<PAGE>
EV TRADITIONAL GREATER CHINA GROWTH FUND
EV TRADITIONAL GROWTH FUND
SUPPLEMENT TO PROSPECTUSES DATED JANUARY 1, 1995
EV TRADITIONAL INFORMATION AGE FUND
SUPPLEMENT TO PROSPECTUS DATED AUGUST 23, 1995
1. Effective immediately, all purchases of shares of a Fund of $1 million or
more will be subject to a contingent deferred sales charge ("CDSC") of 0.50% in
the event of certain redemptions within twelve months after the purchase. Such
purchases continue to bear no initial sales charge. (Such purchases made before
November 9, 1995 will continue to be subject to a CDSC of 1% in the event of
certain redemptions made within eighteen months of purchase.) The Principal
Underwriter will compensate Authorized Firms responsible for such purchases at
the rate of 0.50% of the amount invested, and any CDSC incurred will be retained
by the Principal Underwriter.
The CDSC will be imposed on an amount equal to the lesser of the current
market value or the original purchase price of the shares redeemed. Accordingly,
no CDSC will be imposed on increases in account value above the initial purchase
price, including any dividends or distributions that have been reinvested in
additional shares. It will be assumed that redemptions are made first from any
shares in the shareholder's account that are not subject to a CDSC.
The CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. No initial sales
charge or CDSC will be imposed on Fund shares purchased by qualified retirement
plans. If a shareholder reinvests redemption proceeds within a 60- day period
and in accordance with the conditions set forth under "Eaton Vance Shareholder
Services -- Reinvestment Privilege," the shareholder's account will be credited
with the amount of any CDSC paid on such redeemed shares.
Shares of a Fund which are subject to a CDSC may be exchanged into any of
the funds listed under "The Eaton Vance Exchange Privilege" without incurring
the CDSC. The shares acquired in an exchange may be subject to a CDSC upon
redemption. For purposes of computing the CDSC payable upon redemption of shares
acquired in an exchange, the holding period of the original shares is added to
the holding period of the shares acquired in the exchange.
Consistent with the foregoing, the "Shareholder and Fund Expenses" table is
revised by replacing the line "Contingent Deferred Sales Charges Imposed on
Redemptions" with the following:
Contingent Deferred Sales Charges (on purchases of $1 million
or more) Imposed on Redemptions During the First Twelve Months
(as a percentage of redemption proceeds exclusive of all
reinvestments and capital appreciation in the account) 0.50%
In addition, the sales charge table under "How to Buy Fund Shares" is
revised by replacing the line "$1,000,000 or more" with the following:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER COMMISSION
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
------------------ ---------------- ---------------- -----------------
<S> <C> <C> <C>
$1,000,000 or more 0.00% 0.00% 0.50%
</TABLE>
2. THE FOLLOWING IS ADDED TO "HOW TO BUY FUND SHARES":
Shares of the Fund may be sold at net asset value to an investor
making an investment through an investment adviser, financial planner,
broker or other intermediary that charges a fee for its services and has
entered into an agreement with the Fund or its Principal Underwriter. Fund
shares may also be sold at net asset value where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton
Vance, if the redemption occurred no more than 60 days prior to the purchase
of Fund shares and the redeemed shares were subject to a sales charge. An
Authorized Firm may charge its customers a fee in connection with
transactions executed by that Firm.
3. THE FOLLOWING IS ADDED TO "REPORTS TO SHAREHOLDERS":
Consistent with applicable law, duplicate mailings of shareholder
reports and certain other Fund information to shareholders residing at the
same address may be eliminated.
4. THE FOLLOWING IS ADDED TO "PERFORMANCE INFORMATION":
The Fund's performance may be compared in publications to the
performance of various indices and investments for which reliable data is
available, and to averages, performance rankings, or other information
prepared by recognized mutual fund statistical services.
November 9, 1995 T-SUPP3
<PAGE>
EV TRADITIONAL GREATER CHINA GROWTH FUND
EV TRADITIONAL GREATER CHINA GROWTH FUND (THE "FUND") IS A MUTUAL FUND
SEEKING LONG-TERM CAPITAL APPRECIATION THROUGH PURCHASE OF AN INTEREST IN A
SEPARATE INVESTMENT COMPANY WHICH INVESTS IN EQUITY SECURITIES OF COMPANIES
WHICH, IN THE OPINION OF THE INVESTMENT ADVISER, WILL BENEFIT FROM THE
ECONOMIC DEVELOPMENT AND GROWTH OF THE PEOPLE'S REPUBLIC OF CHINA. ACCORDINGLY
THE FUND INVESTS ITS ASSETS IN GREATER CHINA GROWTH PORTFOLIO (THE
"PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND
MANAGING ITS OWN PORTFOLIO OF SECURITIES. A SIGNIFICANT PERCENTAGE OF THE
PORTFOLIO WILL BE INVESTED IN THE SECURITIES MARKETS OF COUNTRIES IN THE CHINA
REGION, INCLUDING HONG KONG, CHINA, TAIWAN, SOUTH KOREA, SINGAPORE, MALAYSIA,
THAILAND, INDONESIA AND THE PHILIPPINES. THE FUND IS A SEPARATE SERIES OF
EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of
some or all of the principal investment.
This Prospectus is designed to provide you with information you should
know before investing in the Fund. Please retain this document for future
reference. A Statement of Additional Information for the Fund dated January 1,
1995, as supplemented from time to time, has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. The Statement
of Additional Information is available without charge from the Fund's
Principal Underwriter, Eaton Vance Distributors, Inc., 24 Federal Street,
Boston, MA 02110 (telephone (800) 225-6265). The sponsor and manager of the
Fund and the administrator of the Portfolio is Eaton Vance Management, 24
Federal Street, Boston, MA 02110 (the "Manager"). The Portfolio's investment
adviser is Lloyd George Management (Hong Kong) Limited (the "Adviser"). The
principal business address of the Adviser is 3808 One Exchange Square,
Central, Hong Kong.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page Page
<C> <C>
Shareholder and Fund Expenses .................... 2 How to Buy Fund Shares ........................ 21
The Fund's Financial Highlights .................. 3 How to Redeem Fund Shares .................... 24
The Fund's Investment Objective .................. 5 Reports to Shareholders ...................... 25
The Portfolio's Investment Opportunities The Lifetime Investing Account/Distribution
in the China Region ............................. 5 Options .................................... 25
How the Fund and the Portfolio Invest The Eaton Vance Exchange Privilege ........... 26
their Assets ................................... 10 Eaton Vance Shareholder Services ............. 27
Special Investment Methods and Risk Factors ....... 11 Distributions and Taxes ...................... 29
Organization of the Fund and the Portfolio ....... 15 Performance Information ...................... 30
Management of the Fund and the Portfolio ......... 17 Statement of Intention and Escrow Agreement .. 31
Distribution Plan ................................ 20 Appendix A -- Additional Information about
Valuing Fund Shares ............................... 21 Investment Methods .......................... 32
</TABLE>
- ------------------------------------------------------------------------------
PROSPECTUS DATED JANUARY 1, 1995
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDER AND FUND EXPENSES <F1>
- ---------------------------------------------------------------------------------------------------------------------
<C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) 4.75%
Sales Charges Imposed on Reinvested Distributions None
Redemption Fees None
Exchange Fees None
Contingent Deferred Sales Charges (on purchases of $1 million or more) Imposed on
Redemptions During the First Eighteen Months (as a percentage of redemption
proceeds exclusive of all reinvestments and capital appreciation in the account)<F2> 1.00%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees (including management fees paid by the Fund and investment
advisory and administration fees paid by the Portfolio of 0.25%, 0.74% and
0.25%, respectively) 1.24%
Rule 12b-1 Fees 0.50%
Other Expenses 0.38%
----
Total Operating Expenses 2.12%
====
<S> <C> <C> <C> <C>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
An investor would pay the following expenses (including initial maximum
sales charge) on a $1,000 investment, assuming (a) 5% annual return and
(b) redemption at the end of each period: $68 $111 $156 $281
Notes:
<FN>
<F1> The purpose of the 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 have determined that the aggregate expenses of the Fund and
the Portfolio may be greater, but in no event materially greater, than the expenses which would have been
incurred had the Fund made a direct investment in the securities held by the Portfolio. The costs and expenses
in the table and Example are based on the Fund's and the Portfolio's fiscal year ended August 31, 1994. The
table and Example should not be considered a representation of past or future expenses and actual expenses may
be greater or less than those shown. For further information regarding the expenses of 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", "How to Redeem Fund Shares" and "Distribution Plan". 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". Other investment companies with different distribution
arrangements are investing in the Portfolio and additional such companies may do so in the future. See
"Organization of the Fund and the Portfolio".
<F2> If shares were purchased at net asset value with no initial sales charge by virtue of the purchase having been
in the amount of $1 million or more and are redeemed within 18 months after the end of the calendar month in
which the purchase was made, a contingent deferred sales charge of 1% will be imposed on such redemption. See
"How to Buy Fund Shares", "How to Redeem Fund Shares" and "Eaton Vance Shareholder Services".
</TABLE>
THE FUND'S FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following information should be read in conjunction with the financial
statements included in the Statement of Additional Information, all of which
has been so included in reliance upon the report of Deloitte & Touche LLP,
independent certified public accountants, as experts in accounting and
auditing. Further information regarding the performance of the Fund is
contained in the Fund's annual report to shareholders which may be obtained
without charge by contacting the Fund's Principal Underwriter, Eaton Vance
Distributors, Inc.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
FOR THE OCTOBER 28, 1992
YEAR ENDED (START OF BUSINESS)
AUGUST 31, 1994 AUGUST 31, 1993
--------------- ------------------
<S> <C> <C>
NET ASSET VALUE, beginning of period ........................................ $ 12.450 $ 10.000
-------- --------
Income from investment operations:
Net investment loss ....................................................... $ (0.026) $ (0.029)
Net realized and unrealized gain on investments ........................... 3.336 2.479<F2>
-------- --------
Total income from investment operations ................................. $ 3.310 $ 2.450
-------- --------
Less distributions:
Distributions in excess of net realized gain on investment transactions .... $ (0.050) $ --
-------- --------
NET ASSET VALUE, end of period ............................................... $ 15.710 $ 12.450
======== ========
TOTAL RETURN<F3>.............................................................. 26.56% 24.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted).................................... $316,229 $154,317
Ratio of net expenses to average net assets <F4>............................ 2.12 % 2.47 %<F1>
Ratio of net investment loss to average net assets ......................... (0.28)% (0.69)%<F1>
<FN>
<F1> Annualized.
<F2> The amount is not in accord with the net realized and unrealized gain for the period because of the timing of
sales of Fund shares and the amount of per share realized and unrealized gains and losses at such time.
<F3> 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 payable date.
<F4> Includes the Fund's share of Greater China Growth Portfolio's allocated expenses.
</TABLE>
<PAGE>
2 Maps
One Map of the China Region and the other of China's Special Economic Zones.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
EV TRADITIONAL GREATER CHINA GROWTH FUND (THE "FUND") IS A DIVERSIFIED SERIES
OF EATON VANCE GROWTH TRUST (THE "TRUST"). THE FUND'S INVESTMENT OBJECTIVE IS
TO SEEK LONG-TERM CAPITAL APPRECIATION. IT SEEKS TO MEET ITS INVESTMENT
OBJECTIVE BY INVESTING ITS ASSETS IN THE GREATER CHINA GROWTH PORTFOLIO (THE
"PORTFOLIO"), A SEPARATE REGISTERED INVESTMENT COMPANY WHICH INVESTS PRIMARILY
IN EQUITY SECURITIES OF COMPANIES WHICH, IN THE OPINION OF THE INVESTMENT
ADVISER, WILL BENEFIT FROM THE ECONOMIC DEVELOPMENT AND GROWTH OF THE PEOPLE'S
REPUBLIC OF CHINA ("CHINA"). A significant percentage of the Portfolio's
assets will be invested in the securities markets of countries in the China
region, consisting of Hong Kong, China, Taiwan, South Korea, Singapore,
Malaysia, Thailand, Indonesia and the Philippines (collectively, the "China
Region").
The Fund is intended for long-term investors and is not intended to be a
complete investment program. A prospective investor should take into account
personal objectives and other investments when considering the purchase of
Fund shares. The Fund cannot assure achievement of its investment objective.
See "How the Fund and the Portfolio Invest their Assets" for further
information. The investment objective of the Fund and the Portfolio are
nonfundamental. See "Organization of the Fund and the Portfolio -- Special
Information on the Fund/Portfolio Investment Structure" for further
information. In addition, investments in issuers of the China Region involve
risks not typically associated with issuers in the United States. See "Special
Investment Methods and Risk Factors" for further information.
THE PORTFOLIO'S INVESTMENT OPPORTUNITIES IN THE HINA REGION
- ------------------------------------------------------------------------------
THE FOLLOWING IS A GENERAL DISCUSSION OF THE ECONOMIES AND SECURITIES MARKETS
IN WHICH THE PORTFOLIO MAY INVEST. There can be no assurance that the
Portfolio will be able to capitalize on the factors described herein. Opinions
expressed herein are the good faith opinions of the Portfolio's investment
adviser, Lloyd George Management (Hong Kong) Limited (the "Adviser"). Unless
otherwise indicated, all amounts are expressed in United States dollars.
Over the past twenty years the performance of the major Asian securities
markets has generally been better than that of markets in Europe and the
United States. In the past five years, the newly emerging securities markets
of the China Region have demonstrated significant growth in market
capitalization, in numbers of listed securities and in the volume of
transactions. Over the same period, the underlying economies of the region
have grown against a background of the high savings rates characteristic of
many Asian societies and generally moderate inflation. According to the Asian
Development Bank forecasts, the economies of Southeast Asia, excluding Japan,
are forecast to grow by 7.2% in 1995.
The following graph shows the average growth in gross domestic product
("GDP") from 1989 to 1994 for the main countries in Southeast Asia, compared
with the United States.
Bar chart showing the Average Gross Domestic Product Growth for the
years 1989-1994 in percentages for the following countries, Thailand,
China, Maylasia, Singapore, South Korea, Indonesia, Taiwan, Hong Kong,
Philippines, United States. Source: Lloyd George Management (Hong Kong)
Limited.
A PARTICULARLY SIGNIFICANT FACTOR WITHIN THE REGION OVER THE LAST 13 YEARS HAS
BEEN THE INCREASING INFLUENCE WHICH CHINA HAS HAD IN THE DETERMINATION OF THE
ECONOMIC DEVELOPMENT OF CERTAIN COUNTRIES. This influence has been principally
in providing manufacturing facilities, a market for goods and services, and in
creating a demand for export outlets, both directly and indirectly.
The stages of China's economic development are discussed below. The effect
by 1992 was an increase in economic integration among the countries in the
China Region. The links between China and Hong Kong, between China and Taiwan
and between China and other countries within the region, where there is a
significant Chinese element of the population, have by now been strengthened
to a degree which makes a reversal unlikely. Moreover, although these links
have been developed to a stage where economic co-operation in trade operates
smoothly, the full potential of the market, both in terms of domestic
consumption and of export growth, has hardly begun to be realized. It is based
upon this potential that the Manager and Adviser perceive an investment
opportunity that may be exploited by the Fund and the Portfolio.
CHINA -- CHINA'S POPULATION, ESTIMATED AT 1.3 BILLION, IS THE HIGHEST OF ANY
COUNTRY IN THE WORLD. China has had for many centuries a well deserved
reputation for being closed to foreigners, with trade with the outside world
being carried on under terms of extreme restriction and under central control.
Such conditions were maintained in the first thirty years of the Communist
regime which began in 1949; however there have been several stages of
evolution, from the institution of an industrialization program in the 1950s
to a modernization policy commencing in 1978 which combined economic
development with the beginnings of opening the country.
The economic reform plan thus begun was designed to bring in foreign
investment capital and technological skills. The result has been a move
towards a more mixed economy away from the previous centrally planned economy.
The process of devolving responsibility for all aspects of enterprise to local
management and authorities continues, even though the system of socialism with
Chinese characteristics involves considerable influence by the central
government on production and marketing.
The economic plans covering the last decade of the century include
objectives to quadruple the country's 1980 industrial and agricultural output
by the year 2000, to increase the export element of the economy and to
continue to open the country with further development of the designated
special investment areas. Average annual GDP growth rate between 1988 and 1993
was 9.08%. The current Five Year Plan anticipates an annual growth rate of 6%,
but some senior leaders have called for this to be increased significantly.
In order to attract foreign investment China has since 1978 designated
certain areas of the country where overseas investors can receive special
investment incentives and tax concessions. There are five Special Economic
Zones (Shenzhen, Shantou and Zhuhai in Guangdong Province, Xiamen in Fujian
Province and Hainan Island, which itself is a province). Fourteen coastal
cities have been designated as "open cities" and certain Open Economic Zones
have been established in coastal areas. Shanghai has established the Pudong
New Area. Twenty-seven High and New Technology Industrial Development Zones
have been approved where preferential treatment is given to enterprises which
are confirmed as technology intensive.
AS A RESULT, FOREIGN DIRECT INVESTMENT IN CHINA HAS INCREASED SUBSTANTIALLY IN
THE LAST TEN YEARS. The contracted value of foreign investment in China was
over $122 billion in 1993, an increase from $57 billion in 1992. The "New
Industrialized Economics" have accounted for over 70% of this total.
Investment by Taiwan in Fujian Province continues to grow. Most of Hong Kong's
manufacturing investment has been in Guangdong Province, and more than 2.5
million workers are now employed in the Province working for Hong Kong
companies.
Since the beginning of 1992, China has indicated a willingness to speed up
reform of the economy. GDP grew by 13.4% in 1993 with gross industrial output
rising by 21%. Most notably among the high echelons of the Chinese leadership,
Deng Xiaoping has made a number of vigorously pro-reform statements since he
visited Shenzhen in January 1992 to demonstrate support for the way in which
the province of Guangdong is conducting its affairs. Other senior Chinese
Leaders have reaffirmed the principle of economic reform.
Exports continue to rise strongly, although China remains vulnerable to
United States economic conditions and possible trade sanctions, unless it
liberalizes current import restrictions and improves its human rights record.
However, imports are also expected to rise and may outstrip exports in terms
of growth rates.
1993 figures show the extent to which Southeast China, and Guangdong
Province in particular, is ahead of the rest of the country in economic
performance. Its industrial output grew by over 50.5% during 1993; exports
increased by more than 11.8% during 1993 following a 34% growth in 1992. In
1993 Guangdong Province accounted for some 40.7% of total exports and for more
than 10.3% of GDP although having only 5.5% of the population.
THERE ARE CURRENTLY TWO OFFICIALLY RECOGNIZED SECURITIES EXCHANGES IN CHINA --
THE SHANGHAI SECURITIES EXCHANGE WHICH OPENED IN DECEMBER 1990 AND THE
SHENZHEN STOCK EXCHANGE WHICH OPENED IN JULY 1991. Shares traded on these
Exchanges are of two types -- "A" shares which can be traded only by Chinese
investors and "B" shares which can be traded only by individuals and
corporations not resident in China.
In Shanghai, all "B" Shares are denominated in Chinese renminbi ("RMB")
but all transactions in "B" Shares must be settled in US dollars, and all
distributions made on "B" Shares are payable in US dollars, the exchange rate
being the weighted average exchange rate for the US dollar as published by the
Shanghai Foreign Exchange Adjustment Centre. In Shenzhen, the purchase and
sale prices for "B" Shares are quoted in Hong Kong dollars. Dividends and
other lawful revenue derived from "B" Shares are calculated in RMB but payable
in Hong Kong dollars, the rate of exchange being the average rate published by
the Shenzhen Foreign Exchange Adjustment Centre. There are no foreign exchange
restrictions on the repatriation of gains made on or income derived from "B"
Shares, subject to the payment of taxes imposed by China thereon.
Company law relating to companies limited by shares and regulations
regarding the issuing of shares by equity joint ventures have not yet been
developed on a national basis. The Shenzhen municipality issued regulations in
1992 relating to joint stock companies, and the Shanghai municipality has a
draft joint stock company law under review. Regulations governing the trading
of securities on both the Shenzhen and the Shanghai stock exchanges have been
issued by each municipality; there is no national securities legislation as
yet.
As of December 15, 1994, 171 companies had shares listed on The Shanghai
Securities Exchange, of which 32 also had "B" Shares listed. The total market
capitalization of the "B" Shares of these companies as at that date (which
includes equities and bonds) was approximately U.S. $1.52 billion. As of the
same date, 114 companies had shares listed on The Shenzhen Stock Exchange, of
which 22 also had "B" Shares listed. The total market capitalization of the
"B" Shares at that date was approximately HK $4.841 billion (U.S. $625.6
million).
HONG KONG -- AS A TRADE ENTREPOT AND FINANCE CENTER, HONG KONG'S VIABILITY HAS
BEEN INEXORABLY LINKED TO MAINLAND CHINA SINCE THE ESTABLISHMENT OF THE COLONY
IN 1841. HONG KONG REMAINS CHINA'S LARGEST TRADE PARTNER AND ITS LEADING
FOREIGN INVESTOR. In 1993, visible trade between Hong Kong and China exceeded
$32.6 billion, while Hong Kong accounts for approximately 34% of external
investment in China.
In the last two decades there has been a structural change in Hong Kong's
economy, with growth in the services sector outpacing manufacturing growth.
With more and more labor intensive manufacturing relocating to Southern China,
Hong Kong has developed its services sector, which in 1993 contributed 72.5%
of Gross Domestic Product.
In recent years large numbers of Hong Kong based companies have set up
factories in the southern province of Guangdong, where it is estimated that
Hong Kong companies employ between 2.5 and 3 million workers. The low cost of
setting up a factory in China and low wage rates have been the primary
attractions. While few Hong Kong companies in the service sector derive the
majority of their sales from China, activity there is increasing notably in
the construction, utilities, communications and tourism sectors. Examples
include China Light and Power, Hong Kong Telecom and Hopewell Holdings.
Although less noticeable than Hong Kong's investment in China, there has been
considerable growth in Chinese investment in Hong Kong over the last decade
and particularly in the last five years. In contrast to Japanese investment,
Chinese investment in Hong Kong typically involves the purchase of stakes in
existing companies. This has traditionally been in the banking and import/
export sectors. Recently, investment in property, manufacturing and
infrastructure projects has increased. The most active Chinese enterprise in
Hong Kong, the Bank of China Group, is the second largest banking group in
Hong Kong. Much as China has become the manufacturing capital for Hong Kong
companies, Hong Kong is the primary funding center for the development of
China through direct investment, syndicated loans, commercial paper and share
issues in Hong Kong by Chinese companies.
In view of the growing economic interaction between Hong Kong and Southern
China, it is increasingly meaningful to consider the concept of a Greater Hong
Kong economy consisting of Hong Kong and Guangdong Province, with a combined
population of 66 million and average per capita GDP of $1,500 per year. Given
the human, financial and technological resources in Hong Kong and the low wage
rates and infrastructural requirements of China, the economic rationale for
further integration of the two economies is considerable. In ensuring the role
of Hong Kong in the economy of Southern China, the challenge of policy makers
in Hong Kong is to see that the colony's infrastructure is capable of
accommodating the sustained 15% annual growth of the Guangdong economy, and
with it increasing trade and investment flows. Towards this end, the Hong Kong
government in 1989 unveiled PADS, the Port and Airport Development Strategy.
The project, estimated to cost $21 billion, is designed to allow Hong Kong's
cargo handling capacity to increase by four times between 1988 and 2011 and
its air traffic handling capacity to increase from 15 million passengers in
1988 to 50 million in 2011. Representatives of the Hong Kong and Chinese
governments are currently discussing the future of the PADS project and its
financing.
In the past, political considerations have hindered closer economic
integration between Hong Kong and China. It was largely in response to the
United Nations embargo on trade with China in the 1950s and 1960s that Hong
Kong developed a significant manufacturing base. In the last several years,
however, there has been an improvement in relations between China and Hong
Kong. In September 1991, Hong Kong and China concluded the Sino-British
Memorandum of Understanding, providing a framework for the PADS project. Of
even greater importance, the Basic Law, the outline for Hong Kong's government
post 1997, calls for Hong Kong's capitalist system to remain intact for an
additional fifty years after 1997 and sets out details for the integration of
Hong Kong into China after 1997.
TAIWAN -- BETWEEN 1960 AND 1994, TAIWAN'S GNP GREW FROM LESS THAN $2 BILLION
TO OVER $240 BILLION. The economic growth has been accompanied by a
transformation of domestic production from labor intensive to capital
intensive industries in the 1970s and finally to higher technology industries
in the 1980s. With over $85 billion, Taiwan has the world's largest foreign
exchange reserves. Taiwan companies continue to be attracted by China's low
labor costs, inexpensive land and less rigid environmental rules. It is
estimated that accumulated Taiwanese investment in China exceeds $3 billion.
Taiwanese listed companies include a number which invested indirectly in
China, primarily in the textiles, food and rubber industries. Given the
proximity of Taiwan to China, the cultural homogeneity and the compelling
economic incentive for further investment, the primary obstacle to greater
investment flows has been the prohibition by Taiwanese authorities of direct
investment in China. Based on discussions with Taiwanese companies and the
trend toward greater liberalization by the government of investment in China,
the Adviser believes that over the next several years the scope for investment
by Taiwanese companies in China will widen substantially and that many more
companies listed on The Taiwan Stock Exchange Corp. will have significant
interests in China.
OTHER COUNTRIES -- GIVEN THE PROXIMITY OF HONG KONG AND TAIWAN TO CHINA, AND
THEIR ETHNIC AND CULTURAL TIES, THE ADVISER BELIEVES THERE WILL BE AN INCREASE
IN THE NUMBER AND COMMITMENT OF LISTED COMPANIES IN THOSE TWO COUNTRIES DOING
BUSINESS IN CHINA. Although less visible to the public, listed companies
elsewhere in Asia are also becoming increasingly active in China.
While Guangdong Province has been the leading recipient of foreign
investment in China, there has also been considerable foreign investment by
Japanese companies in the Northeastern Provinces of Liaoning, Jilin, and
Heilongiang. As the major trading partner of this province, Japan is primarily
manufacturing light industrial products for re-export. Major Japanese projects
have been set up in the electronics and natural resources sectors in China.
While Thailand has been traditionally known as a recipient of foreign
investment, Chinese-managed listed companies in the banking, textiles and
packaging sectors have indicated their intention of expanding into China. In
Singapore, shipping, construction and hotel companies have been the first
sectors to do business in China while several Malaysian companies in the
manufacturing sector have invested in joint ventures in China. The Adviser
believes that growing China exposure will enhance the earnings growth of such
companies, making them attractive for investment.
See Appendix B to the Statement of Additional Information for further
information about the economic characteristics of and risks associated with
investing in China Region countries.
HOW THE FUND AND THE PORTFOLIO INVEST THEIR ASSETS
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THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF COMPANIES WHICH, IN THE OPINION OF THE INVESTMENT ADVISER, WILL
BENEFIT FROM THE ECONOMIC DEVELOPMENT AND GROWTH OF CHINA ("CHINA GROWTH
COMPANIES"). A significant percentage of the Portfolio's assets will be
invested in the securities markets of countries in the China Region (or
Greater China), consisting of Hong Kong, China, Taiwan, South Korea,
Singapore, Malaysia, Thailand, Indonesia and the Philippines. The Portfolio
will, under normal market conditions, invest at least 65% of its total assets
in equity securities of China growth companies ("Greater China investments").
However, it is expected that substantially all of the Portfolio's assets will
normally be invested in equity securities, warrants and equity options. China
growth companies consist of companies that (a) are located in or whose
securities are principally traded in a China Region country, (b)(i) have at
least 50% of their assets in one or more China Region countries or (ii) derive
at least 50% of their gross sales revenues or profits from providing goods or
services to or from within one or more China Region countries and (c)(i) have
at least 35% of their assets in China, or (ii) derive at least 35% of their
gross sales revenues or profits from providing goods or services to or from
within China or (iii) have manufacturing or other operations in China that are
significant to such companies. Greater China investments are typically listed
on stock exchanges or traded in the over-the-counter markets in countries in
the China Region. The principal offices of these companies, however, may be
located outside these countries. The Portfolio may invest 25% or more of its
total assets in the securities of issuers located in any one country in the
China Region. The Portfolio has invested more than 25% of its total assets in
issuers located in Hong Kong, but the Adviser currently expects the Portfolio
ordinarily will not invest more than 10% of its total assets in any other
country.
Equity securities, for purposes of the 65% policy, will be limited to
common and preferred stocks; equity interests in trusts, partnerships, joint
ventures and other unincorporated entities or enterprises; special classes of
shares available only to foreign investors in markets that restrict the
ownership of certain classes of equity to nationals or residents of the
country; convertible preferred stocks; and convertible investment grade debt
instruments. A debt security is investment grade if it is rated BBB or above
by Standard & Poor's Ratings Group ("S&P") or Baa or above by Moody's
Investors Service, Inc. ("Moody's") or determined to be of comparable quality
by the Adviser. Debt securities rated BBB by S&P or Baa by Moody's have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade debt securities. The
Portfolio will promptly dispose of any convertible debt instrument which is
rated or determined by the Adviser to be below investment grade subsequent to
acquisition by the Portfolio. Direct investments in China growth companies
will not exceed 10% of the Portfolio's total assets. See "Special Investment
Methods and Risk Factors -- Direct Investments" for a discussion of the risks
associated with direct investments.
In addition to its investments in equity securities, the Portfolio may
invest up to 5% of its net assets in options on equity securities and up to 5%
of its net assets in warrants, including options and warrants traded in over-
the-counter markets. The Portfolio will not, under normal market conditions,
invest more than 35% of its total assets in equity securities other than
Greater China investments, warrants, options on securities and indices,
options on currency, futures contracts and options on futures, forward foreign
currency exchange contracts, currency swaps and any other non-equity
investments. See Appendix A and the Fund's Statement of Additional Information
for a description of certain active management techniques available to the
Portfolio. The Portfolio will not invest in debt securities, other than
investment grade convertible debt instruments, except for temporary defensive
purposes, as described below. The Portfolio will not invest more than 10% of
its assets in the securities of issuers in any country outside the China
Region.
The Portfolio may, for temporary defensive purposes, invest more than 35%
of its total assets in debt securities of foreign and United States companies,
foreign governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in money
market instruments denominated in U.S. dollars or a foreign currency. These
money market instruments include, but are not limited to, negotiable or short-
term deposits with domestic or foreign banks with total surplus and undivided
profits of at least $50 million; high quality commercial paper; and repurchase
agreements maturing within seven days with domestic or foreign dealers, banks
and other financial institutions deemed to be creditworthy under guidelines
approved by the Board of Trustees of the Portfolio. The commercial paper in
which the Portfolio may invest will, at the time of purchase, be rated P-1 or
better by Moody's or A-1 or better by S&P or, if unrated, will be of
comparable high quality as determined by the Adviser.
SPECIAL INVESTMENT METHODS AND RISK FACTORS
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INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S.
Government and domestic corporations. The values of foreign investments are
affected by changes in currency rates or exchange control regulations,
application of foreign tax laws, including withholding taxes, changes in
governmental administration or economic or monetary policy (in this country or
abroad) or changed circumstances in dealings between nations. Costs are
incurred in connection with conversions between various currencies. In
addition, foreign brokerage commissions are generally higher than in the
United States, and foreign securities markets may be less liquid, more
volatile and less subject to governmental supervision than in the United
States. Investments in foreign issuers could be affected by other factors not
present in the United States, including expropriation, confiscatory taxation,
lack of uniform accounting and auditing standards and potential difficulties
in enforcing contractual obligations. Transactions in the securities of
foreign issuers could be subject to settlement delays.
Since the Portfolio will, under normal market conditions, invest at least
65% of its total assets in Greater China investments, its investment
performance will be especially affected by events affecting China growth
companies. The value and liquidity of Greater China investments may be
affected favorably or unfavorably by political, economic, fiscal, regulatory
or other developments in the China Region or neighboring regions. The extent
of economic development, political stability and market depth of different
countries in the China Region varies widely. Certain China Region countries,
including China, Indonesia, Malaysia, the Philippines and Thailand, are either
comparatively underdeveloped or in the process of becoming developed. Greater
China investments typically involve greater potential for gain or loss than
investments in securities of issuers in developed countries. In comparison to
the United States and other developed countries, developing countries may have
relatively unstable governments and economies based on only a few industries.
Given the Portfolio's investments, the Portfolio will likely be particularly
sensitive to changes in China's economy as the result of any reversals of
economic liberalization, political unrest or changes in China's trading
status.
SECURITIES TRADING MARKETS. THE SECURITIES MARKETS IN THE CHINA REGION ARE
SUBSTANTIALLY SMALLER, LESS LIQUID AND MORE VOLATILE THAN THE MAJOR SECURITIES
MARKETS IN THE UNITED STATES. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which
may limit the number of shares available for investment by the Portfolio. The
prices at which the Portfolio may acquire investments may be affected by
trading by persons with material non-public information and by securities
transactions by brokers in anticipation of transactions by the Portfolio in
particular securities. Similarly, volume and liquidity in the bond markets in
the China Region are less than in the United States and, at times, price
volatility can be greater than in the United States. The limited liquidity of
securities markets in the China Region may also affect the Portfolio's ability
to acquire or dispose of securities at the price and time it wishes to do so.
Accordingly, during periods of rising securities prices in the more illiquid
China Region securities markets, the Portfolio's ability to participate fully
in such price increases may be limited by its investment policy of investing
not more than 15% of its net assets in illiquid securities. Conversely, the
Portfolio's inability to dispose fully and promptly of positions in declining
markets will cause the Portfolio's net asset value to decline as the value of
the unsold positions is marked to lower prices. In addition, China Region
securities markets are susceptible to being influenced by large investors
trading significant blocks of securities.
The Chinese, Hong Kong and Taiwan stock markets are undergoing a period of
growth and change which may result in trading volatility and difficulties in
the settlement and recording of transactions, and in interpreting and applying
the relevant law and regulations. In particular, the securities industry in
China is not well developed. China has no securities laws of nationwide
applicability. The municipal securities regulations adopted by Shanghai and
Shenzhen municipalities are very new, as are their respective securities
exchanges and other self-regulatory organizations. In addition, Chinese
stockbrokers and other intermediaries may not perform as efficiently as their
counterparts in the United States and other more developed securities markets.
THE PORTFOLIO WILL INVEST IN CHINA REGION COUNTRIES WITH EMERGING ECONOMIES OR
SECURITIES MARKETS. Political and economic structures in many of such
countries may be undergoing significant evolution and rapid development, and
such countries may lack the social, political and economic stability
characteristic of the United States. Certain of such countries may have, in
the past, failed to recognize private property rights and have at times
nationalized or expropriated the assets of private companies. As a result, the
risks described above, including the risks of nationalization or expropriation
of assets, may be heightened. In addition, unanticipated political or social
developments may affect the values of the Portfolio's investments in those
countries and the availability to the Portfolio of additional investments in
those countries.
The exchanges on which the Portfolio may purchase securities in the China
Region which are believed to provide sufficiently liquid markets so that the
securities acquired by the Portfolio on such markets need not be considered
illiquid securities currently include: Hong Kong -- The Stock Exchange of Hong
Kong Limited; South Korea -- The Korea Stock Exchange; Malaysia -- The Kuala
Lumpur Stock Exchange; Singapore -- The Stock Exchange of Singapore Limited;
Taiwan -- The Taiwan Stock Exchange Corp.; Thailand -- The Securities Exchange
of Thailand; Indonesia -- The Jakarta Stock Exchange; Philippines -- The
Manila and Makati Stock Exchange; China -- The Shanghai Securities Exchange
and The Shenzhen Stock Exchange.
ECONOMIES OF COUNTRIES IN THE CHINA REGION MAY DIFFER FAVORABLY OR UNFAVORABLY
FROM THE U.S. ECONOMY IN SUCH RESPECTS AS RATE OF GROWTH OF GROSS NATIONAL
PRODUCT, RATE OF INFLATION, CAPITAL REINVESTMENT, RESOURCE SELF-SUFFICIENCY
AND BALANCE OF PAYMENTS POSITION. As export-driven economies, the economies of
countries in the China Region are affected by developments in the economies of
their principal trading partners. Revocation by the United States of China's
"Most Favored Nation" trading status, which the U.S. President and Congress
reconsider annually, would adversely affect the trade and economic development
of China and Hong Kong. Hong Kong and Taiwan have limited natural resources,
resulting in dependence on foreign sources for certain raw materials and
economic vulnerability to global fluctuations of price and supply.
China governmental actions can have a significant effect on the economic
conditions in the China Region, which could adversely affect the value and
liquidity of the Portfolio's investments. Although the Chinese Government has
recently begun to institute economic reform policies, there can be no
assurances that it will continue to pursue such policies or, if it does, that
such policies will succeed.
China does not have a comprehensive system of laws, although substantial
changes have occurred in this regard in recent years. The corporate form of
organization has only recently been permitted in China and national
regulations governing corporations were introduced only in May, 1992. Prior to
the introduction of such regulations Shanghai had adopted a set of corporate
regulations applicable to corporations located or listed in Shanghai, and the
relationship between the two sets of regulations is not clear. Consequently,
until a firmer legal basis is provided, even such fundamental corporate law
tenets as the limited liability status of Chinese issuers and their authority
to issue shares remain open to question. Laws regarding fiduciary duties of
officers and directors and the protection of shareholders are not well
developed. China's judiciary is relatively inexperienced in enforcing the laws
that exist, leading to a higher than usual degree of uncertainty as to the
outcome of any litigation. Even where adequate law exists in China, it may be
impossible to obtain swift and equitable enforcement of such law, or to obtain
enforcement of the judgment by a court of another jurisdiction. The bankruptcy
laws pertaining to state enterprises have rarely been used and are untried in
regard to an enterprise with foreign shareholders, and there can be no
assurance that such shareholders, including the Portfolio, would be able to
realize the value of the assets of the enterprise or receive payment in
convertible currency. As the Chinese legal system develops, the promulgation
of new laws, changes to existing laws and the preemption of local laws by
national laws may adversely affect foreign investors, including the Portfolio.
The uncertainties faced by foreign investors in China are exacerbated by the
fact that many laws, regulations and decrees of China are not publicly
available, but merely circulated internally.
DIRECT INVESTMENTS. The Portfolio may invest up to 10% of its total assets in
direct investments in China growth companies. Direct investments include (i)
the private purchase from an enterprise of an equity interest in the
enterprise in the form of shares of common stock or equity interests in
trusts, partnerships, joint ventures or similar enterprises, and (ii) the
purchase of such an equity interest in an enterprise from a principal investor
in the enterprise. In each case, the Portfolio will, at the time of making the
investment, enter into a shareholder or similar agreement with the enterprise
and one or more other holders of equity interests in the enterprise. The
Adviser anticipates that these agreements will, in appropriate circumstances,
provide the Portfolio with the ability to appoint a representative to the
board of directors or similar body of the enterprise and for eventual
disposition of the Portfolio's investment in the enterprise. Such a
representative of the Portfolio will be expected to provide the Portfolio with
the ability to monitor its investment and protect its rights in the investment
and will not be appointed for the purpose of exercising management or control
of the enterprise.
Certain of the Portfolio's direct investments, particularly in China, will
probably include investments in smaller, less seasoned companies. These
companies may have limited product lines, markets or financial resources, or
they may be dependent on a limited management group. The Adviser does not
anticipate making direct investments in start-up operations, although it is
expected that in some cases the Portfolio's direct investments will fund new
operations for an enterprise which itself is engaged in similar operations or
is affiliated with an organization that is engaged in similar operations. Such
direct investments may be made in entities that are reasonably expected in the
foreseeable future to become China growth companies, either by expanding
current operations or establishing significant operations in China.
Direct investments may involve a high degree of business and financial
risk that can result in substantial losses. Because of the absence of any
public trading market for these investments, the Portfolio may take longer to
liquidate these positions than would be the case for publicly traded
securities. Although these securities may be resold in privately negotiated
transactions, the prices on these sales could be less than those originally
paid by the Portfolio. Furthermore, issuers whose securities are not publicly
traded may not be subject to public disclosure and other investor protection
requirements applicable to publicly traded securities. If such securities are
required to be registered under the securities laws of one or more
jurisdictions before being resold, the Portfolio may be required to bear the
expenses of registration. In addition, in the event the Portfolio sells
unlisted securities, any capital gains realized on such transactions may be
subject to higher rates of taxation than taxes payable on the sale of listed
securities.
LENDING OF PORTFOLIO SECURITIES. The Portfolio may seek to earn additional
income by lending portfolio securities to broker-dealers or other
institutional borrowers. As with other extensions of credit there are risks of
delay in recovery or even loss of rights in the securities loaned if the
borrower of the securities fails financially. However, the loans will be made
only to organizations deemed by the Adviser to be sufficiently creditworthy
and when, in the judgment of the Adviser, the consideration which can be
earned from securities loans of this type justifies the attendant risk.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements with
respect to its permitted investments, but currently intends to do so only with
member banks of the Federal Reserve System or with primary dealers in U.S.
Government securities. In the event of the bankruptcy of the other party to a
repurchase agreement, the Portfolio might experience delays in recovering its
cash. To the extent that, in the meantime, the value of the securities the
Portfolio purchased may have decreased, the Portfolio could experience a loss.
At no time will the Portfolio commit more than 15% of its net assets to
repurchase agreements which mature in more than seven days and other illiquid
securities.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to
10% of its total assets, calculated at the time of purchase, in the securities
of other investment companies unaffiliated with the Adviser or the Manager
that have the characteristics of closed-end investment companies. The
Portfolio may not invest more than 5% of its total assets in the securities of
any one investment company or acquire more than 3% of the voting securities of
any other investment company. The Portfolio will indirectly bear its
proportionate share of any management fees paid by investment companies in
which it invests in addition to the advisory fee paid by the Portfolio.
PORTFOLIO TURNOVER. While it is the policy of the Portfolio to seek long-term
capital appreciation, and generally not to engage in trading for short-term
gains, the Portfolio will effect portfolio transactions without regard to its
holding period if, in the judgment of the Adviser, such transactions are
advisable in light of a change in circumstances of a particular company or
within a particular industry, or in light of general market, economic or
political conditions. Accordingly, the Portfolio may engage in short-term
trading under such circumstances. Portfolio expenses increase with turnover of
securities. It is anticipated that the annual portfolio turnover rate of the
Portfolio will be not more than 100%.
CERTAIN INVESTMENT POLICIES. The Fund and the Portfolio have adopted certain
fundamental investment restrictions and policies which are enumerated in
detail in the Statement of Additional Information and which may not be changed
unless authorized by a shareholder vote and an investor vote, respectively.
Among these fundamental restrictions, neither the Fund nor the Portfolio may
(1) borrow money except from banks or through reverse repurchase agreements
and in an amount not exceeding one-third of its total assets; or (2) with
respect to 75% of its total assets, invest more than 5% of its total assets in
the securities of any one issuer, other than U.S. Government securities or, in
the case of the Fund, interests in the Portfolio, or acquire more than 10% of
the outstanding voting securities of any one issuer. Except with respect to
the Portfolio's borrowing limitation, investment restrictions are considered
at the time of acquisition of assets; the sale of portfolio assets is not
required in the event of a subsequent change in circumstances. As a matter of
fundamental policy the Portfolio will invest less than 25% of its total assets
in the securities, other than U.S. Government securities, of issuers in any
one industry. However, the Portfolio is permitted to invest 25% or more of its
total assets in (i) the securities of issuers located in any one country in
the China Region and (ii) assets denominated in the currency of any one
country.
Except for the fundamental investment restrictions and policies
specifically identified above and those enumerated in the Statement of
Additional Information, the investment objective and policies of the Fund and
the Portfolio are not fundamental policies and accordingly may be changed by
the Trustees of the Trust and the Portfolio without obtaining the approval of
the shareholders of the Fund or the investors in the Portfolio, as the case
may be. If any changes were made, the Fund might have investment objectives
different from the objectives which an investor considered appropriate at the
time the investor became a shareholder in the Fund.
As a matter of nonfundamental policy, neither the Fund nor the Portfolio
(i) intends to borrow for leverage purposes or may purchase any securities if,
at the time of such purchase, permitted borrowings exceed 5% of the value of
the Portfolio's or the Fund's total assets, as the case may be, or (ii) is
permitted to invest more than 15% of its net assets in unmarketable
securities, over-the-counter options, repurchase agreements maturing in more
than seven days and other illiquid securities. Although otherwise permissible
under the Fund's investment restrictions, the Fund has no present intention of
investing its assets in securities or instruments other than interests in the
Portfolio and cash.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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EV TRADITIONAL GREATER CHINA GROWTH FUND IS A DIVERSIFIED SERIES OF EATON
VANCE GROWTH TRUST (THE "TRUST"), A BUSINESS TRUST ESTABLISHED UNDER
MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST DATED MAY 25, 1989, AS
AMENDED, AND IS THE SUCCESSOR TO A MASSACHUSETTS CORPORATION WHICH COMMENCED
ITS INVESTMENT COMPANY OPERATIONS IN 1954. The Trustees of the Trust are
responsible for the overall management and supervision of its affairs. The
Fund has one class of shares of beneficial interest, an unlimited number of
which may be issued. Each share represents an equal proportionate beneficial
interest in the Fund. When issued and outstanding, the shares are fully paid
and nonassessable by the Fund and redeemable as described under "How to Redeem
Fund Shares." Shareholders are entitled to one vote for each full share held.
Fractional shares may be voted proportionately. Shares have no preemptive or
conversion rights and are freely transferable. Upon liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets of the Fund
available for distribution to shareholders.
GREATER CHINA GROWTH PORTFOLIO (THE "PORTFOLIO"), IS ORGANIZED AS A TRUST
UNDER THE LAWS OF THE STATE OF NEW YORK, AND IS 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. Investors
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 all of its investable assets in an interest in the
Portfolio, 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 different
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. As a result of the Fund's investment in the Portfolio, the
Fund's aggregate expenses, including its allocable share of expenses of the
Portfolio, may be higher than if the Fund were organized as an historically
structured mutual fund. For information regarding the investment objective,
policies and restrictions of the Portfolio, see "How the Fund and the
Portfolio Invest their Assets" and "Special Investment Methods and Risk
Factors." Further information regarding the investment practices of the
Portfolio may also 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 $500 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. 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 all 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 the availability of 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 funds investing in the
Portfolio may be adversely affected by the actions of larger funds investing
in the Portfolio. For example, if a large fund withdraws from the Portfolio,
the remaining funds 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 Manager 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, a Fund could
incur brokerage, tax or other charges in converting the securities to cash. In
addition, the distribution in kind may result in a less diversified portfolio
of investments or adversely affect the liquidity of such Fund. Notwithstanding
the above, there are other means for meeting shareholder redemption requests,
such as borrowing.
One independent Trustee of the Portfolio also serves as a Trustee of the
Trust. The Trustees of the Trust and the Portfolio have adopted written
procedures for resolution of conflicts of interest which might arise as a
result of the existence of one common independent Trustee on the two boards.
For further information concerning the Trustees and officers of each of the
Trust and the Portfolio, see the Statement of Additional Information.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE MANAGEMENT (HONG KONG) LIMITED (THE "ADVISER") AS ITS INVESTMENT
ADVISER. The Adviser, acting under the supervision of the Portfolio's
Trustees, manages the Portfolio's investments and affairs. The Portfolio is
co-managed by Robert Lloyd George and Scobie Dickinson Ward.
The Adviser, which maintains an office in Hong Kong, is a corporation
formed on September 27, 1991 under the laws of Hong Kong. The Adviser is
registered as an investment adviser with the Securities and Exchange
Commission the ("Commission"). The Adviser is a subsidiary of Lloyd George
Management (B.V.I.) Limited ("LGM"). LGM and its subsidiaries act as
investment adviser to various individual and institutional clients with total
assets under management of more than $1 billion.
LGM specializes in providing investment management services with respect
to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages portfolios for
both private clients and institutional investors seeking long-term capital
growth. LGM's core investment team consists of ten experienced investment
professionals who have worked together over a number of years successfully
managing client portfolios in non-U.S. stock markets. The team has a unique
knowledge of, and experience with, Asian emerging markets. LGM is ultimately
controlled by the Hon. Robert J.D. Lloyd George, President and Trustee of the
Portfolio and Chairman and Chief Executive Officer of the Adviser. LGM's only
business is portfolio management. Eaton Vance's parent is a shareholder of
LGM.
LGM and the Adviser have adopted a conservative management style,
providing a blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, LGM and the Adviser maintain a network of international
contacts in order to monitor international economic and stock market trends
and offer clients a global management service.
THE HONOURABLE ROBERT LLOYD GEORGE. Chairman. Born in London in 1952 and
educated at Eton College, where he was a King's Scholar, and at Oxford
University. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services Ltd., which, under his supervision, grew in
assets under management to over $1 billion from 1984 to 1991. Much of this
growth was based on the successful launch of such products as the Asian Growth
Fund (1984), Pacific Gold Fund (1986), Siam Fund (1988), Malacca Fund (1989),
Manila Fund (1989) and the Himalayan Fund (1990).
In 1983 Mr. Lloyd George launched and managed the Henderson Japan Special
Situations Trust. Prior to that he spent four years with the Fiduciary Trust
Company of New York researching international securities, in the United States
and Europe, for the United Nations Pension Fund. Mr. Lloyd George is the
author of numerous published articles and two books -- "A Guide to Asian Stock
Markets" (Longmans, Hong Kong, 1989) and "The East West Pendulum" (Woodhead -
Faulkner, Cambridge, 1991).
WILLIAM WALTER RALEIGH KERR. Finance Director and Chief Operating
Officer. Born in 1950 and educated at Ampleforth and Oxford. Mr. Kerr
qualified as a Chartered Accountant at Thomson McLintock & Co. before joining
The Oldham Estate Company plc as Financial Controller. Prior to joining LGM,
Mr. Kerr was a Director of Banque Indosuez's corporate finance subsidiary,
Financiere Indosuez Limited, in London. Prior to that Mr. Kerr worked for
First Chicago Limited.
MICHAEL TZE-HAU LEE. Director. Born in Hong Kong in 1961 and educated at
Bowdoin College, Maine, and at Boston University School of Management where he
obtained an MBA. Mr. Lee became a director of Indosuez Asia Investment
Services Ltd. in 1987. Prior thereto Mr. Lee worked as an assistant to the
President of Elder Care Services in the United States. Mr. Lee is also a
Director of Hysan Development Company Ltd., a public company listed on The
Hong Kong Stock Exchange. Mr. Lee is fluent in the Cantonese dialect of the
Chinese language.
SCOBIE DICKINSON WARD. Director. Born in 1966, cum laude graduate of both
Phillips Academy Andover, and Harvard College. Mr. Ward joined Indosuez Asia
Investment Services in 1989, where he managed the $100 million Himalayan Fund,
and the Indosuez Tasman Fund, investing in Australia and New Zealand. Messrs.
Ward and Lloyd George manage Eaton Vance's Emerging Markets Portfolio and
South Asia Portfolio (which invests in India and the Indian subcontinent).
M. F. TANG. Director. Born in 1946 and educated in Hong Kong. Mr. Tang is a
Fellow of the Chartered Association of Certified Accountants. Mr. Tang joined
LGM having worked for Australian Mutual Provident Society in Sydney where he
was a Portfolio Manager responsible for Asian Equities. Prior thereto Mr. Tang
worked for Barclays Australia Investment Services Ltd. From 1978 to 1986 Mr.
Tang worked for Barings International Investment Management and prior to that
he spent six years with Peat Marwick Mitchell & Co. Mr. Tang is fluent in the
Cantonese and Mandarin dialects of the Chinese language.
The Adviser, acting under the general supervision of the Board of Trustees
of the Portfolio, manages the investment of the Portfolio's assets. Under its
investment advisory agreement with the Portfolio, the Adviser receives a
monthly advisory fee of 0.0625% (equivalent to 0.75% annually) of the average
daily net assets of the Portfolio up to $500 million, which fee declines at
intervals above $500 million. As at August 31, 1994, the Portfolio had net
assets of $732,612,677. For the fiscal year ended August 31, 1994, the
Portfolio paid the Adviser advisory fees equivalent to 0.74% (annualized) of
the Portfolio's average daily net assets for such period. The Adviser also
furnishes for the use of the Portfolio office space and all necessary office
facilities, equipment and personnel for servicing the investments of the
Portfolio.
The Adviser places the portfolio securities transactions of the Portfolio
with many broker-dealer firms and uses its best efforts to obtain execution of
such transactions at prices which are advantageous to the Portfolio and at
reasonably competitive commission rates. Subject to the foregoing, the Adviser
may consider sales of shares of the Fund as a factor in the selection of firms
to execute portfolio transactions.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF APPROXIMATELY $15 BILLION. Eaton Vance is a wholly-owned
subsidiary of Eaton Vance Corp., a publicly held holding company. Eaton Vance
Corp., through its subsidiaries and affiliates, engages in investment
management and marketing activities, fiduciary and banking services, oil and
gas operations, real estate investment, consulting and management, and
development of precious metals properties. Eaton Vance Corp. also owns 2% of
the A Shares and 20% of the Preferred Shares issued by LGM.
Eaton Vance, acting under the general supervision of the Boards of
Trustees of the Trust and the Portfolio, manages and administers the business
affairs of the Fund and the Portfolio. Eaton Vance's services include
monitoring and providing reports to the Trustees of the Trust and the
Portfolio concerning the investment performance achieved by the Adviser for
the Portfolio, recordkeeping, preparation and filing of documents required to
comply with Federal and state securities laws, supervising the activities of
the transfer agent of the Fund and the custodian of the Portfolio, providing
assistance in connection with Trustees' and shareholders' meetings and other
management and administrative services necessary to conduct the business of
the Fund and the Portfolio. Eaton Vance does not provide any investment
management or advisory services to the Portfolio or the Fund. Eaton Vance also
furnishes for the use of the Fund and the Portfolio office space and all
necessary office facilities, equipment and personnel for managing and
administering the business affairs of the Fund and the Portfolio.
Under its management contract with the Fund, Eaton Vance receives a
monthly fee in the amount of 1/48 of 1% (equal to 0.25% annually) of the
average daily net assets of the Fund up to $500 million, which fee declines at
intervals above $500 million. As of August 31, 1994, the Fund had net assets
of $316,229,250. For the fiscal year ended August 31, 1994, Eaton Vance earned
management fees equivalent to 0.25% (annualized) of the Fund's average daily
net assets for such period. In addition, under its administration agreement
with the Portfolio, Eaton Vance receives a monthly fee in the amount of 1/48
of 1% (equal to 0.25% annually) of the average daily net assets of the
Portfolio up to $500 million, which fee declines at intervals above $500
million. For the fiscal year ended August 31, 1994, Eaton Vance earned
administration fees from the Portfolio equivalent to 0.25% (annualized) of the
Portfolio's average daily net assets for such period. The combined advisory,
management and administration fees payable by the Fund and the Portfolio are
higher than similar fees charged by most other investment companies.
The Fund and the Portfolio, as the case may be, will each be responsible
for all respective costs and expenses not expressly stated to be payable by
the Adviser under the investment advisory agreement or Eaton Vance under the
management contract or the administration agreement. Such costs and expenses
to be borne by each of the Fund or the Portfolio, as the case may be, include,
without limitation, custody and transfer agency fees and expenses, including
those incurred for determining net asset value and keeping accounting books
and records; expenses of pricing and valuation services; the cost of share
certificates; membership dues in investment company organizations; brokerage
commissions and fees; fees and expenses of registering under the securities
laws; expenses of reports to shareholders and investors; proxy statements, and
other expenses of shareholders' or investors' meetings; insurance premiums,
printing and mailing expenses; interest, taxes and corporate fees; legal and
accounting expenses; compensation and expenses of Trustees not affiliated with
Eaton Vance or the Adviser; and investment advisory, management and
administration fees. The Fund or the Portfolio, as the case may be, will also
each bear expenses incurred in connection with litigation in which the Fund or
the Portfolio, as the case may be, is a party and any legal obligation to
indemnify its respective officers and Trustees with respect thereto.
DISTRIBUTION PLAN
- ------------------------------------------------------------------------------
IN ADDITION TO MANAGEMENT FEES AND OTHER EXPENSES, THE FUND PAYS FOR CERTAIN
EXPENSES PURSUANT TO A DISTRIBUTION PLAN (THE "PLAN") DESIGNED TO MEET THE
REQUIREMENTS OF RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE "1940
ACT"). The Plan provides that the Fund will pay a monthly distribution fee to
the Principal Underwriter in an amount equal to the aggregate of (a) .50% of
that portion of the Fund's average daily net assets for any fiscal year which
is attributable to shares of the Fund which have remained outstanding for less
than one year and (b) .25% of that portion of the Fund's average daily net
assets for any fiscal year which is attributable to shares of the Fund which
have remained outstanding for more than one year. Aggregate payments to the
Principal Underwriter under the Plan are limited to those permissible,
pursuant to a rule of the National Association of Securities Dealers, Inc. For
the fiscal year ended August 31, 1994, the Fund paid distribution fees under
the Plan to the Principal Underwriter representing 0.46% (annualized) of the
Fund's average daily net assets.
The Plan also provides that the Fund will pay a quarterly service fee to
the Principal Underwriter in an amount equal on an annual basis to .25% of
that portion of the Fund's average daily net assets for any fiscal year which
is attributable to shares of the Fund which have remained outstanding for more
than one year; from such service fee the Principal Underwriter expects to pay
a quarterly service fee to financial service firms ("Authorized Firms"), as
compensation for providing personal services and/or the maintenance of
shareholder accounts, with respect to shares sold by such Firms which have
remained outstanding for more than one year. The Trustees of the Trust have
implemented the Plan by authorizing the Fund to make quarterly service fee
payments to the Principal Underwriter not to exceed on an annual basis .25% of
that portion of the Fund's average daily net assets for any fiscal year which
is attributable to shares of the Fund which have remained outstanding for more
than one year. Service fee payments to Authorized Firms will be in addition to
sales charges on Fund shares which are reallowed to such Firms. To the extent
that the entire amount of such service fee payments are not paid to such
Firms, the balance will serve as compensation for personal and account
maintenance services furnished by the Principal Underwriter. The Principal
Underwriter may realize a profit from these arrangements. If the Plan is
terminated or not continued in effect, the Fund has no obligation to reimburse
the Principal Underwriter for amounts expended by the Principal Underwriter in
distributing shares of the Fund. For the fiscal year ended August 31, 1994,
the Fund made service fee payments under the Plan equivalent to 0.04%
(annualized) of the Fund's average daily net assets for such year.
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 substantially all of 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 share and the public offering price
based thereon. 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) based on market or fair value in the manner authorized by the
Trustees of the Portfolio, with special provisions for valuing debt
obligations, short-term investments, foreign securities, direct investments,
hedging instruments and assets not having readily available market quotations,
if any. 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.
- ------------------------------------------------------------------------------
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 effective public offering price, which price is based on the
effective net asset value per share plus the applicable sales charge. The Fund
receives the net asset value, while the sales charge is divided between the
Authorized Firm and the Principal Underwriter. The Principal Underwriter will
furnish the names of Authorized Firms to an investor upon request. The Fund
may suspend the offering of shares at any time and may refuse an order for the
purchase of shares.
The sales charge may vary depending on the size of the purchase and the
number of shares of Eaton Vance funds the investor may already own, any
arrangement to purchase additional shares during a 13-month period, the type
of investor or special purchase programs. Complete details of how investors
may purchase shares at reduced sales charges under a Statement of Intention,
Right of Accumulation, or various employee benefit plans are available from
Authorized Firms or from the Principal Underwriter.
The current sales charges are:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER DISCOUNT
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE AMOUNT INVESTED OFFERING PRICE OFFERING PRICE
- ------------------ --------------- ---------------- ----------------
<S> <C> <C> <C>
Under $100,000 ................................................. 4.99% 4.75% 4.00%
$100,000 but less than $250,000 ................................ 3.90 3.75 3.15
$250,000 but less than $500,000 ................................ 2.83 2.75 2.30
$500,000 but less than $1,000,000 .............................. 2.04 2.00 1.70
$1,000,000 or more ............................................. 0<F1> 0<F1> 0<F2>
<FN>
<F1> No sales charge is payable at the time of purchase on investments of $1
million or more. A contingent deferred sales charge ("CDSC") of 1% will be
imposed on such investments, as described below, in the event of certain
redemption transactions within 18 months of purchase. The CDSC will be
waived on redemptions by employee retirement plans organized under the
Internal Revenue Code relating to distributions to plan participants or
beneficiaries upon retirement, disability or death.
<F2> The Principal Underwriter may pay a commission to Authorized Firms who
initiate and are responsible for purchases of $1 million or more as
follows: 1.00% on sales up to $2 million, plus 0.80% on the next $1
million, 0.20% on the next $2 million and 0.08% on the excess over $5
million.
</TABLE>
The Principal Underwriter may at times allow discounts up to the full
sales charge. During periods when the discount includes the full sales charge,
such Firms may be deemed to be underwriters as that term is defined in the
Securities Act of 1933.
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.
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 as follows: The Shareholder
Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104. The $1,000
minimum initial investment is waived for Bank Draft Investing accounts, which
may be established with an investment of $50 or more. See "Eaton Vance
Shareholder Services".
Shares of the Fund may be sold at net asset value to current and retired
Directors and Trustees of Eaton Vance funds, including the Portfolio; to
officers and employees and clients of Eaton Vance, the Adviser and their
respective affiliates; to registered representatives and employees of
Authorized Firms; bank employees who refer customers to registered
representatives of Authorized Firms; and to such persons' spouses and children
under the age of 21 and their beneficial accounts. Shares may also be issued
at net asset value in connection with the merger of an investment company with
the Fund and to investors making an investment as part of a fixed fee program
whereby an entity unaffiliated with Eaton Vance provides multiple investment
services, such as management, brokerage and custody.
No initial sales charge and no contingent deferred sales charge will be
payable or imposed with respect to shares of the Fund purchased by retirement
plans qualified under Section 401, 403(b) or 457 of the Internal Revenue Code
("Eligible Plans"). In order to purchase shares without a sales charge, the
plan sponsor of an Eligible Plan must notify the transfer agent of the Fund of
its status as an Eligible Plan. Participant accounting services (including
trust fund reconciliation services) will be offered only through third party
record-keepers and not by EVD. The Fund's Principal Underwriter may pay
commissions to Authorized Firms who initiate and are responsible for purchases
of shares of the Fund by Eligible Plans of up to 1.00% of the amount invested
in such shares.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent,
will receive securities acceptable to Eaton Vance, as Manager, in exchange for
Fund shares at the applicable public offering price shown 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
public offering price per Fund share on the day such proceeds are received.
Eaton Vance will use reasonable efforts to obtain the current market price for
such securities but does not guarantee the best 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 Traditional Greater China Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional Greater China 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, must contact Eaton Vance to determine
whether the securities are acceptable before forwarding such securities to
IBT. Eaton Vance reserves the right to reject any securities. Exchanging
securities for Fund shares may create a taxable gain or loss. Investors should
consult their 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 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 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 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 and reduced by the amount
of 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 or repurchase may be delayed up to 15 days from
the purchase date when the purchase check has not yet cleared. Redemptions or
repurchases may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem Fund accounts with balances of less than $500. 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 if the cause of the low account
balance was a reduction in the net asset value of Fund shares.
If shares have been purchased at net asset value with no initial sales
charge by virtue of the purchase having been in the amount of $1 million or
more and are redeemed within 18 months after the end of the calendar month in
which the purchase was made, a CDSC of 1% will be imposed on such redemption.
The CDSC will be retained by the Principal Underwriter. The CDSC will be
imposed on an amount equal to the lesser of the current market value or the
original purchase price of the shares redeemed. Accordingly, no CDSC will be
imposed on increases in account value above the initial purchase price,
including any dividends or distributions that have been reinvested in
additional shares. In determining whether a CDSC is applicable to a
redemption, the calculation will be made in a manner that results in the
lowest possible rate being charged. It will be assumed that redemptions are
made first from any shares in the shareholder's account that are not subject
to a CDSC.
The CDSC is waived for redemptions involving certain liquidation, merger
or acquisition transactions involving other investment companies. If a
shareholder reinvests redemption proceeds within the 30-day period and in
accordance with the conditions set forth under "Eaton Vance Shareholder
Services -- Reinvestment Privilege", the shareholder's account will be
credited with the amount of any CDSC paid on such redeemed shares.
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual
reports are audited by the Fund's independent certified public accountants.
Shortly after the end of each year, the Fund will furnish all shareholders
with information necessary for preparing Federal and state income 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 investment
plans, statements may be sent only quarterly). THE LIFETIME INVESTING ACCOUNT
ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS 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
also 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 of the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Fund's dividend disbursing agent, The Shareholder Services Group, Inc.,
BOS725, P.O. Box 1559, Boston, MA 02104. The currently effective option will
appear on each confirmation statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the Federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or
capital gains distribution checks which are returned by the United States
Postal Service as not deliverable or which remain uncashed for six months or
more will be reinvested in the account 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 a 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 a Fund involves special procedures and will require the
beneficial owner to obtain historical purchase information about the shares in
the account from the Authorized Firm. Before establishing a "street name"
account with an investment firm, or transferring the account to another
investment firm, an investor wishing to reinvest distributions should
determine whether the firm which will hold the shares allows reinvestment of
distributions in "street name" accounts.
- -----------------------------------------------------------------------------
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL INVESTMENTS
BY SENDING A CHECK FOR $50 OR MORE.
- -----------------------------------------------------------------------------
THE EATON VANCE EXCHANGE PRIVILEGE
- ------------------------------------------------------------------------------
Shares of the Fund may currently be exchanged for shares of any of the
following funds: Eaton Vance Cash Management Fund, Eaton Vance Income Fund of
Boston, Eaton Vance Municipal Bond Fund L.P., Eaton Vance Tax Free Reserves
and any fund in the Eaton Vance Traditional Group of Funds on the basis of the
net asset value per share of each fund at the time of the exchange, provided
that such exchange offers are available only in states where shares of 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.
Shares of the Fund which are subject to a CDSC may be exchanged into any
of the above funds without incurring the CDSC. The shares acquired in an
exchange may be subject to a CDSC upon redemption. For purposes of computing
the CDSC payable upon redemption of shares acquired in an exchange, the
holding period of the original shares is added to the holding period of the
shares acquired in the exchange.
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.
Shares of certain other funds for which Eaton Vance acts as investment
adviser or administrator may be exchanged for Fund shares at their respective
net asset value per share, but subject to any restrictions or qualifications
set forth in the current prospectus of any such fund.
Telephone exchanges are accepted by The Shareholder Services Group, Inc.
provided the investor has not disclaimed in writing the use of the privilege.
To effect such exchanges, call The Shareholder Services Group, Inc. at 800-
262-1122 or, within Massachusetts, 617-573-9403, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone
exchange must be registered in the same name(s) and with the same address as
the shares being exchanged. Neither the Fund, the Principal Underwriter nor
The Shareholder Services Group, Inc. will be responsible for the authenticity
of exchange instructions received by telephone, provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter.
The cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the
Fund may be mailed directly to The Shareholder Services Group, Inc. BOS725,
P.O. Box 1559, Boston, MA 02104 at any time -- whether or not dividends are
reinvested. The name of the shareholder, the Fund and the account number
should accompany each investment.
BANK DRAFT INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made through the shareholder's checking account via bank
draft each month or quarter. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
STATEMENT OF INTENTION: Purchases of $100,000 or more made over a 13-month
period are eligible for reduced sales charges.
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges when
the current market value of holdings (shares at current offering price), plus
new purchases, reaches $100,000 or more. Shares of the Eaton Vance funds
mentioned under "The Eaton Vance Exchange Privilege" may be combined under the
Statement of Intention and Right of Accumulation.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks in the amount specified by the shareholder. A
minimum deposit of $5,000 in shares is required. The maintenance of a
withdrawal plan concurrently with purchases of additional shares would be
disadvantageous because of the sales charge included in such purchases.
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES
MAY REINVEST ANY PORTION OR ALL OF HIS 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 or, provided that the shares
repurchased or redeemed have been held for at least 30 days, in shares of any
of the other funds offered by the Principal Underwriter with an initial sales
charge at net asset value, 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 whose
shares are to be purchased (or by such fund's Transfer Agent). The privilege
is also available to holders of shares of the other funds offered with an
initial sales charge by the Principal Underwriter who wish to reinvest such
redemption or repurchase proceeds in shares of the Fund. If a shareholder
reinvests redemption proceeds within the 30 day period, the shareholder's
account will be credited with the amount of any CDSC paid on such redeemed
shares. A reinvesting shareholder may realize a gain or loss for Federal tax
purposes as a result of such repurchase or redemption. Special rules may apply
to the computation of gain or loss and to the deduction of loss on a
repurchase or redemption followed by a reinvestment. See "Distributions and
Taxes". 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 nonprofit 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 nonprofit organizations meeting
certain requirements of the Internal Revenue Code.
Detailed information concerning these plans, including certain exceptions
to minimum investment requirements, and copies of the plans are available from
the Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
Federal income tax consequences of establishing a plan. Under all plans,
dividends and distributions will be automatically reinvested in additional
shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of the Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of
the investment income allocated to the Fund by the Portfolio, less the Fund's
direct and allocated expenses and (B) at least one distribution annually of
all or substantially all of the net realized capital gains allocated by the
Portfolio to the Fund, if any (reduced by any available capital loss
carryforwards from prior years).
Shareholders may reinvest all distributions in shares of the Fund without
a sales charge at the per share net asset value as of the close of business on
the record date.
The Fund's net investment income consists of the Fund's allocated share of
the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted
accounting principles. The Portfolio's net investment income consists of all
income accrued on the Portfolio's assets, less all actual and accrued expenses
of the Portfolio determined in accordance with generally accepted accounting
principles. The Fund's net realized capital gains, if any, consist of the net
realized capital gains (if any) allocated to the Fund by the Portfolio for tax
purposes, after taking into account any available capital loss carryovers.
TAXES. Distributions by the Fund which are derived from the Fund's allocated
share of the Portfolio's net investment income, net short-term capital gains
and certain foreign exchange gains are taxable to shareholders as ordinary
income, whether received in cash or reinvested in additional shares of the
Fund. The Fund's distributions will generally not qualify for the dividends-
received deduction for corporate shareholders.
Capital gains referred to in clause (B) above, if any, realized by the
Portfolio and allocated to the Fund for the Fund's fiscal year, which ends on
August 31, will usually be distributed by the Fund prior to the end of
December. Distributions by the Fund of long-term capital gains allocated to
the Fund by the Portfolio are taxable to shareholders as long-term capital
gains, whether paid in cash or additional shares of the Fund, regardless of
the length of time Fund shares have been owned by the shareholder.
If shares are purchased shortly before the record date of a distribution,
the shareholder will pay the full price for the shares and then receive some
portion of the price back as a taxable distribution. The amount, timing and
character of the Fund's distributions to shareholders may be affected by
special tax rules governing the Portfolio's activities in options, futures and
forward foreign currency exchange transactions or certain other investments.
Certain distributions declared by the Fund in October, November or
December and paid the following January will be taxable to shareholders as if
received on December 31 of the year in which they are declared.
Sales charges paid upon a purchase of shares of the Fund cannot be taken
into account for purposes of determining gain or loss on a redemption or
exchange of the shares before the 91st day after their purchase to the extent
shares of the Fund or of another fund are subsequently acquired pursuant to
the Fund's reinvestment or exchange privilege. In addition, losses realized on
a redemption of Fund shares may be disallowed under certain "wash sale" rules
if within a period beginning 30 days before and ending 30 days after the date
of redemption other shares of the Fund are acquired. Any disregarded or
disallowed amounts will result in an adjustment to the shareholder's tax basis
in some or all of any other shares acquired.
In order to qualify as a regulated investment company under the Internal
Revenue Code (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 also does not pay Federal income or excise
taxes.
Income (possibly including, in some cases, capital gains) realized by the
Portfolio from certain investments and allocated to the Fund may be subject to
foreign income taxes, and the Fund may make an election under Section 853 of
the Code that would allow shareholders to claim a credit or deduction on their
Federal income tax returns for (and treated as additional amounts distributed
to them) their pro rata portion of the Fund's allocated share of qualified
taxes paid by the Portfolio to foreign countries. This election may be made
only if more than 50% of the assets of the Fund, including its allocable share
of the Portfolio's assets, at the close of the Fund's taxable year consists of
securities in foreign corporations. The Fund will send a written notice of any
such election (not later than 60 days after the close of its taxable year) to
each shareholder indicating the amount to be treated as the shareholder's
proportionate share of such taxes. Availability of foreign tax credits or
deductions for shareholders is subject to certain additional restrictions and
limitations under the Code.
Shareholders will receive annually one or more Forms 1099 to assist in the
preparation of their Federal and state income 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.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
THE FUND'S AVERAGE ANNUAL TOTAL RETURN IS DETERMINED BY MULTIPLYING A
HYPOTHETICAL INITIAL PURCHASE ORDER OF $1,000 BY THE AVERAGE ANNUAL COMPOUNDED
RATE OF RETURN (INCLUDING CAPITAL APPRECIATION/DEPRECIATION, AND DIVIDENDS AND
DISTRIBUTIONS PAID AND REINVESTED) FOR THE STATED PERIOD AND ANNUALIZING THE
RESULT. The average annual total return calculation assumes the maximum sales
charge is deducted from the initial $1,000 purchase order and that all
dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period. The Fund may also publish annual and
cumulative total return figures from time to time. The Fund may use such total
return figures, together with comparisons with the Consumer Price Index,
various domestic and foreign securities indices and performance studies
prepared by independent organizations, in advertisements and in information
furnished to present or prospective shareholders.
The Fund may also furnish total return calculations based on investments
at various sales charge levels or at net asset value. Any performance data
which is based on the Fund's net asset value per share would be reduced if a
sales charge were taken into account.
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 a representation of what an investment
may earn or what an investor's total return may be in any future period. The
Fund's investment results are based on many factors, including market
conditions, the composition of the security holdings of the Portfolio and the
operating expenses of the Fund and the Portfolio. Investment results also
often reflect the risks associated with the particular investment objective
and policies of the Fund and the Portfolio. Among others, these factors should
be considered when comparing the Fund's investment results to those of other
mutual funds and other investment vehicles.
STATEMENT OF INTENTION AND ESCROW AGREEMENT
- ------------------------------------------------------------------------------
TERMS OF ESCROW. If the investor, on an application, makes a Statement of
Intention to invest a specified amount over a thirteen month period, then out
of the initial purchase (or subsequent purchases if necessary) 5% of the
dollar amount specified on the application shall be held in escrow by the
escrow agent in the form of shares (computed to the nearest full share at the
public offering price applicable to the initial purchase hereunder) registered
in the investor's name. All income dividends and capital gains distributions
on escrowed shares will be paid to the investor's order.
When the minimum investment so specified is completed, the escrowed shares
will be delivered to the investor. If the investor has an accumulation account
the shares will remain on deposit under the account.
If total purchases under this Statement of Intention are less than the
amount specified, the investor will promptly remit to EVD any difference
between the sales charge on the amount specified and on the amount actually
purchased. If the investor does not within 20 days after written request by
EVD or the Authorized Firm pay such difference in sales charge, the escrow
agent will redeem an appropriate number of the escrowed shares in order to
realize such difference. Full shares remaining after any such redemption
together with any excess cash proceeds of the shares so redeemed will be
delivered to the investor or to his order by the escrow agent.
In signing the application, the investor irrevocably constitutes and
appoints the escrow agent as his attorney to surrender for redemption any or
all escrowed shares with full power of substitution in the premises.
PROVISION FOR RETROACTIVE PRICE ADJUSTMENT. If total purchases made under this
Statement are large enough to qualify for a lower sales charge than that
applicable to the amount specified, all transactions will be computed at the
expiration date of this Statement to give effect to the lower charge. Any
difference in sales charge will be refunded to the investor in cash, or
applied to the purchase of additional shares at the lower charge if specified
by the investor. This refund will be made by the financial service firm and by
EVD. If at the time of the recomputation a firm other than the original firm
is placing the orders, the adjustment will be made only on those shares
purchased through the firm then handling the account.
<PAGE>
APPENDIX A
ADDITIONAL INFORMATION ABOUT INVESTMENT METHODS
- ------------------------------------------------------------------------------
TRANSACTIONS IN DERIVATIVE INSTRUMENTS. The Portfolio may invest in certain
instruments that derive their value from a relationship to another instrument
or a currency, index or security. The Portfolio may invest up to 35% of its
total assets in options on securities and indices, options on currency,
futures contracts and options on futures, forward foreign currency exchange
contracts and currency swaps. Each of these active management techniques
involves (1) liquidity risk that contractual positions cannot be easily closed
out in the event of market changes, (2) correlation risk that changes in the
value of hedging positions may not match the securities market and foreign
currency fluctuations intended to be hedged, (3) market risk that an incorrect
prediction of securities prices or exchange rates may cause the Portfolio to
perform less well than if such positions had not been entered into, and (4)
management skills different from those needed to select portfolio securities.
FOREIGN CURRENCY TRANSACTIONS. More than 25% of the Portfolio's total assets,
adjusted to reflect currency transactions and positions, may be denominated in
any single currency. Concentration in a particular currency will increase the
Portfolio's exposure to adverse developments affecting the value of such
currency. An issuer of securities purchased by the Portfolio may be domiciled
in a country other than the country in whose currency the securities are
denominated. The Portfolio may hedge against foreign currency risk by entering
into forward foreign currency exchange contracts and currency swaps, engaging
in transactions in futures contracts on currency and options on such futures
contracts and purchasing and writing options on currency.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Portfolio may enter into
forward foreign currency exchange contracts in an attempt to reduce the risk
to the Portfolio from adverse changes in the relationship between the U.S.
dollar and foreign currencies. The Portfolio may purchase forward contracts
for non-hedging purposes when the Portfolio anticipates that the foreign
currency will appreciate in value, but securities denominated in that currency
do not present attractive investment opportunities. However, forward contracts
may limit potential gain from a positive change in the relationship between
the U.S. dollar and foreign currencies. Unanticipated changes in currency
prices may result in poorer overall performance for the Portfolio than if it
had not entered into forward foreign currency exchange contracts.
CURRENCY SWAPS. The Portfolio may enter into currency swaps for both hedging
and non-hedging purposes. Currency swaps involve the exchange of rights to
make or receive payments in specified currencies. Since currency swaps are
individually negotiated, the Portfolio expects to achieve an acceptable degree
of correlation between its portfolio investments and its currency swap
positions. Currency swaps usually involve the delivery of the entire principal
value of one designated currency in exchange for the other designated
currency. Therefore, the entire principal value of a currency swap is subject
to the risk that the other party to the swap will default on its contractual
delivery obligations.
The use of currency swaps is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. If the Adviser is incorrect in its
forecasts of market values and currency exchange rates, the investment
performance of the Portfolio would be less favorable than it would have been
if this investment technique were not used.
OPTIONS ON CURRENCIES. The Portfolio may purchase and sell (write) put and
call options on foreign currencies. The Portfolio may use options on currency
to cross-hedge, as described above under "Forward Foreign Currency Exchange
Contracts". As with other kinds of option transactions, however, the writing
of an option on foreign currency will constitute only a partial hedge, up to
the amount of the premium received. The Portfolio could be required to
purchase or sell foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may constitute
an effective hedge against exchange rate fluctuations; however, in the event
of exchange rate movements adverse to the Portfolio's position, the Portfolio
may forfeit the entire amount of the premium plus related transaction costs.
In addition, the Portfolio may purchase call or put options on currency for
non-hedging purposes when the Adviser anticipates that the currency will
appreciate or depreciate in value, but the securities denominated in that
currency do not present attractive investment opportunities. Options on
foreign currencies to be written or purchased by the Portfolio will be traded
on U.S. and foreign exchanges or over-the-counter. See "Risks Associated with
Options Transactions" below, and "Special Risks Associated With Options on
Securities" in the Statement of Additional Information, for information about
the liquidity and other risks associated with options transactions.
OPTIONS ON SECURITIES AND SECURITIES INDICES. The Portfolio may write (sell)
covered call and put options and purchase call and put options on securities
and securities indices. The Portfolio may also write combinations of put and
call options on the same security, known as "straddles". Such transactions can
generate additional premium income but also present increased risk.
RISKS ASSOCIATED WITH OPTIONS TRANSACTIONS. The Portfolio may purchase and
sell both options that are traded on United States and foreign exchanges, and
options traded over-the-counter with broker-dealers who make markets in these
options. The ability to terminate over-the-counter options is more limited
than with exchange-traded options and may involve the risk that broker-dealers
participating in such transactions will not fulfill their obligations. Until
such time as the staff of the Commission changes its position, the Portfolio
will treat purchased over-the-counter options and assets used to cover written
over-the-counter options as illiquid securities. However, with respect to
options written with primary dealers in U.S. Government securities pursuant to
an agreement requiring a closing purchase transaction at a formula price, the
amount of illiquid securities may be calculated with reference to the formula
price.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. In the event of unanticipated
changes in securities prices, the Portfolio may recognize a loss of the
premium on an option it has purchased to the extent that the option cannot be
profitably exercised before its expiration. The successful use of options for
hedging purposes depends in part on the ability of the Adviser to predict
future price fluctuations and the degree of correlation between the options
and securities markets.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Portfolio may purchase
and sell various kinds of futures contracts and may purchase and write call
and put options on any of such futures contracts. The futures contracts may be
based on various securities (such as U.S. Government securities), stock and
other securities indices, foreign currencies and other financial instruments
and indices. The Portfolio will engage in futures and related options
transactions for bona fide hedging or non-hedging purposes as defined in or
permitted by regulations of the Commodity Futures Trading Commission. The
Portfolio may engage in cross-hedging by purchasing or selling futures or
options on futures on a security or currency different from the security or
currency position being hedged if the Adviser determines that there is a
historical pattern of correlation between the two securities or currencies.
The Portfolio may not purchase or sell futures contracts or purchase or
sell related options, except for closing purchase or sale transactions, if
immediately thereafter the sum of the amount of initial margin deposits on the
Portfolio's outstanding non-hedging positions in futures and related options
and the amount of premiums paid for outstanding non-hedging positions in
options on futures would exceed 5% of the market value of the Portfolio's net
assets. These transactions involve brokerage costs, require margin deposits
and, in the case of contracts and options obligating the Portfolio to purchase
securities or currencies, require the Portfolio to segregate assets to cover
such contracts and options.
In addition, while transactions in futures contracts and options on
futures may reduce certain risks, such transactions themselves entail certain
other risks. See "Transactions in Derivative Instruments" above. The loss
incurred by the Portfolio in writing options on futures is potentially
unlimited and may exceed the amount of the premium received. In the event of
an imperfect correlation between a futures position and portfolio position
which is intended to be protected, the desired protection may not be obtained
and the Portfolio may be exposed to risk of loss.
The Portfolio intends to engage in transactions in futures contracts,
options and other derivative instruments only to the extent such transactions
are consistent with the requirements of the Internal Revenue Code 1986, as
amended (the "Code") for maintaining the qualification of an investor in the
Portfolio, such as the Fund, as a regulated investment company for Federal
income tax purposes.
Cover photo courtesy of the Peabody
Museum of Salem, from a painting of
Hong Kong, circa 1855-1860, attributed
to Sunqua. Photo by Mark Sexton.
<PAGE>
SPONSOR AND MANAGER OF
EV TRADITIONAL GREATER CHINA
GROWTH FUND
Administrator of Greater China
Growth Portfolio
Eaton Vance Management
24 Federal Street
Boston, MA 02110
ADVISER OF GREATER CHINA
GROWTH PORTFOLIO
Lloyd George Management (Hong Kong)
Limited
3808 One Exchange Square
Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
EV TRADITIONAL GREATER CHINA
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
EV TRADITIONAL
GREATER CHINA
GROWTH FUND
PROSPECTUS
JANUARY 1, 1995
T-CGP
