings Group, Merrill Lynch, Pierce, Fenner & Smith, Inc., Bloomberg,
L.P., Dow Jones & Company, Inc., and The Federal Reserve Board) or included in
various publications (e.g., The Wall Street Journal, Barron's and The Decade:
Wealth of Investments in U.S. Stocks, Bonds, Bills & Inflation) reflecting the
investment performance or return achieved by various classes and types of
investments (e.g., common stocks, small company stocks, long-term corporate
bonds, long-term government bonds, intermediate-term government bonds, U.S.
Treasury bills) over various periods of time. This information may be used to
illustrate the benefits of long-term investments in common stocks.
From time to time, information about the portfolio allocation and holdings
of the Portfolio may be included in advertisements and other material furnished
to present and prospective shareholders.
The Portfolio's asset allocation on February 28, 1995 was as follows:
PERCENT OF NET ASSETS
---------------------
U.S. common stocks 87.0%
Foreign common stocks 9.2%
Cash & equivalents 3.8%
-----
Total 100%
The Portfolio's ten largest common stock holdings on February 28, 1995 were:
COMPANY PERCENT OF NET ASSETS
------- ---------------------
American International Group 3.8%
Reuters Holdings PLC 3.8%
MGIC Investment 3.3%
Tele-Communications Class A 3.2%
Andarko Petroleum Corp. 3.2%
Home Depot 3.1%
Sofamor/Denek Group, Inc. 3.1%
Astra AB Free Shares 3.1%
Loctite Corp. 3.0%
Illinois Tool Works, Inc. 2.9%
----
Total 32.5%
From time to time, evaluations of the Fund's performance made by independent
sources (e.g., Lipper Analytical Services, Inc., CDA/Wiesenberger and
Morningstar, Inc.) may be used in advertisements and in information furnished to
present or prospective shareholders. See "Performance Information" in Part II of
this Statement of Additional Information.
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 as the
"Triple Squeeze."
For additional information on the Fund's investment performance, see
"Performance Information" in Part II of this Statement of Additional
Information.
TAXES
See "Distributions and Taxes" in the Fund's current Prospectus and
"Additional Tax Matters" in Part II of this Statement of Additional Information.
Each series of the Trust is treated as a separate entity for Federal income
tax purposes. The Fund will elect to be treated and intends to qualify each year
as a RIC under the Code. Accordingly, the Fund intends to satisfy certain
requirements relating to sources of its income and diversification of its assets
and to distribute its net investment 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 to the Fund. Because the Fund invests its assets in
the Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements in order for the Fund to satisfy them.
The Portfolio will allocate at least annually among its investors, including the
Fund, the Portfolio's net investment income, net realized capital gains, and any
other items of income, gain, loss, deduction or credit. The Portfolio will make
allocations to the Fund in accordance with the Code and applicable regulations
and will make moneys available for withdrawal at appropriate times and in
sufficient amounts to enable the Fund to satisfy the tax distribution
requirements that apply to the Fund and that must be satisfied in order to avoid
Federal income and/or excise tax on the Fund. For purposes of applying the
requirements of the Code regarding qualification as a RIC, the Fund will be
deemed (i) to own its proportionate share of each of the assets of the Portfolio
and (ii) to be entitled to the gross income of the Portfolio attributable to
such share.
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, and 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 or, by election, December 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 was not taxed.
Under current law, provided that the Fund qualifies as a RIC for Federal
income tax purposes and the Portfolio is treated as a partnership for
Massachusetts and Federal tax purposes, neither the Fund nor the Portfolio is
liable for any income, excise or franchise tax in the Commonwealth of
Massachusetts.
Foreign exchange gains and losses realized by the Portfolio in connection
with investments in foreign securities and forward contracts may be treated as
ordinary income and losses under special tax rules. Certain forward contracts of
the Portfolio may be required to be marked to market (i.e., treated as if closed
out) on the last day of each taxable year, and any gain or loss realized with
respect to these contracts may be required to be treated as 60% long-term and
40% short-term gain or loss. Positions of the Portfolio in foreign securities
and offsetting forward contracts may be treated as "straddles" and be subject to
other special rules that may affect the amount, timing and character of
Portfolio distributions to shareholders. The Portfolio will limit its foreign
currency hedging activities to the extent necessary to preserve its
qualification as a RIC.
The Portfolio may be subject to foreign withholding or other foreign taxes
with respect to income (possibly including, in some cases, capital gains) on
certain foreign securities. These taxes may be reduced or eliminated under the
terms of an applicable U.S. income tax treaty. As it is not expected that more
than 50% of the value of the total assets of the Fund, taking into account its
allocable share of the Portfolio's total assets, at the close of any taxable
year of the Fund will consist of securities issued by foreign corporations, the
Fund will not be eligible to pass through to shareholders their proportionate
share of any foreign taxes paid by the Portfolio and allocated to the Fund, with
the result that shareholders will not include in income, and will not be
entitled to take any foreign tax credits or deductions for, foreign taxes paid
by the Portfolio and allocated to the Fund. Certain uses of foreign currency and
investments by the Portfolio in the stock of certain "passive foreign investment
companies" may be limited or a tax election may be made, if available, in order
to preserve the Fund's qualification as a RIC and/or to avoid imposition of a
tax on the Fund.
A portion of distributions made by the Fund which are derived from dividends
received by the Portfolio from domestic corporations and allocated to the Fund
may qualify for the dividends-received deduction for corporations. The
dividends-received deduction for corporate shareholders is reduced to the extent
the shares of the Fund with respect to which the dividends are received are
treated as debt-financed under the Federal income tax law and is eliminated if
the shares are deemed to have been held for less than a minimum period,
generally 46 days. Receipt of certain distributions qualifying for the deduction
may result in reduction of the tax basis of the corporate shareholder's shares.
Distributions of the excess of net long-term capital gains over net
short-term capital losses (including any capital losses carried forward from
prior years) earned by the Portfolio and allocated to the Fund are taxable to
shareholders of the Fund as long-term capital gains, whether received in cash or
in additional shares and regardless of the length of time their shares have been
held. Certain distributions declared in October, November or December and paid
the following January will be taxed to shareholders as if received on December
31 of the year in which they are declared.
Distributions of the Fund (including a portion of any distributions eligible
for the dividends-received deduction) may give rise to or increase an
alternative minimum tax for individuals and corporations depending upon the
shareholder's particular tax situation.
Any loss realized upon the redemption or exchange of shares of the Fund with
a tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares. In addition, all or a portion of a loss realized on a
redemption or other disposition of Fund shares may be disallowed under "wash
sale" rules if other Fund shares are acquired (whether through reinvestment of
dividends or otherwise) within a period beginning 30 days before and ending 30
days after the date of such redemption or other disposition. Any disallowed loss
will result in an adjustment to the shareholder's tax basis in some or all of
the other shares acquired.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and other
retirement plans and persons investing through IRAs or such plans should consult
their tax advisers for more information.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number 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.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans,
tax-exempt entities, insurance companies and financial institutions.
Shareholders should consult their own tax advisers with respect to special tax
rules that may apply in their particular situations, as well as the state, local
or foreign tax consequences of investing in the Fund.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions of the
Portfolio, including the selection of the market and the broker-dealer firm, are
made by BMR. BMR is also responsible for the execution of transactions for all
other accounts managed by it.
BMR places the security transactions of the Portfolio and of all other
accounts managed by it for execution with many broker-dealer firms. BMR uses its
best efforts to obtain execution of portfolio transactions at prices which are
advantageous to the Portfolio and (when a disclosed commission is being charged)
at reasonably competitive commission rates. In seeking such execution, BMR will
use its best judgment in evaluating the terms of a transaction, and will give
consideration to various relevant factors, including without limitation the size
and type of the transaction, the general execution and operational capabilities
of the broker-dealer, the nature and character of the market for the security,
the confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition of
the broker-dealer, the value and quality of services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission,
if any. Transactions on United States stock exchanges and other agency
transactions involve the payment by the Portfolio of negotiated brokerage
commissions. Such commissions vary among different broker-dealer firms, and a
particular broker-dealer may charge different commissions according to such
factors as the difficulty and size of the transaction and the volume of business
done with such broker-dealer. Transactions in foreign securities usually involve
the payment of fixed brokerage commissions, which are generally higher than
those in the United States. There is generally no stated commission in the case
of securities traded in the over-the-counter markets, but the price paid or
received by the Portfolio usually includes an undisclosed dealer markup or
markdown. In an underwritten offering the price paid by the Portfolio often
includes a disclosed fixed commission or discount retained by the underwriter or
dealer. Although commissions paid on portfolio security transactions will, in
the judgment of BMR, be reasonable in relation to the value of the services
provided, commissions exceeding those which another firm might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Portfolio and BMR's other clients in part for providing brokerage and
research services to BMR.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if BMR
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided. This determination may be
made on the basis of either that particular transaction or on the basis of the
overall responsibilities which BMR and its affiliates have for accounts over
which they exercise investment discretion. In making any such determination, BMR
will not attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the commission should be
related to such services. Brokerage and research services may include advice as
to the value of securities, the advisability of investing in, purchasing, or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement); and the "Research
Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealer firms which
execute portfolio transactions for the clients of such advisers and from third
parties with which these broker-dealers have arrangements. Consistent with this
practice, BMR receives Research Services from many broker-dealer firms with
which BMR places the Portfolio transactions and from third parties with which
these broker-dealers have arrangements. These Research Services include such
matters as general economic and market reviews, industry and company reviews,
evaluations of securities and portfolio strategies and transactions,
recommendations as to the purchase and sale of securities and other portfolio
transactions, financial, industry and trade publications, news and information
services, pricing and quotation equipment and services, and research oriented
computer hardware, software, data bases and services. Any particular Research
Service obtained through a broker-dealer may be used by BMR in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
BMR in rendering investment advisory services to all or a significant portion of
its clients, or may be relevant and useful for the management of only one
client's account or of a few clients' accounts, or may be useful for the
management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by the
Portfolio is not reduced because BMR receives such Research Services. BMR
evaluates the nature and quality of the various Research Services obtained
through broker-dealer firms and attempts to allocate sufficient commissions to
such firms to ensure the continued receipt of Research Services which BMR
believes are useful or of value to it in rendering investment advisory services
to its clients.
Subject to the requirement that BMR shall use its best efforts to seek to
execute Portfolio security transactions at advantageous prices and at reasonably
competitive commission rates or spreads, BMR is authorized to consider as a
factor in the selection of any broker-dealer firm with whom Portfolio orders may
be placed the fact that such firm has sold or is selling shares of the Fund or
of other investment companies sponsored by BMR or Eaton Vance. This policy is
not inconsistent with a rule of the 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 Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates. BMR
will attempt to allocate equitably portfolio security transactions among the
Portfolio and the portfolios of its other investment accounts whenever decisions
are made to purchase or sell securities by the Portfolio and one or more of such
other accounts simultaneously. In making such allocations, the main factors to
be considered are the respective investment objectives of the Portfolio and such
other accounts, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Portfolio
and such accounts, the size of investment commitments generally held by the
Portfolio and such accounts and the opinions of the persons responsible for
recommending investments to the Portfolio and such accounts. While this
procedure could have a detrimental effect on the price or amount of the
securities available to the Portfolio from time to time, it is the opinion of
the Trustees of the Trust and the Portfolio that the benefits available from the
BMR organization outweigh any disadvantage that may arise from exposure to
simultaneous transactions. For the period from the start of business, August 2,
1994, to February 28, 1995, the Portfolio paid brokerage commissions of $92,370
on portfolio securities transactions. Of the total brokerage commissions paid,
approximately $86,370 was paid in respect of portfolio securities transactions
aggregating approximately $52,537,102 to firms which provided some Research
Services to BMR (although many of such firms may have been selected in any
particular transaction primarily because of their execution capabilities).
OTHER INFORMATION
On August 18, 1992 the Trust changed its name from Eaton Vance Growth Fund
to Eaton Vance Growth Trust. The Trust is a Massachusetts business trust
established in 1989 as the successor to Eaton Vance Growth Fund, Inc., a
Massachusetts corporation, which changed its name from Vance, Sanders Common
Stock Fund, Inc. on November 16, 1981. Such name was changed from Boston Common
Stock Fund, Inc. on December 29, 1972. It was originally organized as a Canadian
corporation in 1954, at which time it was known as Canada General Fund Limited.
Eaton Vance, pursuant to its agreement with the Trust, controls the use of the
words "Eaton Vance" in the Trust's name and may use the words "Eaton Vance" in
other connections and for other purposes.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust affected by the amendment. The Trustees may also amend the Declaration of
Trust without the vote or consent of shareholders to change the name of the
Trust or to make such other changes as do not have a materially adverse effect
on the rights or interests of shareholders or if they deem it necessary to
conform the Declaration to the requirements of applicable Federal laws or
regulations. The Trust's by-laws provide that the Fund will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with any litigation or proceeding in which they may be involved because of their
offices with the Trust. However, no indemnification will be provided to any
Trustee or officer for any liability to the Trust or its shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. Moreover, the Trust's By-laws also provide for indemnification out
of the property of the Fund of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising
from such liability. The assets of the Fund are readily marketable and will
ordinarily substantially exceed its liabilities. In light of the nature of the
Fund's business and the nature of its assets, management believes that the
possibility of the Fund's liability exceeding its assets, and therefore the
shareholder's risk of personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Securities and Exchange Commission,
or during any emergency as determined by the Commission which makes it
impracticable for the Portfolio to dispose of its securities or value its
assets, or during any other period permitted by order of the Commission for the
protection of investors.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts, are
the independent accountants for the Fund and the Portfolio, providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Securities and Exchange Commission.
For the financial statements of the Fund and the Portfolio see "Financial
Statements" in Part II of this Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV MARATHON GROWTH FUND. The Fund
became a series of the Trust on July 27, 1994.
FEES AND EXPENSES
ADMINISTRATOR
As stated under "Investment Adviser and Administrator" in Part I of this
Statement of Additional Information, the Administrator receives no compensation
for providing administrative services to the Fund. For the period from the start
of business, September 13, 1994, to February 28, 1995, $6,234 of the Fund's
operating expenses were allocated on a preliminary basis to the Administrator.
DISTRIBUTION PLAN
For the period from the start of business, September 13, 1994, to February
28, 1995, the Fund made sales commission payments under the Plan to the
Principal Underwriter aggregating $1,278, which amount was used by the Principal
Underwriter to partially defray sales commissions aggregating $5,401 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 $837 were imposed on early redeeming shareholders and paid to the
Principal Underwriter to partially defray sales commissions. As at February 28,
1995, the outstanding uncovered distribution charges of the Principal
Underwriter calculated under the Plan amounted to approximately $27,052 (which
amount was equivalent to 3.7% of the Fund's net assets on such day). For the
period from the start of business, September 13, 1994, to February 28, 1995, the
Fund made no service fee payments under the Plan. The Fund expects to begin
accruing for its service fee payments during the quarter ending December 31,
1995.
PRINCIPAL UNDERWRITER
For the period from the start of business, September 13, 1994, to February
28, 1995, the Fund paid the Principal Underwriter $10.00 for repurchase
transactions handled (being $2.50 for each such transaction).
CUSTODIAN
For the period from the start of business, September 13, 1994, to February
28, 1995, the Fund paid IBT $583.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ending August 31, 1995, it is anticipated
that the noninterested Trustees of the Trust and the Portfolio will earn the
following compensation in their capacities as Trustees from the Fund and the
Portfolio, and, during the quarter ended March 31, 1995, the noninterested
Trustees of the Trust and the Portfolio earned the following compensation in
their capacities as Trustees of the other funds in the Eaton Vance fund
complex\1/:
TOTAL
AGGREGATE AGGREGATE RETIREMENT COMPENSATION
NAME COMPENSATION COMPENSATION BENEFIT ACCRUED FROM TRUST AND
- ---- FROM FUND FROM PORTFOLIO FROM FUND COMPLEX FUND COMPLEX
---------- -------------- ---------------- ------------
Donald R. Dwight ..... $- 0 - $1,608 $ 8,750 $33,750
Samuel L. Hayes, III . - 0 - 1,624 24,885 38,750
Norton H. Reamer ..... - 0 - 1,672 - 0 - 33,750
John L. Thorndike .... - 0 - 1,760 - 0 - 35,000
Jack L. Treynor ...... - 0 - 1,691 - 0 - 35,000
- ---------
\1/ The Eaton Vance fund complex consists of 201 registered investment companies
or series thereof.
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 Authorized Firms or investors and other selling
literature and of advertising is borne by the Principal Underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under Federal and state securities laws
is 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 Trust's Board of Trustees (including a majority of its Trustees who are not
interested persons of the Trust 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 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.
The Fund has authorized Eaton Vance Distributors, Inc. (the "Principal
Underwriter") to act as its agent in repurchasing shares at the rate of $2.50
for each repurchase transaction handled by the Principal Underwriter. The
Principal Underwriter estimates that the expenses incurred by it in acting as
repurchase agent for the Fund will exceed the amounts paid therefor by the Fund.
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.
The amount payable by the Fund to the Principal Underwriter pursuant to the
Plan as sales commissions and distribution fees 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 Portfolio, the
expenses of the Fund and the Portfolio accrued and allocated to the Fund on such
day, income on portfolio investments of the Portfolio accrued and allocated to
the Fund on such day, and any dividends and distributions declared on Fund
shares. The 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 by the Fund to the Principal Underwriter whenever there exist
uncovered distribution charges under the Plan.
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.
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 or payable
under the Plan by the Fund to the Principal Underwriter and contingent deferred
sales charges theretofore paid or payable to the Principal Underwriter will be
subtracted from such distribution charges; if the result of such subtraction is
positive, a distribution fee (computed at 1% over the prime rate then reported
in The Wall Street Journal) will be computed on such amount and added thereto,
with the resulting sum constituting the amount of outstanding uncovered
distribution charges with respect to such day. The amount of outstanding
uncovered distribution charges of the Principal Underwriter calculated on any
day does not constitute a liability recorded on the financial statements of the
Fund.
The amount of uncovered distribution charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of 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.
As currently implemented by the Trustees, the Plan 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. For the sales commission and service fee
payments made by the Fund and the outstanding uncovered distribution charges of
the Principal Underwriter, see "Fees and Expenses -- Distribution Plan" in this
Part II. 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. Although the Principal Underwriter
will use its own funds (which may be borrowed from banks) to pay sales
commissions at the time of sale, 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
BMR by the Portfolio) resulting from sale of Fund shares and through the 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 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 Trust on behalf of the Fund and the Principal
Underwriter. 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 Trust
as required by Rule 12b-1. The Plan continues in effect through and including
April 28, 1996, 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 Trust who are not interested persons of the Trust 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. Under the Plan the President
or a Vice President of the Trust shall provide to the Trustees for their review,
and the Trustees shall review at least quarterly, a written report of the amount
expended under the Plan and the purposes for which such expenditures were made.
The Plan may not be amended to increase materially the payments described
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
Trustees who are not interested persons of the Trust shall be committed to the
discretion of the Trustees who are not such interested persons.
The Trustees of the Trust believe that the Plan will be a significant factor
in the expected growth of the Fund's assets, and will result in increased
investment flexibility and advantages which will 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 of the Trust have
determined that in their judgment there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders.
PERFORMANCE INFORMATION
The tables below indicate 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 September 13, 1994 through February 28,
1995.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF INVEST- VALUE OF INVEST- TOTAL RETURN BEFORE TOTAL RETURN AFTER
MENT BEFORE DE- MENT AFTER DEDUCT- DEDUCTING DEDUCTING
DUCTING THE CON- ING THE CONTINGENT THE CONTINGENT DEFERRED THE CONTINGENT DEFERRED
TINGENT DEFERRED DEFERRED SALES SALES CHARGE SALES CHARGE<F2>
INVESTMENT INVESTMENT AMOUNT OF SALES CHARGE CHARGE<F2> ----------------------- -------------------------
PERIOD DATE INVESTMENT ON 2/28/95 ON 2/28/95 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------- ---------- ---------- ------------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund 9/13/94<F1> $1,000 $1,029.00 $979.00 2.90%<F3> -- -2.10%<F3> --
PERCENTAGE CHANGES 9/13/94 -- 2/28/95
<CAPTION>
NET ASSET VALUE TO NET ASSET VALUE NET ASSET VALUE TO NET ASSET VALUE
BEFORE DEDUCTING THE CONTINGENT DEFERRED AFTER DEDUCTING THE CONTINGENT DEFERRED
SALES CHARGE WITH ALL DISTRIBUTIONS REINVESTED SALES CHARGE<F2> WITH ALL DISTRIBUTIONS REINVESTED
------------------------------------------------------ -----------------------------------------------------
PERIOD ENDED ANNUAL CUMULATIVE AVERAGE ANNUAL ANNUAL CUMULATIVE AVERAGE ANNUAL
- ------------ ------ ---------- -------------- ------ ---------- --------------
<C> <C> <C> <C> <C> <C> <C>
2/28/95<F1> -- 2.90%<F3> -- -- -2.10%<F3> --
Past performance is not indicative of future results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
<FN>
- ---------
<F1> Investment operations began on September 13, 1994.
<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, or 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> If a portion of the expenses related to the operation of the Fund had not been allocated to Eaton Vance, the Fund would have
had lower returns.
</TABLE>
ADDITIONAL TAX MATTERS
The Fund intends to elect to be treated and to qualify as a regulated
investment company under the Code for its fiscal year ending August 31, 1995.
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of February 28, 1995, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. As of February 28, 1995, Merrill Lynch, Pierce, Fenner & Smith, Inc., New
Brunswick, NJ was the record owner of approximately 17.6% of the outstanding
shares, which were held on behalf of its customers who are the beneficial owners
of such shares, and as to which it had voting power under certain limited
circumstances. In addition, as of February 28, 1995, the following shareholders
owned beneficially and of record the percentages of outstanding shares of the
Fund indicated after their names: NFSC FEBO Lucy A. Ganlock, Gloucester, VA
(13.1%); Jane S. Pettit, Palm Harbor, FL (7.6%); Prudential Securities FBO Joy
A. Hartke, Pompono Beach, FL (7.3%); and Prudential Securities FBO Robert E.
McKinney, Naples, FL (5.4%). To the Trust's knowledge, no other person owned of
record or beneficially 5% or more of the Fund's outstanding shares on such date.
<PAGE>
EV MARATHON GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment in Growth Portfolio (Portfolio), at value (Note 1A) $681,011
Receivable for Fund shares sold 42,429
Receivable from administrator (Note 6) 6,234
Deferred organization expenses (Note 1D) 34,602
--------
Total assets $764,276
LIABILITIES:
Payable for Fund shares redeemed $ 5,131
Payable to affiliates --Custodian fee 83
Accrued organizational expense 30,123
Accrued expenses 308
-------
Total liabilities 35,645
--------
NET ASSETS for 70,782 shares of beneficial interest outstanding $728,631
========
SOURCES OF NET ASSETS:
Proceeds from sales of shares, less cost of shares
redeemed $701,881
Accumulated net realized loss on investments (645)
Unrealized appreciation of investments 30,166
Accumulated net investment loss (2,771)
--------
Total net assets $728,631
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($728,631 / 70,782 shares of beneficial interest outstanding) $10.29
======
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the period from the start of business, September 13, 1994,
to February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 556
Dividend income allocated from Portfolio (net of
withholding tax expense of $1) 2,047
Expenses allocated from Portfolio (1,212)
-------
Total investment income $ 1,391
Expenses --
Custodian fee (Note 6) $ 583
Distribution fees (Note 4) 1,278
Printing and postage 3,550
Amortization of organization expenes (Note 1D) 3,393
Registration fees 75
Transfer agent fees 145
Miscellaneous 1,372
-------
Total expenses 10,396
Deduct -- Preliminary allocation of expenses by
administrator (Note 6) 6,234
-------
Net expenses 4,162
-------
Net investment loss $(2,771)
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized loss on investments (identified cost basis) $ (645)
Change in unrealized appreciation of investments 30,166
-------
Net realized and unrealized gain on investments 29,521
-------
Net increase in net assets resulting from operations $26,750
=======
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period from the start of business, September 13, 1994,
to February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment loss $ (2,771)
Net realized loss from Portfolio (645)
Unrealized appreciation from Portfolio 30,166
--------
Net increase in net assets from operations $ 26,750
Net increase in net assets from Fund share transactions (Note 2) 701,871
--------
Net increase in net assets $728,621
NET ASSETS:
At beginning of period 10
--------
At end of period $728,631
========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For the period from the start of business, September 13, 1994,
to February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (for a share outstanding throughout the period)
NET ASSET VALUE -- Beginning of period $10.000
-------
Income from investment operations:
Net investment loss $(0.037)
Net realized and unrealized gain on investments 0.327
-------
Total income from investment operations 0.290
-------
NET ASSET VALUE -- End of period $10.290
=======
TOTAL RETURN** 2.90 %
RATIOS/SUPPLEMENTAL DATA (to average daily net assets)*:
Expenses(1) 3.13 %+
Net investment income (1.61)%+
NET ASSETS, AT END OF PERIOD (000'S OMITTED) $ 729
*The expenses related to the operation of the Fund reflect a preliminary
allocation of expenses to the Administrator. Had such action not been taken,
net investment income per share and the ratios would have been as follows:
RATIOS (to average daily net assets)
Expenses(1) 6.76 %+
Net investment loss (5.24)%+
** Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of each period
reported. Dividends and distributions, if any, are assumed to be reinvested
at the net asset value on the record date.
+ Computed on an annualized basis.
(1) Includes the Fund's share of Growth Portfolio's allocated expenses.
Note: Certain of the per share amounts have been computed using average shares
outstanding.
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Marathon Growth Fund (the Fund) is a diversified series of Eaton Vance Growth
Trust (the Trust). 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 an open-end management investment company. The Fund
invests all of its investable assets in interests in the Growth Portfolio (the
Portfolio), a New York Trust, having the same investment objective as the Fund.
The value of the Fund's investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio (0.55% at February 28,
1995). The performance of the Fund is directly affected by the performance of
the Portfolio. The financial statements of the Portfolio, including the
portfolio of investments, are included elsewhere in this report and should be
read in conjunction with the Fund's financial statements. The following is a
summary of significant accounting policies consistently followed by the Fund in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Valuations of securities by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INCOME -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted accounting
principles.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments, options and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization, are being amortized on the straight-line basis over five
years beginning on the date the Fund commenced operations.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Distributions to shareholders are recorded on
the ex-dividend date and interest income is recorded on the accrual basis.
F. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of Fund
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 Fund's current yield or total return (Note 5).
G. DISTRIBUTIONS -- Generally accepted accounting principles require that
differences in the recognition or classification of income between the financial
statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized
gains.
H. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
February 28, 1995 and for the period then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
- --------------------------------------------------------------------------------
(2) 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 Fund shares from the start of business September 13, 1994 to
February 28, 1995 were as follows:
SHARES AMOUNT
------- ---------
Sales 89,712 $ 889,812
Issued to shareholders
electing to receive
payment of distribution
in Fund shares -- --
Redemptions (18,930) (187,941)
------- ---------
Net increase 70,782 $ 701,871
======= =========
- --------------------------------------------------------------------------------
(3) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$847,384 and $197,296 respectively.
- --------------------------------------------------------------------------------
(4) DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
principal underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to
1/365th of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund 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 Fund 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 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 Fund and, accordingly, reduces the
Fund's net assets. The Fund paid $1,278 to EVD for the period ended February 28,
1995, representing 0.75% (annualized) of average daily net assets. At February
28, 1995, the amount of Uncovered Distribution Charges of EVD calculated under
the Plan was approximately $27,052.
In addition, the Plan authorizes the Fund to make payments of service fees to
the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have implemented 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 0.25% of the Fund's average daily net assets for
each fiscal year based on the value of Fund shares sold by such persons and
remaining outstanding for at least twelve months, and that payments of these
service fees shall commence with the quarter ending December 31, 1995. Service
fees are separate and distinct from the sales commissions and distribution fees
payable by the Fund to EVD, and, as such, are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution Charges of
EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
- ------------------------------------------------------------------------------
(5) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon the
lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by reinvestment of dividends or capital gain
distributions. The CDSC is imposed at declining rates that begin at 5% in the
first and second year of redemption after purchase, declining one percentage
point each subsequent 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 Fund's Distribution Plan. CDSC charges received when no
Uncovered Distribution Charges exist will be retained by the Fund. EVD received
approximately $837 of CDSC paid by shareholders for the period ended February
28, 1995.
- ------------------------------------------------------------------------------
(6) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves only as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services. See
Note 2 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report. To enhance the net income of the Fund, $6,234 of
expenses related to the operation of the Fund were allocated, on a preliminary
basis, to EVM. Except as to Trustees of the Fund and the Portfolio who are not
members of EVM's or BMR's organizations, officers and Trustees receive
remuneration for their services to the Fund out of such investment adviser fee.
Investors Bank & Trust Company (IBT), an affiliate of EVM, serves as custodian
of the Fund and the Portfolio. Pursuant to their respective custodian
agreements, IBT receives a fee reduced by credits which are determined based on
the average cash balances of the Fund or the Portfolio maintains with IBT.
Certain of the officers and Trustees of the Fund and Portfolio are officers and
directors/trustees of the above organizations.
<PAGE>
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCKS - 96.2%
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
ADVERTISING - 1.3%
Omnicom Group, Inc. 30,000 $ 1,593,750
The parent company of DDB Needham ------------
Worldwide and BBDO Worldwide, two full
service advertising agency networks.
AUTOMOTIVE - 2.0%
Bandag Inc. 42,000 $ 2,520,000
Dominates the domestic tire retread ------------
market, selling through 600 franchised
dealers, and has a growing presence in
foreign markets.
BANKS - 2.2%
Citicorp 60,000 $ 2,700,000
Operates the largest money center bank in ------------
the U.S. with a substantial worldwide
presence.
BEVERAGES - 4.3%
Coca-Cola Co. 60,000 $ 3,300,000
Manufactures soft drink concentrates and
syrups that make Coca Cola and other
brands including Minute Maid orange
juice.
PepsiCo, Inc. 50,000 1,956,250
Global soft drink producer with
businesses in snack foods and fast food
restaurants.
------------
$ 5,256,250
------------
BROADCASTING - 3.2%
Tele-Communications, Inc. Class A* 175,000 $ 3,992,187
The largest operator of cable television ------------
systems in the U.S.
BUSINESS PRODUCTS AND SERVICES - 5.3%
Reuters Holdings PLC ADR 110,000 $ 4,661,250
Worldwide provider of proprietary
financial data and information.
WMX Technologies, Inc. 70,000 1,846,250
World's largest provider of collection,
disposal and remediation services for
solid and hazardous waste.
------------
$ 6,507,500
------------
CHEMICALS - 6.3%
Corning Inc. 50,000 $ 1,606,250
A diversified manufacturer of
sophisticated communications (fiber
optics), ceramics (pollution control
devices) and glass (TV screens, automobile
headlights, cookwear and dishes)
products and provider of medical
laboratory services.
Great Lakes Chemical Corp. 40,000 2,405,000
Specialty chemical manufacturer of a wide
range of products including flame
retardants, water treatments, fuel
additives.
Loctite Corp. 80,000 3,680,000
Manufacturer of adhesives for consumer
and industrial markets.
------------
$ 7,691,250
------------
COMPUTER EQUIPMENT AND SERVICES - 7.9%
Automatic Data Processing, Inc. 50,000 $ 3,075,000
The leading independent computing and
payroll processing services firm in the
U.S.
General Motors Corp. Class E 60,000 2,302,500
Stock represents participation in the
Electronic Data Systems Division of
General Motors. EDS designs, installs and
operates data processing and
communications systems for GM and other
customers.
Microsoft Corp. 25,000 1,575,000
Dominant developer of microcomputer
software for business and personal use.
Novell Inc.* 130,000 2,721,875
Vendor of local area network operating
systems that allow computers of any size
and make to work together.
------------
$ 9,674,375
------------
DRUGS & HEALTH CARE SERVICES - 8.3%
Astra AB A Free Shares 150,000 $ 3,775,965
Swedish based international
pharmaceutical firm with drugs for the
control of ulcers and asthma.
Sofamor Danek Group, Inc.* 182,000 3,799,250
The dominant supplier of spinal implant
devices used in surgical treatment of
spinal diseases and deformities.
U.S. Healthcare, Inc. 60,000 2,580,000
Operator of health maintenance
organizations serving the Mid-Atlantic,
Greater New York and New England regions.
------------
$ 10,155,215
------------
ELECTRONIC INSTRUMENTATION - 2.2%
Millipore Corp. 50,000 $ 2,656,250
Products use membrane separations ------------
technology to analyze and purify fluids
for a variety of high tech industries.
FINANCIAL SERVICES - 6.7%
Federal National Mortgage Association 30,000 $ 2,313,750
U.S. Government sponsored mortgage lender
and provider of secondary mortgage
market.
Franklin Resources Inc. 50,000 1,937,500
Provides investment management and
related services to a family of equity
and fixed income mutual funds.
MGIC Investment Corp. Wisc. 105,000 4,003,125
The leading provider of private mortgage
insurance coverage to U.S. banks and
other mortgage suppliers.
------------
$ 8,254,375
------------
FOOD - 0.8%
Archer Daniels Midland Co. 50,000 $ 950,000
Major factor in soybean processing, corn ------------
refining and flour milling.
HOTELS AND RESTAURANTS - 2.3%
Carnival Corp. 120,000 $ 2,850,000
Operator of large cruise ships plying the ------------
Caribbean, Mediterranean, South Pacific
and Alaska.
HOUSEHOLD PRODUCTS - 2.6%
Gillette Co. 40,000 $ 3,165,000
A global company with internationally ------------
recognized brands in razors and blades,
small appliances, cosmetics, dental and
other consumer products.
INSURANCE - 7.5%
American International Group, Inc. 45,000 $ 4,668,750
One of the world's leading insurance
companies, operating in 130 countries.
Progressive Corp., Inc. 50,000 1,943,750
Underwriter of non-standard automobile
and other specialty personal lines of
insurance.
UNUM Corp. 60,000 2,550,000
A writer of group long term disability
insurance.
------------
$ 9,162,500
------------
MACHINERY - 2.9%
Illinois Tool Works Inc. 80,000 $ 3,590,000
Manufacturer of industrial components and ------------
other specialty products and equipment.
METALS & MINING - 3.9%
Freeport McMoRan Copper & Gold, Inc. 135,000 $ 2,835,000
Operator of third largest copper mine in
the world with world's largest gold
reserves.
J & L Specialty Steel, Inc. 100,000 1,925,000
A low cost producer in the domestic
stainless steel industry.
------------
$ 4,760,000
------------
OIL - 5.2%
Anadarko Petroleum Corp. 90,000 $ 3,948,750
Leading independent natural gas and crude
oil production company.
Phillips Petroleum Co. 75,000 2,503,125
Engaged in crude oil and natural gas
exploration and production worldwide and
petroleum refining and marketing
primarily in the U.S.
------------
$ 6,451,875
------------
PAPER & FOREST PRODUCTS - 2.6%
Willamette Industries, Inc. 60,000 $ 3,225,000
Integrated forest products company ------------
selling solid wood products,
containerboard and corrugated boxes and
white business papers and computer forms.
PUBLISHING - 4.3%
Harcourt General, Inc. 75,000 $ 2,784,375
Diversified company with major interests
in publishing and the Neiman Marcus Group
of retail companies.
McGraw Hill Inc. 35,000 2,467,500
Supplies informational products and
services for businesses, education and
industry through a broad range of media.
------------
$ 5,251,875
------------
RETAILING - 4.7%
Gap (The) Inc. 60,000 $ 1,950,000
A nationwide retailer of moderately
priced casual and activewear clothing
plus separate chains for Gap Kids, Banana
Republic and more recently, Old Navy
Clothing Company.
Home Depot, Inc. 85,000 3,814,375
A chain of do-it-yourself warehouse style
stores.
------------
$ 5,764,375
------------
SEMICONDUCTORS - 5.8%
Advanced Micro Devices, Inc. 75,000 $ 2,278,125
A producer of a broad line of
semiconductors including microprocessors
for telecommunications, office
automation, and networking applications.
Intel Corp. 36,000 2,871,000
A manufacturer of semiconductors and
other microcomputer components and
systems which comprise the heart of the
personal computer.
Motorola Inc. 35,000 2,012,500
A leading supplier of semiconductors and
two-way radios, paging equipment, and
cellular mobile telephone systems.
------------
$ 7,161,625
------------
TELEPHONE UTILITIES - 3.9%
Alltel Corp. 90,000 $ 2,576,250
Operates local telephone systems serving
1.6 million customers, an information
procession business for financial,
telecommunications and healthcare
companies and cellular operations in 19
states.
Telephone & Data Systems, Inc. 50,000 2,281,250
A provider of local telephone service, as
well as cellular and paging services.
------------
$ 4,857,500
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST, $106,766,615) $118,190,902
------------
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 3.7%
- --------------------------------------------------------------------------------
FACE AMOUNT
(000 OMITTED)
- --------------------------------------------------------------------------------
CXC Inc., 6.10s, 3/1/95 $3,216 $ 3,216,000
Chevron Oil Finance Co., 5.82s, 3/1/95 1,267 1,267,000
------------
TOTAL SHORT-TERM OBLIGATIONS, AT
AMORTIZED COST $ 4,483,000
------------
TOTAL INVESTMENTS
(IDENTIFIED COST, $111,249,615) $122,673,902
OTHER ASSETS, LESS LIABILITIES - 0.1% 140,645
------------
NET ASSETS - 100% $122,814,547
============
*Non-income producing security.
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
February 28, 1995 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$111,249,615) $ 122,673,902
Cash 753
Dividends receivable 130,775
Deferred organization expenses (Note 1C) 14,490
-------------
Total assets $ 122,819,920
LIABILITIES:
Custodian fee payable $4,045
Accrued expenses 1,328
------
Total liabilities 5,373
-------------
NET ASSETS applicable to investor's interest in Portfolio $(122,814,547)
=============
SOURCES OF NET ASSETS:
Net proceeds capital contributions and withdrawals $ 111,390,260
Unrealized appreciation of investments (computed on
the basis of identified cost) 11,424,287
-------------
Total $ 122,814,547
=============
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the six months ended February 28, 1995 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Income --
Dividend (net of withholding tax of $91) $ 765,387
Interest 192,921
----------
Total income $ 958,308
Expenses --
Investment adviser fee (Note 2) $ 384,275
Custodian fee (Note 2) 37,310
Trustee fees 2,083
Legal and audit fees 9,229
Amortization of organization expense (Note 1C) 1,512
Miscellaneous 3,127
-----------
Total expenses 437,536
----------
Net investment income $ 520,772
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis) $(1,504,169)
Increase in unrealized appreciation of
investments 2,384,573
-----------
Net realized (loss) and unrealized gain on
investments 880,404
----------
Net increase in net assets from operations $1,401,176
==========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994*
---------------- ----------------
INCREASE IN NET ASSETS:
From operations --
Net investment income $ 520,772 $ 69,589
Net realized gain (loss) on
investment transactions (1,504,169) 1,063,482
Increase in unrealized
appreciation of investments 2,384,573 2,595,384
---------------- ----------------
Increase in net assets from
operations $ 1,401,176 $ 3,728,455
---------------- ----------------
Capital transactions --
Contributions 33,292,216 140,348,725
Withdrawals (43,414,714) (12,641,351)
---------------- ----------------
Increase (decrease) in net
assets resulting from capital
transactions $ (10,122,498) $127,707,374
---------------- ----------------
Total increase (decrease) in
net assets $ (8,721,322) $131,435,829
---------------- ----------------
NET ASSETS:
At beginning of period 131,535,869 100,040
---------------- ----------------
At end of period $ 122,814,547 $ 131,535,869
================ ================
*For the period from the start of business, August 2, 1994, to August 31, 1994.
The accompanying notes are an integral part of the financial statements
<PAGE>
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994*
---------------- ----------------
RATIOS (As a percentage of average net assets):
Expenses 0.72%+ 0.73%+
Net investment income 0.85%+ 0.66%+
PORTFOLIO TURNOVER 32% 4%
+Annualized.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Growth Portfolio (the Portfolio) is registered under the Investment Company Act
of 1940 as a diversified open-end investment company which was organized as a
trust under the laws of the State of New York on August 2, 1994. The Declaration
of Trust permits the Trustees to issue interests in the Portfolio. Investment
operations began on August 2, 1994, with the acquisition of investments with a
value of $127,122,709, including unrealized appreciation of $6,444,330 in
exchange for an interest in the Portfolio by one of the Portfolio's investors.
The following is a summary of significant accounting policies of the Portfolio.
The policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Investments listed on securities exchanges or in the
NASDAQ National Market are valued at closing sale prices. Listed or unlisted
investments for which closing sale prices are not available are valued at the
mean between the latest bid and asked prices. Short-term obligations are valued
at amortized cost, which approximates value. Foreign securities held by the Fund
are valued in U.S. dollars at the current exchange rate.
B. INCOME TAXES -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally must
satisfy the applicable source of income and diversification requirements (under
the Internal Revenue Code) in order for its investors to satisfy them. The
Portfolio will allocate at least annually among its investors each investors'
distributive share of the Portfolio's net taxable (if any) and tax-exempt
investment income, net realized capital gains, and any other items of income,
gain, loss, deduction or credit. Interest income received by the Portfolio on
investments in municipal bonds, which is excludable from gross income under the
Internal Revenue Code, will retain its status as income exempt from Federal
income tax when allocated to the Portfolio's investors. The portion of such
interest, if any, earned on private activity bonds issued after August 7, 1986
may be considered a tax preference item for investors.
C. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line basis
over five years.
D. LEGAL FEES -- Legal fees and other related expenses incurred as part of
negotiations of the terms and requirements of capital infusions, or that are
expected to result in the restructuring of or a plan of reorganization for an
investment are added to the cost of the investment.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income and distributions to
shareholders are recorded on the ex-dividend date and interest income is
recorded on the accrual basis.
- --------------------------------------------------------------------------------
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee is earned by Boston Management and Research (BMR), a
wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation for
management and investment advisory services rendered to the Portfolio. The fee
is based upon a percentage of average daily net assets. For the six months ended
February 28, 1995, the fee was equivalent to 0.625% (annualized) of the
Portfolio's average net assets for such period and amounted to $384,275. Except
as to Trustees of the Portfolio who are not members of EVM's or BMR's
organization, officers and Trustees receive remuneration for their services to
the Fund out of such investment adviser fee. Investors Bank & Trust Company
(IBT), an affiliate of EVM and BMR, serves as custodian of the Fund. Pursuant to
the custodian agreement, IBT receives a fee reduced by credits which are
determined based on the average daily cash balances the Portfolio maintains with
IBT. Certain of the officers and Trustees of the Portfolio are officers and
directors/trustees of the above organizations.
- --------------------------------------------------------------------------------
(3) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short term obligations,
aggregated $36,944,589 and $39,114,037, respectively.
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at February 28, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $111,249,615
============
Gross unrealized appreciation $ 15,198,431
Gross unrealized depreciation (3,774,144)
------------
Net unrealized appreciation $ 11,424,287
============
- --------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $120 million unsecured line of credit agreement with
a bank. The line of credit consists of $20 million committed facility and a $100
million discretionary facility. Borrowings will be made by the Portfolio solely
to facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each portfolio 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 and portfolios
at the end of each quarter. The Portfolio did not have any significant
borrowings or allocated fees during the period. At February 28, 1995, the Fund
did not have an outstanding balance pursuant to the line of credit.
<PAGE>
INVESTMENT ADVISER OF
GROWTH PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV MARATHON
GROWTH FUND
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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV MARATHON GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
M-GFSAI
[LOGO]
EV MARATHON
GROWTH
FUND
STATEMENT OF
ADDITIONAL
INFORMATION
MAY 1, 1995
