EV MARATHON
INFORMATION AGE FUND
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EV MARATHON INFORMATION AGE FUND (THE "FUND") IS A MUTUAL FUND SEEKING LONG-TERM
CAPITAL GROWTH BY INVESTING IN A GLOBAL AND DIVERSIFIED PORTFOLIO OF SECURITIES
OF INFORMATION AGE COMPANIES. THE FUND INVESTS ITS ASSETS IN INFORMATION AGE
PORTFOLIO (THE "PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING
THE SAME INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY INVESTING DIRECTLY IN
AND MANAGING ITS OWN PORTFOLIO OF SECURITIES AS WITH HISTORICALLY STRUCTURED
MUTUAL FUNDS. 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 August 23,
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. (the "Principal
Underwriter"), 24 Federal Street, Boston, MA 02110 (telephone (800) 225-6265).
The sponsor and manager of the Fund and the administrator of the Portfolio is
Eaton Vance Management, 24 Federal Street, Boston, MA 02110 ("Eaton Vance" or
the "Manager"). The Portfolio's investment advisers are Boston Management and
Research ("BMR"), a wholly-owned subsidiary of Eaton Vance, and Lloyd George
Investment Management (Bermuda) Limited ("Lloyd George") (collectively, the
"Advisers"). The principal business address of BMR is 24 Federal Street,
Boston, MA 02110 and of Lloyd George is 3808 One Exchange Square, Central,
Hong Kong.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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Shareholder and Fund Expenses .............. 2 How to Redeem Fund Shares ..................... 12
The Fund's Investment Objective ............ 3 Reports to Shareholders ....................... 13
The Portfolio's Investments ................ 3 The Lifetime Investing Account/Distribution
Investment Policies and Risks .............. 4 Options ..................................... 13
Organization of the Fund and the Portfolio 6 The Eaton Vance Exchange Privilege ............ 14
Management of the Fund and the Portfolio ... 8 Eaton Vance Shareholder Services .............. 15
Distribution Plan .......................... 9 Distributions and Taxes ....................... 16
Valuing Fund Shares ........................ 10 Performance Information ....................... 17
How to Buy Fund Shares ..................... 11
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PROSPECTUS DATED AUGUST 23, 1995
<PAGE>
SHAREHOLDER AND FUND EXPENSES
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SHAREHOLDER TRANSACTION EXPENSES
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Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on Redemptions
During the First Seven Years (as a percentage of redemption proceeds exclusive
of all reinvestments and capital appreciation in the account) 5.00%-0%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
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Management Fees (including management fees paid by the Fund and investment
advisory and administration fees paid by the Portfolio of 0.25%, 0.75% and 0.25%,
respectively) 1.25%
Rule 12b-1 Distribution Fees 0.75
Other Expenses 0.50
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Total Operating Expenses 2.50%
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EXAMPLES 1 YEAR 3 YEARS
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<S> <C> <C>
An investor would pay the following contingent deferred sales charge and
expenses on a $1,000 investment, assuming (a) 5% annual return and (b)
redemption at the end of each period: $75 $118
An investor would pay the following expenses on the same investment,
assuming (a) 5% annual return and (b) no redemptions: $25 $ 78
</TABLE>
NOTES:
The table and Examples summarize the aggregate expenses of the Fund and the
Portfolio and are designed to help investors understand the costs and expenses
they will bear directly or indirectly by investing in the Fund. Other Expenses
are estimated for the current fiscal year because the Fund was only recently
organized.
The Fund invests exclusively in the Portfolio. The Trustees of the Trust believe
that over time the aggregate per share expenses of the Fund and the Portfolio
should be approximately equal to or less than the per share expenses which the
Fund would incur if the Trust retained the services of an investment adviser for
the Fund and the Fund's assets were invested directly in the type of securities
being held by the Portfolio.
The Examples should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. Federal
regulations require the Examples to assume a 5% annual return, but actual return
will vary. For further information regarding the expenses of both the Fund and
the Portfolio see "Organization of the Fund and the Portfolio," "Management of
the Fund and the Portfolio," "How to Redeem Fund Shares" and "Distribution
Plan." A long-term shareholder in the Fund 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.
No contingent deferred sales charge is imposed on (a) shares purchased more than
six years prior to the redemption, (b) shares acquired through the reinvestment
of distributions or (c) any appreciation in value of other shares in the
account, and no such charge is imposed on exchanges of Fund shares for shares of
one or more other funds listed under "The Eaton Vance Exchange Privilege."
For shares sold by Authorized Firms and remaining outstanding for at least one
year, the Fund will pay service fees not exceeding .25% per annum of its
average daily net assets. The Fund expects to begin making service fee
payments during the quarter ending September 30, 1996. Therefore, expenses
after year one will be higher. See "Distribution Plan."
Other investment companies and investors with different distribution
arrangements and fees are investing in the Portfolio and others may do so in the
future. See "Organization of the Fund and the Portfolio."
THE FUND'S INVESTMENT OBJECTIVE
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THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL GROWTH. IT CURRENTLY
SEEKS TO MEET ITS INVESTMENT OBJECTIVE BY INVESTING ITS ASSETS IN INFORMATION
AGE PORTFOLIO (THE "PORTFOLIO"), A SEPARATE REGISTERED INVESTMENT COMPANY THAT
INVESTS IN SECURITIES OF INFORMATION AGE COMPANIES.
The Fund is intended for long-term investors who can accept international
investment risk and little or no current income. The Fund is not intended to be
a complete investment program. Prospective investors should take into account
their objectives and other investments when considering the purchase of Fund
shares. The Fund cannot assure achievement of its investment objective. See
"Investment Policies and Risks" 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.
THE PORTFOLIO'S INVESTMENTS
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In recent years, a number of technological advances have facilitated the global
dissemination of information of all types including text, voice, images, moving
pictures and digital data streams. These technological advances may be likened
to the dynamic process of invention and application of new technology in the
eighteenth and nineteenth centuries that has come to be known as the Industrial
Revolution, ushering in the Industrial Age. In the same way, the Advisers
believe that the current pace of technological change in the dissemination and
use of information will be looked upon as the Information Revolution and will
usher in the Information Age.
The leading equity investments of the Information Age may be those companies,
referred to as information age companies, developing and successfully adopting
these new technologies to meet the needs of the rapidly changing information
marketplace. The global dissemination of information and information processing
technologies has enhanced economic growth in the developed economies of the
world and is contributing to the rapid modernization of the world's newly
developing economies. The Advisers believe that the pace and scope of these
technological developments are likely to increase and that their economic impact
will become increasingly important. The Advisers believe that investment in
companies participating in these developments both as producers and as
beneficiaries of new technologies is likely to produce favorable returns. These
industries are dynamic and the Advisers will endeavor to keep abreast of changes
in information products, services and technologies. The Advisers may consider
investment in companies that benefit from:
* Emerging and established technologies that will enhance the processing and
transfer of information. These may include digital technologies, such as
computer hardware, software and networks; mobile telephony and established
telecommunications networks of all sorts; fiber optic communications
equipment; and developing methods of utilizing electromagnetic spectrum for
communications.
* Privatization and deregulation of state owned telecommunication, television
and other information media companies both in the developed economies and the
emerging economies where these companies may reach new markets and expand
their business opportunities.
* Wider access to information and entertainment media by peoples around the
globe, including broadcasters; cable television networks; producers and
publishers of entertainment, news, literature and scholarly information;
owners of libraries and data bases of all kinds; advertising agencies and in
some cases advertisers who can capitalize on rising demand due to broader
consumer awareness, particularly in new markets.
* Development of new information infrastructure in developing countries, such as
producers and developers of communication network equipment and managers of
sophisticated communication networks.
* Affordability of, and rising demand for, information industries' consumer
products and services particularly in the emerging economies such as China,
India, Africa, Latin America, and Eastern Europe where penetration of these
products and services is low by world standards.
By focusing on companies such as the foregoing, the Advisers believe that the
opportunity for long-term capital growth exits. Of course, there can be no
assurance that the Portfolio will be able to take advantage of the foregoing
opportunities, or that such investment opportunities will be favorable.
INVESTMENT POLICIES AND RISKS
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The Portfolio invests in a global and diversified portfolio of securities of
information age companies. Information age companies are companies that may be
engaged in providing information services, such as telephony, broadcasting,
cable or satellite television, publishing, advertising, producing information
and entertainment media, data processing, networking of data processing and
communication systems, or providing consumer interconnection to computer
communication networks. In addition, such companies may be engaged in the
development, manufacture, sale, or servicing of information age products, such
as computer hardware, software and networking equipment, mobile telephony
devices, telecommunications network switches and equipment, television and radio
broadcasting and receiving equipment, or news and information media of all
types. The Portfolio may invest in securities of both established and emerging
companies operating in developed and emerging economies. The securities may be
denominated in foreign currencies.
Under normal market conditions, the Portfolio will invest at least 65% of its
assets in securities of information age companies. Securities eligible for
purchase include common and preferred stocks; equity interests in trusts,
partnerships, joint ventures and other unincorporated entities or enterprises;
special classes of shares available only to foreign investors in markets that
restrict ownership by foreign investors to certain classes of equity securities;
convertible preferred stocks; and other convertible instruments. Convertible
debt instruments generally will be rated below investment grade (i.e., rated
lower than Baa by Moody's Investors Service, Inc. or lower than BBB by Standard
& Poor's Ratings Group) or, if unrated, determined by an Adviser to be of
equivalent quality. Convertible debt securities so rated are commonly called
"junk bonds" and have risks similar to equity securities; they are speculative
and changes in economic conditions or other circumstances are more likely to
lead to a weakened capacity to make principal and interest payments than is the
case with higher grade debt securities. Such debt securities will not exceed 20%
of total assets. For temporary defensive purposes, the Portfolio may invest
without limit in debt securities of foreign and United States companies, foreign
governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in high
quality money market instruments.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio's investments are subject
to the risk of adverse developments affecting particular companies or industries
and securities markets generally. In addition, many information age companies
are subject to substantial governmental regulations that can affect their
prospects. The enforcement of patent, trademark and other intellectual property
laws will affect the value of many of such companies. The securities of smaller,
less-seasoned companies, which may include legally restricted securities, are
generally subject to greater price fluctuations, limited liquidity, higher
transaction costs and higher investment risk. The Portfolio may invest up to 15%
of its net assets in illiquid securities (which excludes securities eligible for
resale under Rule 144A of the Securities Act of 1933). The Portfolio also may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions.
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 tax), changes in governmental
administration or economic or monetary policy (in this country or abroad), or
changed circumstances in dealings between nations. Because investment in foreign
issuers will usually involve currencies of foreign countries, the value of the
assets of the Portfolio as measured in U.S. dollars may be adversely affected by
changes in foreign currency exchange rates. Such rates may fluctuate
significantly over short periods of time causing the Portfolio's net asset value
to fluctuate as well. Costs are incurred in connection with conversions between
various currencies. In addition, foreign brokerage commissions, custody fees and
other costs of investing are generally higher than in the United States, and
foreign securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be adversely affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations. In addition to investing in foreign companies of
countries which represent established and developed economies, the Portfolio may
also invest its assets in the emerging economies of lesser developed countries
such as China and India, and countries located in Latin America and Eastern
Europe. Consistent with its investment objective, the Portfolio is not limited
in the percentage of assets it may invest in such securities. The relative risk
and cost of investing in the securities of companies in such emerging economies
may be higher than an investment in securities of companies in more developed
countries. As of the date of this Prospectus, the Advisers initially expect to
invest approximately 50% of the Portfolio's assets in foreign securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return, to hedge against
fluctuations in securities prices, interest rates or currency exchange rates, or
as a substitute for the purchase or sale of securities or currencies. The
Portfolio's transactions in derivative instruments may be in the U.S. or abroad
and may include the purchase or sale of futures contracts on securities,
securities indices, other indices, other financial instruments or currencies;
options on futures contracts; exchange-traded and over-the-counter options on
securities, indices or currencies; and forward foreign currency exchange
contracts. The Portfolio's transactions in derivative instruments involve a risk
of loss or depreciation due to unanticipated adverse changes in securities
prices, interest rates, the other financial instruments' prices or currency
exchange rates, the inability to close out a position or default by the
counterparty. The loss on derivative instruments (other than purchased options)
may exceed the Portfolio's initial investment in these instruments. In addition,
the Portfolio may lose the entire premium paid for purchased options that expire
before they can be profitably exercised by the Portfolio. The Portfolio incurs
transaction costs in opening and closing positions in derivative instruments.
There can be no assurance that an Adviser's use of derivative instruments will
be advantageous to the Portfolio.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the liquidation value of the Portfolio's investments, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into. There is no current intention to use derivative instruments for
non-hedging purposes.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
an Adviser determines that there is an established historical pattern or
correlation between the two currencies (or the basket of currencies and the
underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
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
special investment techniques and risks. If Lloyd George is incorrect in its
forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
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 an 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.
The Portfolio does not expect to invest more than 5% of its total assets in
repurchase agreements under normal circumstances.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to 10%
of its total assets in the securities of other investment companies unaffiliated
with an Adviser that have the characteristics of closed-end investment
companies. The Portfolio will indirectly bear its proportionate share of any
management fees paid by investment companies in which it invests in addition to
the advisory fee paid by the Portfolio. The value of closed-end investment
company securities, which are usually traded on an exchange, is affected by
demand for the securities themselves, independent of the demand for the
underlying portfolio assets, and, accordingly, such securities can trade at a
discount from their net asset values.
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. 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 not invest 25% or more 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 and (ii) securities denominated in the currency of any one country.
Except for the fundamental investment restrictions and policies specifically
identified above and enumerated in the Statement of Additional Information, the
investment objective and policies of the 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. Please refer to the Statement of Additional Information for further
information regarding the investment policies and risks of the Fund and
Portfolio.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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The Fund is a diversified series of Eaton Vance Growth Trust, a business trust
established under Massachusetts law pursuant to a Declaration of Trust dated May
25, 1989, as amended, and organized as the successor to a Massachusetts
corporation which commenced its investment company operations in 1954. THE
TRUSTEES OF THE TRUST ARE RESPONSIBLE FOR THE OVERALL MANAGEMENT AND SUPERVISION
OF ITS AFFAIRS. The Trust may issue an unlimited number of shares of beneficial
interest (no par value per share) in one or more series and because the Trust
can offer separate series (such as the Fund) it is known as a "series company."
Each share represents an equal proportionate beneficial interest in the Fund.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem Fund Shares."
Shareholders are entitled to one vote for each full share held. Fractional
shares may be voted proportionately. Shares have no preemptive or conversion
rights and are freely transferable. In the event of the liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets of the Fund
available for distribution to shareholders.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The
Portfolio, as well as the Trust, intends to comply with all applicable federal
and state securities laws. The Portfolio's Declaration of Trust provides that
the Fund and other entities permitted to invest in the Portfolio (e.g., other
U.S. and foreign investment companies, and common and commingled trust funds)
will each be liable for all obligations of the Portfolio. However, the risk of
the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio itself
is unable to meet its obligations. Accordingly, the Trustees of the Trust
believe that neither the Fund nor its shareholders will be adversely affected by
reason of the Fund investing in the Portfolio.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in
the Fund should be aware that the Fund, unlike mutual funds which directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing its assets in an interest in the Portfolio
(although the Fund may temporarily hold a de minimus amount of cash), which is a
separate investment company with an identical investment objective. Therefore,
the Fund's interest in securities owned by the Portfolio is indirect. In
addition to selling an interest to the Fund, the Portfolio may sell interests to
other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the various funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures,
including funds that have multiple classes of shares. For information regarding
the investment objective, policies and restrictions of the Portfolio, see
"Investment Policies and Risks." Further information regarding the investment
practices of the Portfolio may be found in the Statement of Additional
Information.
The Trustees of the Trust have considered the advantages and disadvantages of
investing the assets of the Fund in the Portfolio, as well as the advantages and
disadvantages of the two-tier format. The Trustees believe that the structure
offers opportunities for substantial growth in the assets of the Portfolio, and
affords the potential for economies of scale for the Fund, at least when the
assets of the Portfolio exceed $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, as the case may be.
Any such change of the investment objective will be preceded by thirty days'
advance written notice to the shareholders of the Fund or the investors in the
Portfolio, as the case may be. If a shareholder redeems shares because of a
change in the nonfundamental objective or policies of the Fund, those shares may
be subject to a contingent deferred sales charge, as described in "How to Redeem
Fund Shares." In the event the Fund withdraws all of its assets from the
Portfolio, or the Board of Trustees of the Trust determines that the investment
objective of the Portfolio is no longer consistent with the investment objective
of the Fund, such Trustees would consider what action might be taken, including
investing the assets of the Fund in another pooled investment entity or
retaining an investment adviser to manage the Fund's assets in accordance with
its investment objective. The Fund's investment performance may be affected by a
withdrawal of all its assets from the Portfolio.
Information regarding other pooled investment entities or funds which invest in
the Portfolio may be obtained by contacting Eaton Vance Distributors, Inc. (the
"Principal Underwriter" or "EVD"), 24 Federal Street, Boston, MA 02110 (617)
482-8260. Smaller investors in the Portfolio may be adversely affected by the
actions of larger investors in the Portfolio. For example, if a large investor
withdraws from the Portfolio, the remaining investors may experience higher pro
rata operating expenses, thereby producing lower returns. Additionally, the
Portfolio may become less diverse, resulting in increased portfolio risk, and
experience decreasing economies of scale. However, this possibility exists as
well for historically structured funds which have large or institutional
investors.
Until recently, the 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, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Trustees of the Trust, including a majority of the noninterested Trustees,
have approved written procedures designed to identify and address any potential
conflicts of interest arising from the fact that most of the Trustees of the
Trust and the Trustees of the Portfolio are the same. Such procedures require
each Board to take action to resolve any conflict of interest between the Fund
and the Portfolio, and it is possible that the creation of separate Boards may
be considered. For further information concerning the Trustees and officers of
the Trust and the Portfolio, see "Trustees and Officers" in 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 AS THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED
BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED SUBSIDIARY OF EATON
VANCE, AND LLOYD GEORGE INVESTMENT MANAGEMENT (BERMUDA) LIMITED ("LLOYD
GEORGE") (COLLECTIVELY, THE "ADVISERS") AS ITS INVESTMENT ADVISERS. The
Portfolio's non-U.S. assets are co-managed by Robert J. D. Lloyd George,
Chairman and Chief Executive Officer of Lloyd George, and the Portfolio's U.S.
assets are managed by Duncan W. Richardson, Vice President of Eaton Vance and
BMR.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. BMR or Eaton Vance acts as investment adviser to
investment companies and various individual and institutional clients with
assets under management of approximately $15 billion. Duncan W. Richardson has
acted as a portfolio manager of the Portfolio since it commenced operations. He
has been a Vice President of Eaton Vance since 1990 and of BMR since 1992, and
an employee of Eaton Vance since 1987.
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 21% of the Class A Shares issued by Lloyd George Management (B.V.I.)
Limited ("LGM"), the parent of Lloyd George.
Lloyd George, which maintains offices in Hong Kong, London, England and Bombay,
India, is a corporation formed on October 29, 1991 under the laws of Bermuda.
Lloyd George is registered as an investment adviser with the U.S. Securities and
Exchange Commission (the "Commission"). Lloyd George is a subsidiary of LGM. LGM
and its subsidiaries act as investment adviser to various individual and
institutional clients with total assets under management of more than $1
billion. Robert J. D. Lloyd George has acted as a portfolio manager of the
Portfolio since it commenced operations. He is the Chairman and Chief Executive
Officer of LGM and Lloyd George. Prior to founding LGM, Mr. Lloyd George was
Managing Director of Indosuez Asia Investment Services, Ltd. (1984-1991).
Acting under the general supervision of the Board of Trustees of the Portfolio,
the Advisers manage the investment of the Portfolio's assets. Under the
investment advisory agreement with the Portfolio, the Advisers receive a monthly
advisory fee, to be divided equally between them, of .0625% (equivalent to .75%
annually) of the average daily net assets of the Portfolio up to $500 million,
which fee declines at intervals above $500 million. The Advisers furnish for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio.
The Advisers place the portfolio securities transactions of the Portfolio with
many broker-dealer firms and use their 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, an Adviser may consider
sales of shares of the Fund or of other investment companies sponsored by BMR or
Eaton Vance as a factor in the selection of firms to execute portfolio
transactions.
Acting under the general supervision of the Board of Trustees of the Trust and
the Portfolio, Eaton Vance 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 Advisers for the Portfolio, recordkeeping,
preparation and filing of documents required to comply with federal and state
securities laws, supervising the activities of the transfer agent of the Fund
and the custodian of the Portfolio, providing assistance in connection with
Trustees' and shareholders' meetings and other management and administrative
services necessary to conduct the business of the Fund and the Portfolio. Eaton
Vance also furnishes for the use of the Fund and the Portfolio office space and
all necessary office facilities, equipment and personnel for managing and
administering the business affairs of the Fund and the Portfolio. Eaton Vance
does not provide any investment management or advisory services to the Portfolio
or the Fund.
Under its management contract with the Fund, Eaton Vance receives a monthly
management fee in the amount of 1/48 of 1% (equal to .25% annually) of the
average daily net assets of the Fund up to $500 million, which fee declines at
intervals above $500 million. In addition, under its administration agreement
with the Portfolio, Eaton Vance receives a monthly administration fee in the
amount of 1/48 of 1% (equal to .25% annually) of the average daily net assets of
the Portfolio up to $500 million, which fee declines at intervals above $500
million. The combined investment 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 an Adviser
under the investment advisory agreement, by Eaton Vance under the management
contract or the administration agreement, or by EVD under the distribution
agreement. Such costs and expenses to be borne by each of the Fund or the
Portfolio, as the case may be, include, without limitation: custody and transfer
agency fees and expenses, including those incurred for determining net asset
value and keeping accounting books and records; expenses of pricing and
valuation services; the cost of share certificates; membership dues in
investment company organizations; brokerage commissions and fees; fees and
expenses of registering under the securities laws; expenses of reports to
shareholders and investors; proxy statements, and other expenses of
shareholders' or investors' meetings; insurance premiums, printing and mailing
expenses; interest, taxes and corporate fees; legal and accounting expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance or an
Adviser; and investment advisory, management and administration fees. The Fund
and the Portfolio, as the case may be, will also each bear expenses incurred in
connection with litigation in which the Fund or the Portfolio, as the case may
be, is a party and any legal obligation to indemnify its respective officers and
Trustees with respect thereto.
DISTRIBUTION PLAN
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THE FUND FINANCES DISTRIBUTION ACTIVITIES AND HAS ADOPTED A DISTRIBUTION PLAN
(THE "PLAN") PURSUANT TO RULE 12B-1 UNDER THE 1940 ACT. Rule 12b-1 permits a
mutual fund, such as the Fund, to finance distribution activities and bear
expenses associated with the distribution of its shares provided that any
payments made by the Fund are made pursuant to a written plan adopted in
accordance with the Rule. The Plan is subject to, and complies with, the sales
charge rule of the National Association of Securities Dealers, Inc. (the "NASD
Rule"). The Plan is described further in the Statement of Additional
Information, and the following is a description of the salient features of the
Plan. The Plan provides that the Fund, subject to the NASD Rule, will pay sales
commissions and distribution fees to the Principal Underwriter only after and as
a result of the sale of shares of the Fund. On each sale of Fund shares
(excluding reinvestment of distributions) the Fund will pay the Principal
Underwriter amounts representing (i) sales commissions equal to 5% of the amount
received by the Fund for each share sold and (ii) distribution fees calculated
by applying the rate of 1% over the prime rate then reported in The Wall Street
Journal to the outstanding balance of Uncovered Distribution Charges (as
described below) of the Principal Underwriter. The Principal Underwriter
currently expects to pay sales commissions (except on exchange transactions and
reinvestments) to a financial services firm (an "Authorized Firm") at the time
of sale equal to 4% of the purchase price of the shares sold by such Firm. The
Principal Underwriter will use its own funds (which may be borrowed from banks)
to pay such commissions. Because the payment of the sales commissions and
distribution fees to the Principal Underwriter is subject to the NASD Rule
described below, it will take the Principal Underwriter a number of years to
recoup the sales commissions paid by it to Authorized Firms from the payments
received by it from the Fund pursuant to the Plan.
THE NASD RULE REQUIRES THE FUND TO LIMIT ITS ANNUAL PAYMENTS OF SALES
COMMISSIONS AND DISTRIBUTION FEES TO AN AMOUNT NOT EXCEEDING .75% OF THE FUND'S
AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. Under its Plan, the Fund accrues
daily an amount at the rate of 1/365 of .75% of the Fund's net assets, and pays
such accrued amounts monthly to the Principal Underwriter. The Plan requires
such accruals to be automatically discontinued during any period in which there
are no outstanding Uncovered Distribution Charges under the Plan. Uncovered
Distribution Charges are calculated daily and, briefly, are equivalent to all
unpaid sales commissions and distribution fees to which the Principal
Underwriter is entitled under the Plan less all contingent deferred sales
charges theretofore paid to the Principal Underwriter. The Eaton Vance
organization may be considered to have realized a profit under the Plan if at
any point in time the aggregate amounts of all payments received by the
Principal Underwriter from the Fund pursuant to the Plan, including any
contingent deferred sales charges, have exceeded the total expenses theretofore
incurred by such organization in distributing shares of the Fund. Total expenses
for this purpose will include an allocable portion of the overhead costs of such
organization and its branch offices.
Because of the NASD Rule limitation on the amount of sales commissions and
distribution fees paid during any fiscal year, a high level of sales of Fund
shares during the initial years of the Fund's operations would cause a large
portion of the sales commission attributable to a sale of Fund shares to be
accrued and paid by the Fund to the Principal Underwriter in fiscal years
subsequent to the year in which such shares were sold. This spreading of sales
commissions payments under the Plan over an extended period would result in the
incurrence and payment of increased distribution fees under the Plan.
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Trust have initially implemented the Plan by authorizing the
Fund to make quarterly service fee payments to the Principal Underwriter and
Authorized Firms in amounts not expected to exceed .25% per annum of the Fund's
average daily net assets based on the value of Fund shares sold by such persons
and remaining outstanding for at least one year. As permitted by the NASD Rule,
such payments are made for personal services and/or the maintenance of
shareholder accounts. Service fees are separate and distinct from the sales
commissions and distribution fees payable by the Fund to the Principal
Underwriter, and as such are not subject to automatic discontinuance when there
are no outstanding Uncovered Distribution Charges of the Principal Underwriter.
The Fund expects to begin making service fee payments during the quarter ending
September 30, 1996.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell a minimum dollar amount of the Fund's shares and/or
shares of other funds distributed by the Principal Underwriter. In some
instances, such additional incentives may be offered only to certain Authorized
Firms whose representatives are expected to sell significant amounts of shares.
In addition, the Principal Underwriter may from time to time increase or
decrease the sales commissions payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares, and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
VALUING FUND SHARES
- --------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by IBT Fund Services (Canada) Inc., (as agent for the Fund)
in the manner authorized by the Trustees of the Trust. IBT Fund Services
(Canada), Inc. is a subsidiary of Investors Bank & Trust ("IBT"), the Fund's and
the Portfolio's custodian. Net asset value is computed by dividing the value of
the Fund's total assets, less its liabilities, by the number of Fund shares
outstanding. Because the Fund invests its assets in an interest in the
Portfolio, the Fund's net asset value will reflect the value of its interest in
the Portfolio (which, in turn, reflects the underlying value of the Portfolio's
assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter, which
is a wholly-owned subsidiary of Eaton Vance.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT Fund Services (Canada) Inc. (as 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.
Net asset value is computed by subtracting the liabilities of the Portfolio from
the value of its total assets. 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.
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SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING
THE NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
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HOW TO BUY FUND SHARES
- --------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the net asset value per share of the Fund next determined after an order is
effective. The Fund may suspend the offering of shares at any time and may
refuse an order for the purchase of shares.
An initial investment in the Fund must be at least $1,000. Once an account has
been established the investor may send investments of $50 or more at any time
directly to the Fund's Transfer Agent (the "Transfer Agent") as follows: The
Shareholder Services Group, Inc. BOS725, P.O. Box 1559, Boston, MA 02104. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
In connection with employee benefit or other continuous group purchase plans
under which the average initial purchase by a participant of the plan is $1,000
or more, the Fund may accept initial investments of less than $1,000 on the part
of an individual participant. In the event a shareholder who is a participant of
such a plan terminates participation in the plan, his or her shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Fund as described below under "How to
Redeem Fund Shares."
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Manager, in exchange for Fund
shares at their net asset value as determined above. The minimum value of
securities (or securities and cash) accepted for deposit is $5,000. Securities
accepted will be sold by IBT as agent for the account of their owner on the day
of their receipt by IBT or as soon thereafter as possible. The number of Fund
shares to be issued in exchange for securities will be the aggregate proceeds
from the sale of such securities, divided by the applicable net asset value per
Fund share on the day such proceeds are received. Eaton Vance will use
reasonable efforts to obtain the then current market price for such securities,
but does not guarantee the best price available. Eaton Vance will absorb any
transaction costs, such as commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Marathon Information Age Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Information Age Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, are advised to contact Eaton Vance to determine
whether the securities are acceptable before forwarding such securities to IBT.
Eaton Vance reserves the right to reject any securities. Exchanging securities
for Fund shares may create a taxable gain or loss. Each investor should consult
his or her tax adviser with respect to the particular federal, state and local
tax consequences of exchanging securities for Fund shares.
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IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
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HOW TO REDEEM FUND SHARES
- --------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO THE SHAREHOLDER SERVICES
GROUP, INC., BOS725, P.O. BOX 1559, BOSTON, MA 02104, during its business hours
a written request for redemption in good order, plus any share certificates with
executed stock powers. The redemption price will be based on the net asset value
per Fund share next computed after such delivery. Good order means that all
relevant documents must be endorsed by the record owner (s) exactly as the
shares are registered and the signature(s) must be guaranteed by a member of
either the Securities Transfer Association's STAMP program or the New York Stock
Exchange's Medallion Signature Program, or certain banks, savings and loan
institutions, credit unions, securities dealers, securities exchanges, clearing
agencies and registered securities associations as required by a regulation of
the Securities and Exchange Commission and acceptable to The Shareholder
Services Group, Inc. In addition, in some cases, good order may require the
furnishing of additional documents such as where shares are registered in the
name of a corporation, partnership or fiduciary.
Within seven days after receipt of a redemption request in good order by The
Shareholder Services Group, Inc., the Fund will make payment in cash for the net
asset value of the shares as of the date determined above, reduced by the amount
of any applicable contingent deferred sales charges (described below) and any
federal income tax required to be withheld. Although the Fund normally expects
to make payment in cash for redeemed shares, the Trust, subject to compliance
with applicable regulations, has reserved the right to pay the redemption price
of shares of the Fund, either totally or partially, by a distribution in kind of
readily marketable securities withdrawn by the Fund from the Portfolio. The
securities so distributed would be valued pursuant to the Portfolio's valuation
procedures. If a shareholder received a distribution in kind, the shareholder
could incur brokerage or other charges in converting the securities to cash.
To sell shares at their net asset value through an Authorized Firm (a
repurchase), a shareholder can place a repurchase order with the Authorized
Firm, which may charge a fee. The value of such shares is based upon the net
asset value calculated after EVD, as the Fund's agent, receives the order. It is
the Authorized Firm's responsibility to transmit promptly repurchase orders to
EVD. Throughout this Prospectus, the word "redemption" is generally meant to
include a repurchase.
If shares were recently purchased, the proceeds of a redemption (or repurchase)
will not be sent until the check (including a certified or cashier's check)
received for the shares purchased has cleared. Payment for shares tendered for
redemption may be delayed up to 15 days from the purchase date when the purchase
check has not yet cleared. Redemptions or repurchases may result in a taxable
gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem accounts with balances of less than $1,000. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. Thus, an investor making an initial investment of $1,000
would not be able to redeem shares without being subject to this policy.
However, no such redemption would be required by the Fund if the cause of the
low account balance was a reduction in the net asset value of Fund shares. No
contingent deferred sales charge will be imposed with respect to such
involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Shares redeemed within the first six years of
their purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge.
This contingent deferred sales charge is imposed on any redemption the amount of
which exceeds the aggregate value at the time of redemption of (a) all shares in
the account purchased more than six years prior to the redemption, (b) all
shares in the account acquired through reinvestment of distributions, and (c)
the increase, if any, of value in the other shares in the account (namely those
purchased within the six years preceding the redemption) over the purchase price
of such shares. Redemptions are processed in a manner to maximize the amount of
redemption proceeds which will not be subject to a contingent deferred sales
charge. That is, each redemption will be assumed to have been made first from
the exempt amounts referred to in clauses (a), (b) and (c) above, and second
through liquidation of those shares in the account referred to in clause (c) on
a first-in-first-out basis. Any contingent deferred sales charge which is
required to be imposed on share redemptions will be made in accordance with the
following schedule:
YEAR OF REDEMPTION CONTINGENT DEFERRED
AFTER PURCHASE SALES CHARGE
----------------------------------------------------
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%
In calculating the contingent deferred sales charge upon the redemption of Fund
shares acquired in an exchange for shares of a fund currently listed under "The
Eaton Vance Exchange Privilege," the contingent deferred sales charge schedule
applicable to the shares at the time of purchase will apply and the purchase of
Fund shares acquired in the exchange is deemed to have occurred at the time of
the original purchase of the exchanged shares. The contingent deferred sales
charge will be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholder Services"), (2) as part of a required distribution from
a tax-sheltered retirement plan, or (3) following the death of all beneficial
owners of such shares, provided the redemption is requested within one year of
death (a death certificate and other applicable documents may be required).
No contingent deferred sales charge will be imposed on Fund shares which have
been sold to Eaton Vance or its affiliates, or to their respective employees or
clients. The contingent deferred sales charge will be paid to the Principal
Underwriter or the Fund.
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THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CONTINGENT DEFERRED
SALES CHARGE. ASSUME THAT AN INVESTOR PURCHASES $10,000 OF THE FUND'S SHARES
AND THAT 16 MONTHS LATER THE VALUE OF THE ACCOUNT HAS GROWN THROUGH INVESTMENT
PERFORMANCE AND REINVESTMENT OF DIVIDENDS TO $12,000. THE INVESTOR THEN MAY
REDEEM UP TO $2,000 OF SHARES WITHOUT INCURRING A CONTINGENT DEFERRED SALES
CHARGE. IF THE INVESTOR SHOULD REDEEM $3,000 OF SHARES, A CHARGE WOULD BE
IMPOSED ON $1,000 OF THE REDEMPTION. THE RATE WOULD BE 5% BECAUSE THE
REDEMPTION WAS MADE IN THE SECOND YEAR AFTER THE PURCHASE WAS MADE AND THE
CHARGE WOULD BE $50.
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REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent certified public accountants. Shortly
after the end of each calendar year, the Fund will furnish all shareholders with
information necessary for preparing federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S TRANSFER
AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete
record of all transactions between the investor and the Fund which at all times
shows the balance of shares owned. The Fund will not issue share certificates
except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain investment plans, statements may
be sent only quarterly.) THE LIFETIME INVESTING ACCOUNT PERMITS A SHAREHOLDER TO
MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to The
Shareholders Services Group, Inc.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA 02104 (please provide the name of the shareholder, the Fund
and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA 02104. The currently effective option will appear on each
confirmation statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares of the Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the account,
or to obtain information about the account. The transfer of shares in a "street
name" account to an account with another dealer or to an account directly with
the Fund involves special procedures and will require the beneficial owner to
obtain historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an investment
firm, or transferring the account to another investment firm, an investor
wishing to reinvest distributions should determine whether the firm which will
hold the shares allows reinvestment of distributions in "street name" accounts.
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UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL
INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE.
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THE EATON VANCE EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of one or more other
funds in the Eaton Vance Marathon Group of Funds (which includes Eaton Vance
Equity-Income Trust and any EV Marathon fund, except Eaton Vance Prime Rate
Reserves) or Eaton Vance Money Market Fund, which are distributed subject to a
contingent deferred sales charge, on the basis of the net asset value per share
of each fund at the time of the exchange, provided that such 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.
The Shareholder Services Group, Inc. makes exchanges at the next determined net
asset value after receiving an exchange request in good order (see "How to
Redeem Fund Shares"). Consult The Shareholder Services Group, Inc. for
additional information concerning the exchange privilege. Applications and
prospectuses of other funds are available from Authorized Firms or the Principal
Underwriter. The prospectus for each fund describes its investment objectives
and policies, and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
No contingent deferred sales charge is imposed on exchanges. For purposes of
calculating the contingent deferred sales charge upon the redemption of shares
acquired in an exchange, the contingent deferred sales charge schedule
applicable to the shares at the time of purchase will apply and the purchase of
shares acquired in one or more exchanges is deemed to have occurred at the time
of the original purchase of the exchanged shares. For the contingent deferred
sales charge schedule applicable to the Eaton Vance Marathon Group of Funds
(except EV Marathon Strategic Income Fund and Class I shares of any EV Marathon
Limited Maturity Fund), see "How to Redeem Fund Shares." The contingent deferred
sales charge schedule applicable to EV Marathon Strategic Income Fund and Class
I shares of any EV Marathon Limited Maturity Fund is 3%, 2.5%, 2% or 1% in the
event of a redemption occurring in the first, second, third or fourth year,
respectively, after the original share purchase.
Shares of the other funds in the Eaton Vance Marathon Group of Funds and shares
of Eaton Vance Money Market Fund may be exchanged for Fund shares on the basis
of the net asset value per share of each fund at the time of the exchange, but
subject to any restrictions or qualifications set forth in the current
prospectus of any such fund.
Telephone exchanges are accepted by The Shareholders Services Group, Inc.
provided that the investor has not disclaimed in writing the use of the
privilege. To effect such exchanges, call The Shareholder Services Group, Inc.
at 800-262-1122 or, within Massachusetts, 617-573-9403, Monday through Friday,
9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone
exchange must be registered in the same name(s) and with the same address as
the shares being exchanged. Neither the Fund, the Principal Underwriter nor
The Shareholder Services Group, Inc. will be responsible for the authenticity
of exchange instructions received by telephone, provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Marathon Information Age Fund may be mailed directly to The Shareholder Services
Group, Inc. BOS725, P.O. Box 1559, Boston, MA 02104 at any time -- whether or
not distributions are reinvested. The name of the shareholder, the Fund and the
account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks in an aggregate amount that does not exceed annually
12% of the account balance at the time the plan is established. Such amount will
not be subject to a contingent deferred sales charge. See "How to Redeem Fund
Shares." A minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST, WITH CREDIT FOR ANY CONTINGENT DEFERRED SALES CHARGES PAID ON THE
REPURCHASED OR REDEEMED SHARES, ANY PORTION OR ALL OF THE REPURCHASE OR
REDEMPTION PROCEEDS (PLUS THAT AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO
ROUND OFF THE PURCHASE TO THE NEAREST FULL SHARE) IN SHARES OF THE FUND,
provided that the reinvestment is effected within 60 days after such repurchase
or redemption, and the privilege has not been used more than once in the prior
12 months. Shares are sold to a reinvesting shareholder at the net asset value
next determined following timely receipt of a written purchase order by the
Principal Underwriter or by the Fund (or by the Fund's Transfer Agent). To the
extent that any shares of the Fund are sold at a loss and the proceeds are
reinvested in shares of the Fund (or other shares of the Fund are acquired
within the period beginning 30 days before and ending 30 days after the date of
the redemption), some or all of the loss generally will not be allowed as a tax
deduction. Shareholders should consult their tax advisers concerning the tax
consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase
in connection with the following tax-sheltered retirement plans:
- -- Pension and Profit Sharing Plans for self-employed individuals,
corporations and 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 of 1986, as amended (the "Code").
Detailed information concerning these plans, including certain exceptions to
minimum investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
Federal income tax consequences of establishing a plan. Under all plans,
dividends and distributions will be automatically reinvested in additional
shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. The Fund's present policy is 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 (if any) allocated to the
Fund by the Portfolio (reduced by any available capital loss carryforwards from
prior years).
Shareholders may reinvest all distributions in shares of the Fund without a
sales charge at the net asset value per share 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 reinvested in additional shares of the Fund and regardless of
the length of time Fund shares have been owned by the shareholder.
If shares are purchased shortly before the record date of a distribution, the
shareholder will pay the full price for the shares and then receive some portion
of the price back as a taxable distribution. The amount, timing and character of
the Fund's distributions to shareholders may be affected by special tax rules
governing the Portfolio's activities in options, futures and forward foreign
currency exchange transactions or certain other investments.
Certain distributions, if declared by the Fund in October, November or December
and paid the following January, will be taxable to shareholders as if received
on December 31 of the year in which they are declared.
The Fund intends to qualify as a regulated investment company under the Code and
to satisfy all requirements necessary to be relieved of federal taxes on income
and gains it distributes to shareholders. In satisfying these requirements, the
Fund will treat itself as owning its proportionate share of each of the
Portfolio's assets and as entitled to the income of the Portfolio properly
attributable to such share.
As a regulated investment company under the Code, the Fund does not pay federal
income or excise taxes to the extent that it distributes to shareholders its net
investment income and net realized capital gains in accordance with the timing
requirements imposed by the Code. As a partnership under the Code, the Portfolio
does not pay federal income or excise taxes.
Income 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 treat 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 a 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
proportionate share of such taxes. The availability of foreign tax credits or
deductions for shareholders is subject to certain additional restrictions and
limitations.
The Fund will provide its shareholders annually with tax information notices and
Forms 1099 to assist in the preparation of their federal and state tax returns
for the prior calendar year's distributions, proceeds from the redemption or
exchange of Fund shares, and federal income tax (if any) withheld by the Fund's
Transfer Agent.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 invested at the maximum public offering price
(net asset value) 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 a complete redemption of the investment and the
deduction of any contingent deferred sales charge at the end of the period. The
Fund may also publish annual and cumulative total return figures from time to
time. The Fund may 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 publish total return figures which do not take into account
any contingent deferred sales charge which may be imposed upon redemptions at
the end of the specified period. Any performance figure which does not take into
account the contingent deferred sales charge would be reduced to the extent such
charge is imposed upon a redemption.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's total return for any prior period
should not be considered a representation of what an investment may earn or what
the Fund'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. If the expenses related to the operation of the Fund or the Portfolio
are allocated to Eaton Vance, the Fund's performance will be higher.
<PAGE>
[LOGO]
EV MARATHON
INFORMATION
AGE FUND
PROSPECTUS
AUGUST 23, 1995
EV MARATHON INFORMATION
AGE FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV MARATHON INFORMATION AGE FUND
ADMINISTRATOR OF INFORMATION AGE PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
CO-ADVISERS OF INFORMATION AGE PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Lloyd George Investment Management (Bermuda) Limited,
3808 One Exchange Square, Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 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
Coopers & Lybrand, L.L.P., One Post Office Square, Boston, MA 02109
M-IAP
<PAGE>
EV TRADITIONAL
INFORMATION AGE FUND
- ------------------------------------------------------------------------------
EV TRADITIONAL INFORMATION AGE FUND (THE "FUND") IS A MUTUAL FUND SEEKING
LONG-TERM CAPITAL GROWTH BY INVESTING IN A GLOBAL AND DIVERSIFIED PORTFOLIO OF
SECURITIES OF INFORMATION AGE COMPANIES. THE FUND INVESTS ITS ASSETS IN
INFORMATION AGE PORTFOLIO (THE "PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT
COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY
INVESTING DIRECTLY IN AND MANAGING ITS OWN PORTFOLIO OF SECURITIES AS WITH
HISTORICALLY STRUCTURED MUTUAL FUNDS. 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 August 23,
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. (the "Principal
Underwriter"), 24 Federal Street, Boston, MA 02110 (telephone (800) 225-6265).
The sponsor and manager of the Fund and the administrator of the Portfolio is
Eaton Vance Management, 24 Federal Street, Boston, MA 02110 ("Eaton Vance" or
the "Manager"). The Portfolio's investment advisers are Boston Management and
Research ("BMR"), a wholly-owned subsidiary of Eaton Vance, and Lloyd George
Investment Management (Bermuda) Limited ("Lloyd George") (collectively, the
"Advisers"). The principal business address of BMR is 24 Federal Street,
Boston, MA 02110 and of Lloyd George 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.
- ------------------------------------------------------------------------------
PAGE PAGE
Shareholder and Fund Expenses ..... 2 How to Redeem Fund Shares ...... 12
The Fund's Investment Objective .... 3 Reports to Shareholders ........ 13
The Portfolio's Investments ........ 3 The Lifetime Investing Account/
Investment Policies and Risks ...... 4 Distribution Options ......... 13
Organization of the Fund and the The Eaton Vance Exchange
Portfolio ........................ 6 Privilege .................... 14
Management of the Fund and the Eaton Vance Shareholder Services 15
Portfolio ........................ 8 Distributions and Taxes ........ 16
Distribution Plan .................. 9 Performance Information ........ 17
Valuing Fund Shares ................ 10 Statement of Intention and
How to Buy Fund Shares ............. 10 Escrow Agreement ............. 18
- --------------------------------------------------------------------------------
PROSPECTUS DATED AUGUST 23, 1995
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases (as a percentage of
offering price) 4.75%
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares 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) 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%, 0.75% and 0.25%, respectively) 1.25%
Rule 12b-1 Distribution Fees 0.50
Other Expenses 0.50
-----
Total Operating Expenses 2.25%
=====
EXAMPLE 1 YEAR 3 YEARS
------------------------------------------------------------------------------
An investor would pay the following maximum initial
sales charge and expenses on a $1,000 investment,
assuming (a) 5% annual return and (b) redemption at
the end of each period: $69 $114
NOTES:
The table and Example summarize the aggregate expenses of the Fund and are
designed to help investors understand the costs and expenses they will bear,
directly or indirectly, by investing in the Fund. Other Expenses are estimated
for the current fiscal year because the Fund was only recently organized.
The Fund invests exclusively in the Portfolio. The Trustees of the Trust believe
that over time the aggregate per share expenses of the Fund and the Portfolio
should be approximately equal to or less than the per share expenses which the
Fund would incur if the Trust retained the services of an investment adviser for
the Fund and the Fund's assets were invested directly in the type of securities
being held by the Portfolio.
The Example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. Federal
regulations require the Example to assume a 5% annual return, but actual return
will vary. For further information regarding the expenses of both the Fund and
the Portfolio see "Organization of the Fund and the Portfolio," "Management of
the Fund and the Portfolio," "How to Redeem Fund Shares" and "Distribution
Plan." A long-term shareholder in the Fund 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.
No sales charge is payable at the time of purchase on investments of $1 million
or more. However, a contingent deferred sales charge of 1% will be imposed on
such investments in the event of certain redemptions within 18 months of
purchase. See "How to Buy Fund Shares," "How to Redeem Fund Shares" and "Eaton
Vance Shareholder Services."
For shares sold by Authorized Firms and remaining outstanding for at least one
year, the Fund will pay service fees not exceeding .25% per annum of its
average daily net assets. The Fund expects to begin making service fee
payments during the quarter ending September 30, 1996. Therefore, expenses
after year one will be higher. See "Distribution Plan."
Other investment companies and investors with different distribution
arrangements and fees are investing in the Portfolio and others may do so in the
future. See "Organization of the Fund and the Portfolio."
THE FUND'S INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL GROWTH. IT CURRENTLY
SEEKS TO MEET ITS INVESTMENT OBJECTIVE BY INVESTING ITS ASSETS IN INFORMATION
AGE PORTFOLIO (THE "PORTFOLIO"), A SEPARATE REGISTERED INVESTMENT COMPANY THAT
INVESTS IN SECURITIES OF INFORMATION AGE COMPANIES.
The Fund is intended for long-term investors who can accept international
investment risk and little or no current income. The Fund is not intended to be
a complete investment program. Prospective investors should take into account
their objectives and other investments when considering the purchase of Fund
shares. The Fund cannot assure achievement of its investment objective. See
"Investment Policies and Risks" 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.
THE PORTFOLIO'S INVESTMENTS
- --------------------------------------------------------------------------------
In recent years, a number of technological advances have facilitated the global
dissemination of information of all types including text, voice, images, moving
pictures and digital data streams. These technological advances may be likened
to the dynamic process of invention and application of new technology in the
eighteenth and nineteenth centuries that has come to be known as the Industrial
Revolution, ushering in the Industrial Age. In the same way, the Advisers
believe that the current pace of technological change in the dissemination and
use of information will be looked upon as the Information Revolution and will
usher in the Information Age.
The leading equity investments of the Information Age may be those companies,
referred to as information age companies, developing and successfully adopting
these new technologies to meet the needs of the rapidly changing information
marketplace. The global dissemination of information and information processing
technologies has enhanced economic growth in the developed economies of the
world and is contributing to the rapid modernization of the world's newly
developing economies. The Advisers believe that the pace and scope of these
technological developments are likely to increase and that their economic impact
will become increasingly important. The Advisers believe that investment in
companies participating in these developments both as producers and as
beneficiaries of new technologies is likely to produce favorable returns. These
industries are dynamic and the Advisers will endeavor to keep abreast of changes
in information products, services and technologies. The Advisers may consider
investment in companies that benefit from:
* Emerging and established technologies that will enhance the processing and
transfer of information. These may include digital technologies, such as
computer hardware, software and networks; mobile telephony and established
telecommunications networks of all sorts; fiber optic communications
equipment; and developing methods of utilizing electromagnetic spectrum for
communications.
* Privatization and deregulation of state owned telecommunication, television
and other information media companies both in the developed economies and the
emerging economies where these companies may reach new markets and expand
their business opportunities.
* Wider access to information and entertainment media by peoples around the
globe, including broadcasters; cable television networks; producers and
publishers of entertainment, news, literature and scholarly information;
owners of libraries and data bases of all kinds; advertising agencies and in
some cases advertisers who can capitalize on rising demand due to broader
consumer awareness, particularly in new markets.
* Development of new information infrastructure in developing countries, such as
producers and developers of communication network equipment and managers of
sophisticated communication networks.
* Affordability of, and rising demand for, information industries' consumer
products and services particularly in the emerging economies such as China,
India, Africa, Latin America, and Eastern Europe where penetration of these
products and services is low by world standards.
By focusing on companies such as the foregoing, the Advisers believe that the
opportunity for long-term capital growth exits. Of course, there can be no
assurance that the Portfolio will be able to take advantage of the foregoing
opportunities, or that such investment opportunities will be favorable.
INVESTMENT POLICIES AND RISKS
- --------------------------------------------------------------------------------
The Portfolio invests in a global and diversified portfolio of securities of
information age companies. Information age companies are companies that may be
engaged in providing information services, such as telephony, broadcasting,
cable or satellite television, publishing, advertising, producing information
and entertainment media, data processing, networking of data processing and
communication systems, or providing consumer interconnection to computer
communication networks. In addition, such companies may be engaged in the
development, manufacture, sale, or servicing of information age products, such
as computer hardware, software and networking equipment, mobile telephony
devices, telecommunications network switches and equipment, television and radio
broadcasting and receiving equipment, or news and information media of all
types. The Portfolio may invest in securities of both established and emerging
companies operating in developed and emerging economies. The securities may be
denominated in foreign currencies.
Under normal market conditions, the Portfolio will invest at least 65% of its
assets in securities of information age companies. Securities eligible for
purchase include common and preferred stocks; equity interests in trusts,
partnerships, joint ventures and other unincorporated entities or enterprises;
special classes of shares available only to foreign investors in markets that
restrict ownership by foreign investors to certain classes of equity securities;
convertible preferred stocks; and other convertible instruments. Convertible
debt instruments generally will be rated below investment grade (i.e., rated
lower than Baa by Moody's Investors Service, Inc. or lower than BBB by Standard
& Poor's Ratings Group) or, if unrated, determined by an Adviser to be of
equivalent quality. Convertible debt securities so rated are commonly called
"junk bonds" and have risks similar to equity securities; they are speculative
and changes in economic conditions or other circumstances are more likely to
lead to a weakened capacity to make principal and interest payments than is the
case with higher grade debt securities. Such debt securities will not exceed 20%
of total assets. For temporary defensive purposes, the Portfolio may invest
without limit in debt securities of foreign and United States companies, foreign
governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in high
quality money market instruments.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio's investments are subject
to the risk of adverse developments affecting particular companies or industries
and securities markets generally. In addition, many information age companies
are subject to substantial governmental regulations that can affect their
prospects. The enforcement of patent, trademark and other intellectual property
laws will affect the value of many of such companies. The securities of smaller,
less-seasoned companies, which may include legally restricted securities, are
generally subject to greater price fluctuations, limited liquidity, higher
transaction costs and higher investment risk. The Portfolio may invest up to 15%
of its net assets in illiquid securities (which excludes securities eligible for
resale under Rule 144A of the Securities Act of 1933). The Portfolio also may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions.
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 tax), changes in governmental
administration or economic or monetary policy (in this country or abroad), or
changed circumstances in dealings between nations. Because investment in foreign
issuers will usually involve currencies of foreign countries, the value of the
assets of the Portfolio as measured in U.S. dollars may be adversely affected by
changes in foreign currency exchange rates. Such rates may fluctuate
significantly over short periods of time causing the Portfolio's net asset value
to fluctuate as well. Costs are incurred in connection with conversions between
various currencies. In addition, foreign brokerage commissions, custody fees and
other costs of investing are generally higher than in the United States, and
foreign securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be adversely affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations. In addition to investing in foreign companies of
countries which represent established and developed economies, the Portfolio may
also invest its assets in the emerging economies of lesser developed countries
such as China and India, and countries located in Latin America and Eastern
Europe. Consistent with its investment objective, the Portfolio is not limited
in the percentage of assets it may invest in such securities. The relative risk
and cost of investing in the securities of companies in such emerging economies
may be higher than an investment in securities of companies in more developed
countries. As of the date of this Prospectus, the Advisers initially expect to
invest approximately 50% of the Portfolio's assets in foreign securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return, to hedge against
fluctuations in securities prices, interest rates or currency exchange rates, or
as a substitute for the purchase or sale of securities or currencies. The
Portfolio's transactions in derivative instruments may be in the U.S. or abroad
and may include the purchase or sale of futures contracts on securities,
securities indices, other indices, other financial instruments or currencies;
options on futures contracts; exchange-traded and over-the-counter options on
securities, indices or currencies; and forward foreign currency exchange
contracts. The Portfolio's transactions in derivative instruments involve a risk
of loss or depreciation due to unanticipated adverse changes in securities
prices, interest rates, the other financial instruments' prices or currency
exchange rates, the inability to close out a position or default by the
counterparty. The loss on derivative instruments (other than purchased options)
may exceed the Portfolio's initial investment in these instruments. In addition,
the Portfolio may lose the entire premium paid for purchased options that expire
before they can be profitably exercised by the Portfolio. The Portfolio incurs
transaction costs in opening and closing positions in derivative instruments.
There can be no assurance that an Adviser's use of derivative instruments will
be advantageous to the Portfolio.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the liquidation value of the Portfolio's investments, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into. There is no current intention to use derivative instruments for
non-hedging purposes.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
an Adviser determines that there is an established historical pattern or
correlation between the two currencies (or the basket of currencies and the
underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
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
special investment techniques and risks. If Lloyd George is incorrect in its
forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
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 an 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.
The Portfolio does not expect to invest more than 5% of its total assets in
repurchase agreements under normal circumstances.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to 10%
of its total assets in the securities of other investment companies unaffiliated
with an Adviser that have the characteristics of closed-end investment
companies. The Portfolio will indirectly bear its proportionate share of any
management fees paid by investment companies in which it invests in addition to
the advisory fee paid by the Portfolio. The value of closed-end investment
company securities, which are usually traded on an exchange, is affected by
demand for the securities themselves, independent of the demand for the
underlying portfolio assets, and, accordingly, such securities can trade at a
discount from their net asset values.
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. 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 not invest 25% or more 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 and (ii) securities denominated in the currency of any one country.
Except for the fundamental investment restrictions and policies specifically
identified above and enumerated in the Statement of Additional Information, the
investment objective and policies of the 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. Please refer to the Statement of Additional Information for further
information regarding the investment policies and risks of the Fund and
Portfolio.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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The Fund is a diversified series of Eaton Vance Growth Trust, a business trust
established under Massachusetts law pursuant to a Declaration of Trust dated May
25, 1989, as amended, and organized as the successor to a Massachusetts
corporation which commenced its investment company operations in 1954. THE
TRUSTEES OF THE TRUST ARE RESPONSIBLE FOR THE OVERALL MANAGEMENT AND SUPERVISION
OF ITS AFFAIRS. The Trust may issue an unlimited number of shares of beneficial
interest (no par value per share) in one or more series and because the Trust
can offer separate series (such as the Fund) it is known as a "series company."
Each share represents an equal proportionate beneficial interest in the Fund.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem Fund Shares."
Shareholders are entitled to one vote for each full share held. Fractional
shares may be voted proportionately. Shares have no preemptive or conversion
rights and are freely transferable. In the event of the liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets of the Fund
available for distribution to shareholders.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The
Portfolio, as well as the Trust, intends to comply with all applicable federal
and state securities laws. The Portfolio's Declaration of Trust provides that
the Fund and other entities permitted to invest in the Portfolio (e.g., other
U.S. and foreign investment companies, and common and commingled trust funds)
will each be liable for all obligations of the Portfolio. However, the risk of
the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio itself
is unable to meet its obligations. Accordingly, the Trustees of the Trust
believe that neither the Fund nor its shareholders will be adversely affected by
reason of the Fund investing in the Portfolio.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in
the Fund should be aware that the Fund, unlike mutual funds which directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing its assets in an interest in the Portfolio
(although the Fund may temporarily hold a de minimus amount of cash), which is a
separate investment company with an identical investment objective. Therefore,
the Fund's interest in securities owned by the Portfolio is indirect. In
addition to selling an interest to the Fund, the Portfolio may sell interests to
other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the various funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures,
including funds that have multiple classes of shares. For information regarding
the investment objective, policies and restrictions of the Portfolio, see
"Investment Policies and Risks." Further information regarding the investment
practices of the Portfolio may be found in the Statement of Additional
Information.
The Trustees of the Trust have considered the advantages and disadvantages of
investing the assets of the Fund in the Portfolio, as well as the advantages and
disadvantages of the two-tier format. The Trustees believe that the structure
offers opportunities for substantial growth in the assets of the Portfolio, and
affords the potential for economies of scale for the Fund, at least when the
assets of the Portfolio exceed $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, as the case may be.
Any such change of the investment objective will be preceded by thirty days'
advance written notice to the shareholders of the Fund or the investors in the
Portfolio, as the case may be. If a shareholder redeems shares because of a
change in the nonfundamental objective or policies of the Fund, those shares may
be subject to a contingent deferred sales charge, as described in "How to Redeem
Fund Shares." In the event the Fund withdraws all of its assets from the
Portfolio, or the Board of Trustees of the Trust determines that the investment
objective of the Portfolio is no longer consistent with the investment objective
of the Fund, such Trustees would consider what action might be taken, including
investing the assets of the Fund in another pooled investment entity or
retaining an investment adviser to manage the Fund's assets in accordance with
its investment objective. The Fund's investment performance may be affected by a
withdrawal of all its assets from the Portfolio.
Information regarding other pooled investment entities or funds which invest in
the Portfolio may be obtained by contacting Eaton Vance Distributors, Inc. (the
"Principal Underwriter" or "EVD"), 24 Federal Street, Boston, MA 02110 (617)
482-8260. Smaller investors in the Portfolio may be adversely affected by the
actions of larger investors in the Portfolio. For example, if a large investor
withdraws from the Portfolio, the remaining investors may experience higher pro
rata operating expenses, thereby producing lower returns. Additionally, the
Portfolio may become less diverse, resulting in increased portfolio risk, and
experience decreasing economies of scale. However, this possibility exists as
well for historically structured funds which have large or institutional
investors.
Until recently, the 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, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Trustees of the Trust, including a majority of the noninterested Trustees,
have approved written procedures designed to identify and address any potential
conflicts of interest arising from the fact that most of the Trustees of the
Trust and the Trustees of the Portfolio are the same. Such procedures require
each Board to take action to resolve any conflict of interest between the Fund
and the Portfolio, and it is possible that the creation of separate Boards may
be considered. For further information concerning the Trustees and officers of
the Trust and the Portfolio, see "Trustees and Officers" in 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 AS THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED
BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED SUBSIDIARY OF EATON
VANCE, AND LLOYD GEORGE INVESTMENT MANAGEMENT (BERMUDA) LIMITED ("LLOYD
GEORGE") (COLLECTIVELY, THE "ADVISERS") AS ITS INVESTMENT ADVISERS. The
Portfolio's non-U.S. assets are co-managed by Robert J. D. Lloyd George,
Chairman and Chief Executive Officer of Lloyd George, and the Portfolio's U.S.
assets are managed by Duncan W. Richardson, Vice President of Eaton Vance and
BMR.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. BMR or Eaton Vance acts as investment adviser to
investment companies and various individual and institutional clients with
assets under management of approximately $15 billion. Duncan W. Richardson has
acted as a portfolio manager of the Portfolio since it commenced operations. He
has been a Vice President of Eaton Vance since 1990 and of BMR since 1992, and
an employee of Eaton Vance since 1987.
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 21% of the Class A Shares issued by Lloyd George Management (B.V.I.)
Limited ("LGM"), the parent of Lloyd George.
Lloyd George, which maintains offices in Hong Kong, London, England and Bombay,
India, is a corporation formed on October 29, 1991 under the laws of Bermuda.
Lloyd George is registered as an investment adviser with the U.S. Securities and
Exchange Commission (the "Commission"). Lloyd George is a subsidiary of LGM. LGM
and its subsidiaries act as investment adviser to various individual and
institutional clients with total assets under management of more than $1
billion. Robert J. D. Lloyd George has acted as a portfolio manager of the
Portfolio since it commenced operations. He is the Chairman and Chief Executive
Officer of LGM and Lloyd George. Prior to founding LGM, Mr. Lloyd George was
Managing Director of Indosuez Asia Investment Services, Ltd. (1984-1991).
Acting under the general supervision of the Board of Trustees of the Portfolio,
the Advisers manage the investment of the Portfolio's assets. Under the
investment advisory agreement with the Portfolio, the Advisers receive a monthly
advisory fee, to be divided equally between them, of .0625% (equivalent to .75%
annually) of the average daily net assets of the Portfolio up to $500 million,
which fee declines at intervals above $500 million. The Advisers furnish for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio.
The Advisers place the portfolio securities transactions of the Portfolio with
many broker-dealer firms and use their 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, an Adviser may consider
sales of shares of the Fund or of other investment companies sponsored by BMR or
Eaton Vance as a factor in the selection of firms to execute portfolio
transactions.
Acting under the general supervision of the Board of Trustees of the Trust and
the Portfolio, Eaton Vance 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 Advisers for the Portfolio, recordkeeping,
preparation and filing of documents required to comply with federal and state
securities laws, supervising the activities of the transfer agent of the Fund
and the custodian of the Portfolio, providing assistance in connection with
Trustees' and shareholders' meetings and other management and administrative
services necessary to conduct the business of the Fund and the Portfolio. Eaton
Vance also furnishes for the use of the Fund and the Portfolio office space and
all necessary office facilities, equipment and personnel for managing and
administering the business affairs of the Fund and the Portfolio. Eaton Vance
does not provide any investment management or advisory services to the Portfolio
or the Fund.
Under its management contract with the Fund, Eaton Vance receives a monthly
management fee in the amount of 1/48 of 1% (equal to .25% annually) of the
average daily net assets of the Fund up to $500 million, which fee declines at
intervals above $500 million. In addition, under its administration agreement
with the Portfolio, Eaton Vance receives a monthly administration fee in the
amount of 1/48 of 1% (equal to .25% annually) of the average daily net assets of
the Portfolio up to $500 million, which fee declines at intervals above $500
million. The combined investment 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 an Adviser
under the investment advisory agreement, by Eaton Vance under the management
contract or the administration agreement, or by EVD under the distribution
agreement. Such costs and expenses to be borne by each of the Fund or the
Portfolio, as the case may be, include, without limitation: custody and transfer
agency fees and expenses, including those incurred for determining net asset
value and keeping accounting books and records; expenses of pricing and
valuation services; the cost of share certificates; membership dues in
investment company organizations; brokerage commissions and fees; fees and
expenses of registering under the securities laws; expenses of reports to
shareholders and investors; proxy statements, and other expenses of
shareholders' or investors' meetings; insurance premiums, printing and mailing
expenses; interest, taxes and corporate fees; legal and accounting expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance or an
Adviser; and investment advisory, management and administration fees. The Fund
and the Portfolio, as the case may be, will also each bear expenses incurred in
connection with litigation in which the Fund or the Portfolio, as the case may
be, is a party and any legal obligation to indemnify its respective officers and
Trustees with respect thereto.
DISTRIBUTION PLAN
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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 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.
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 a financial services firm (an "Authorized Firm"), as
compensation for providing personal services and/or the maintenance of
shareholder accounts, with respect to shares sold by Authorized 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 by the Principal Underwriter to Authorized Firms
will be in addition to sales charges on Fund shares which are reallowed to
Authorized Firms. To the extent that the entire amount of such service fee
payments are not paid to Authorized 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. The Fund expects to
begin making service fee payments during the quarter ending September 30, 1996.
VALUING FUND SHARES
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THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by IBT Fund Services (Canada) Inc., (as agent for the Fund)
in the manner authorized by the Trustees of the Trust. IBT Fund Services
(Canada), Inc. is a subsidiary of Investors Bank & Trust ("IBT"), the Fund's and
the Portfolio's custodian. Net asset value is computed by dividing the value of
the Fund's total assets, less its liabilities, by the number of Fund shares
outstanding. Because the Fund invests its assets in an interest in the
Portfolio, the Fund's net asset value will reflect the value of its interest in
the Portfolio (which, in turn, reflects the underlying value of the Portfolio's
assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per 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 Fund Services (Canada) Inc. (as 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.
Net asset value is computed by subtracting the liabilities of the Portfolio from
the value of its total assets. 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.
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SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
- --------------------------------------------------------------------------------
HOW TO BUY FUND SHARES
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SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the 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 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 the Principal
Underwriter.
The current sales charges and dealer commissions are:
SALES CHARGE SALES CHARGE DEALER COMMISSION
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE AMOUNT INVESTED OFFERING PRICE OFFERING PRICE
- ------------------ ---------------- ---------------- ----------------
Less than $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* 0* 0**
*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.
**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 .80% on the next $1 million, .20% on the
next $2 million and .08% on the excess over $5 million.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in the
Securities Act of 1933. The Principal Underwriter may, from time to time, at its
own expense, provide additional incentives to Authorized Firms which employ
registered representatives who sell a minimum dollar amount of the Fund's shares
and/or shares of other funds distributed by the Principal Underwriter. In some
instances, such additional incentives may be offered only to certain Authorized
Firms whose representatives are expected to sell significant amounts of shares.
In addition, the Principal Underwriter may from time to time increase or
decrease the dealer commissions paid to Authorized Firms.
An initial investment in the Fund must be at least $1,000. Once an account has
been established the investor may send investments of $50 or more at any time
directly to the Fund's Transfer Agent (the "Transfer Agent") as follows: The
Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
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 and its affiliates; to
registered representatives and employees of Authorized Firms; to 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 (1) in connection with
the merger of an investment company with the Fund, (2) 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, and (3) 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.
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 the Principal Underwriter. The 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 as 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 then current market price for such
securities, but does not guarantee the best price available. Eaton Vance will
absorb any transaction costs, such as commissions, on the sale of the
securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Traditional Information Age Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional Information Age Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, are advised to contact Eaton Vance to determine
whether the securities are acceptable before forwarding such securities to IBT.
Eaton Vance reserves the right to reject any securities. Exchanging securities
for Fund shares may create a taxable gain or loss. Each investor should consult
his or her tax adviser with respect to the particular federal, state and local
tax consequences of exchanging securities for Fund shares.
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IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
- --------------------------------------------------------------------------------
HOW TO REDEEM FUND SHARES
- --------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO THE SHAREHOLDER SERVICES
GROUP, INC., BOS725, P.O. BOX 1559, BOSTON, MA 02104, during its business hours
a written request for redemption in good order, plus any share certificates with
executed stock powers. The redemption price will be based on the net asset value
per Fund share next computed after such delivery. Good order means that all
relevant documents must be endorsed by the record owner (s) exactly as the
shares are registered and the signature(s) must be guaranteed by a member of
either the Securities Transfer Association's STAMP program or the New York Stock
Exchange's Medallion Signature Program, or certain banks, savings and loan
institutions, credit unions, securities dealers, securities exchanges, clearing
agencies and registered securities associations as required by a regulation of
the Securities and Exchange Commission and acceptable to The Shareholder
Services Group, Inc. In addition, in some cases, good order may require the
furnishing of additional documents such as where shares are registered in the
name of a corporation, partnership or fiduciary.
Within seven days after receipt of a redemption request in good order by The
Shareholder Services Group, Inc., the Fund will make payment in cash for the net
asset value of the shares as of the date determined above 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 a redemption (or repurchase)
will not be sent until the check (including a certified or cashier's check)
received for the shares purchased has cleared. Payment for shares tendered for
redemption may be delayed up to 15 days from the purchase date when the purchase
check has not yet cleared. Redemptions or repurchases may result in a taxable
gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem accounts with balances of less than $1,000. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. Thus, an investor making an initial investment of $1,000
would not be able to redeem shares without being subject to this policy.
However, no such redemption would be required by the Fund if the cause of the
low account balance was a reduction in the net asset value of Fund shares.
CONTINGENT DEFERRED SALES CHARGE. If shares have been purchased at net asset
value with no initial sale 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 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. Accordingly, 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 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.
REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent certified public accountants. Shortly
after the end of each calendar year, the Fund will furnish all shareholders with
information necessary for preparing federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S TRANSFER
AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete
record of all transactions between the investor and the Fund which at all times
shows the balance of shares owned. The Fund will not issue share certificates
except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain investment plans, statements may
be sent only quarterly.) THE LIFETIME INVESTING ACCOUNT PERMITS A SHAREHOLDER TO
MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to The
Shareholders Services Group, Inc.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA 02104 (please provide the name of the shareholder, the Fund
and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA 02104. The currently effective option will appear on each
confirmation statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares of the Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the account,
or to obtain information about the account. The transfer of shares in a "street
name" account to an account with another dealer or to an account directly with
the Fund involves special procedures and will require the beneficial owner to
obtain historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an investment
firm, or transferring the account to another investment firm, an investor
wishing to reinvest distributions should determine whether the firm which will
hold the shares allows reinvestment of distributions in "street name" accounts.
- --------------------------------------------------------------------------------
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL
INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE.
- --------------------------------------------------------------------------------
THE EATON VANCE EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shares of the Fund currently may 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 the 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 on the basis of the net asset
value per share of each fund at the time of the exchange (plus, in the case of
an exchange made within six months of the date of purchase, an amount equal to
the difference, if any, between the sales charge previously paid on the shares
being exchanged and the sales charge payable on the Fund shares being acquired).
Any such exchange is subject to any restrictions or qualifications set forth in
the current prospectus of any such fund.
Telephone exchanges are accepted by The Shareholders Services Group, Inc.
provided that the investor has not disclaimed in writing the use of the
privilege. To effect such exchanges, call The Shareholder Services Group, Inc.
at 800-262-1122 or, within Massachusetts, 617-573-9403, Monday through Friday,
9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone
exchange must be registered in the same name(s) and with the same address as
the shares being exchanged. Neither the Fund, the Principal Underwriter nor
The Shareholder Services Group, Inc. will be responsible for the authenticity
of exchange instructions received by telephone, provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Traditional Information Age Fund may be mailed directly to The Shareholder
Services Group, Inc. BOS725, P.O. Box 1559, Boston, MA 02104 at any time --
whether or not distributions are reinvested. The name of the shareholder, the
Fund and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
STATEMENT OF INTENTION: Purchases of $100,000 or more made over a 13-month
period are eligible for reduced sales charges. See "Statement of Intention and
Escrow Agreement."
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 an 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 AT NET ASSET VALUE ANY PORTION OR ALL OF THE REPURCHASE OR REDEMPTION
PROCEEDS (PLUS THAT AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO ROUND OFF
THE PURCHASE TO THE NEAREST FULL SHARE) IN SHARES OF THE FUND, or, provided that
the shares repurchased or redeemed have been held for at least 60 days, in
shares of any of the other funds offered by the Principal Underwriter subject to
an initial sales charge, provided that the reinvestment is effected within 60
days after such repurchase or redemption, and the privilege has not been used
more than once in the prior 12 months. Shares are sold to a reinvesting
shareholder at the 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 by the Principal
Underwriter subject to an initial sales charge who wish to reinvest such
redemption or repurchase proceeds in shares of the Fund. If a shareholder
reinvests redemption proceeds within the 60-day period, the shareholder's
account will be credited with the amount of any CDSC paid on such redeemed
shares. To the extent that any shares of the Fund are sold at a loss and the
proceeds are reinvested in shares of the Fund (or other shares of the Fund are
acquired within the period beginning 30 days before and ending 30 days after the
date of the redemption), some or all of the loss generally will not be allowed
as a tax deduction. 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 of 1986, as amended (the "Code").
Detailed information concerning these plans, including certain exceptions to
minimum investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
Federal income tax consequences of establishing a plan. Under all plans,
dividends and distributions will be automatically reinvested in additional
shares.
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS. The Fund's present policy is 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 (if any) allocated to the
Fund by the Portfolio (reduced by any available capital loss carryforwards from
prior years).
Shareholders may reinvest all distributions in shares of the Fund without a
sales charge at the net asset value per share 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 reinvested in additional shares of the Fund and regardless of
the length of time Fund shares have been owned by the shareholder.
If shares are purchased shortly before the record date of a distribution, the
shareholder will pay the full price for the shares and then receive some portion
of the price back as a taxable distribution. The amount, timing and character of
the Fund's distributions to shareholders may be affected by special tax rules
governing the Portfolio's activities in options, futures and forward foreign
currency exchange transactions or certain other investments.
Certain distributions, if declared by the Fund in October, November or December
and paid the following January, will be taxable to shareholders as if received
on December 31 of the year in which they are declared.
Sales charges paid upon a purchase of 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. Any disregarded amounts will result in an
adjustment to the shareholder's tax basis in some or all of any other shares
acquired.
The Fund intends to qualify as a regulated investment company under the Code and
to satisfy all requirements necessary to be relieved of federal taxes on income
and gains it distributes to shareholders. In satisfying these requirements, the
Fund will treat itself as owning its proportionate share of each of the
Portfolio's assets and as entitled to the income of the Portfolio properly
attributable to such share.
As a regulated investment company under the Code, the Fund does not pay federal
income or excise taxes to the extent that it distributes to shareholders its net
investment income and net realized capital gains in accordance with the timing
requirements imposed by the Code. As a partnership under the Code, the Portfolio
does not pay federal income or excise taxes.
Income 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 treat 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 a 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
proportionate share of such taxes. The availability of foreign tax credits or
deductions for shareholders is subject to certain additional restrictions and
limitations.
The Fund will provide its shareholders annually with tax information notices and
Forms 1099 to assist in the preparation of their federal and state tax returns
for the prior calendar year's distributions, proceeds from the redemption or
exchange of Fund shares, and federal income tax (if any) withheld by the Fund's
Transfer Agent.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by 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
the Fund'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. If the expenses related to the operation of the Fund or the Portfolio
are allocated to Eaton Vance, the Fund's performance will be higher.
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 or to the investor's order.
When the minimum investment so specified is completed, the escrowed shares will
be delivered to the investor. If the investor has an accumulation account the
shares will remain on deposit under the investor's account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to 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 the investor's order by the escrow agent.
In signing the application, the investor irrevocably constitutes and appoints
the escrow agent the investor's 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 the Statement to give effect to the lower charge. Any
difference in sales charge will be refunded to the investor in cash, or applied
to the purchase of additional shares at the lower charge if specified by the
investor. This refund will be made by the Authorized Firm and by 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>
EV TRADITIONAL
INFORMATION
AGE FUND
PROSPECTUS
AUGUST 23, 1995
EV TRADITIONAL INFORMATION
AGE FUND
24 FEDERAL STREET
BOSTON, MA 02110
SPONSOR AND MANAGER OF EVTRADITIONAL INFORMATION AGE
FUND ADMINISTRATOR OF INFORMATION AGE PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
CO-ADVISERS OF INFORMATION AGE PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Lloyd George Investment Management (Bermuda) Limited,
3808 One Exchange Square, Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 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
Coopers &Lybrand, L.L.P., One Post Office Square, Boston, MA 02109
T-IAP
[LOGO]
EATON VANCE
-----------------
MUTUAL FUNDS
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
August 23, 1995
EV MARATHON INFORMATION AGE FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Marathon Information Age Fund (the "Fund") and
certain other series of Eaton Vance Growth Trust (the "Trust"). Part II provides
information solely about the Fund. As described in the Prospectus, the Fund
invests its assets in Information Age Portfolio (the "Portfolio"), a separate
registered investment company with the same investment objective and policies as
the Fund. Where appropriate, Part I includes cross-references to the relevant
sections of Part II.
TABLE OF CONTENTS
Page
PART I
Additional Information About Investment Policies ...................... 1
Investment Restrictions ............................................... 5
Trustees and Officers ................................................. 7
Management of the Fund and the Portfolio .............................. 10
Custodian ............................................................. 13
Service for Withdrawal ................................................ 13
Determination of Net Asset Value ...................................... 14
Investment Performance ................................................ 15
Taxes ................................................................. 15
Portfolio Security Transactions ....................................... 17
Other Information ..................................................... 19
Independent Certified Public Accountants .............................. 20
PART II
Fees and Expenses ..................................................... a-1
Principal Underwriter ................................................. a-1
Distribution Plan ..................................................... a-2
Control Persons and Principal Holders of Securities ................... a-3
Financial Statements .................................................. a-4
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED AUGUST 23, 1995, AS SUPPLEMENTED FROM
TIME TO TIME. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE
BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE
BACK COVER FOR ADDRESS AND PHONE NUMBER).
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART I
This Part I provides information about the Fund, certain other series of the
Trust and the Portfolio. Capitalized terms used in this Statement of Additional
Information and not otherwise defined have the meanings given them in the Fund's
Prospectus. The Fund is subject to the same investment policies as those of the
Portfolio. The Fund currently seeks to achieve its objective by investing in the
Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
Foreign Investments. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the U.S. securities
laws. Foreign issuers are generally not bound by uniform accounting, auditing,
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Investments in foreign securities also
involve the risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the removal
of funds or other assets of the Portfolio, political or financial instability or
diplomatic and other developments which could affect such investments. Further,
economies of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the United States. It is anticipated that in
most cases the best available market for foreign securities will be on exchanges
or in over-the-counter markets located outside of the United States. Foreign
stock markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In addition, foreign
brokerage commissions are generally higher than commissions on securities traded
in the United States and may be non-negotiable. In general, there is less
overall governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the United States.
Foreign Currency Transactions. Because investments in companies whose principal
business activities are located outside of the United States will frequently
involve currencies of foreign countries, and because assets of the Portfolio may
temporarily be held in bank deposits in foreign currencies during the completion
of investment programs, the value of the assets of the Portfolio as measured in
U.S. dollars may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations. Currency exchange
rates can also be affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the U.S. or abroad. The Portfolio may
conduct its foreign currency exchange transactions on a spot (i.e., cash) basis
at the spot rate prevailing in the foreign currency exchange market or through
entering into swaps, forward contracts, options or futures on currency. On spot
transactions, foreign exchange dealers do not charge a fee for conversion, but
they do realize a profit based on the difference (the "spread") between the
prices at which they are buying and selling various currencies. Thus, a dealer
may offer to sell a foreign currency to the Portfolio at one rate, while
offering a lesser rate of exchange should the Portfolio desire to resell that
currency to the dealer.
Emerging Companies. The investment risk associated with emerging companies is
higher than that normally associated with larger, older companies due to the
greater business risks associated with small size, the relative age of the
company, limited product lines, distribution channels and financial and
managerial resources. Further, there is typically less publicly available
information concerning smaller companies than for larger, more established ones.
The securities of small companies are often traded only over-the-counter and may
not be traded in the volumes typical of trading on a national securities
exchange. As a result, in order to sell this type of holding, the Portfolio may
need to discount the securities from recent prices or dispose of the securities
over a long period of time. The prices of this type of security may be more
volatile than those of larger companies which are often traded on a national
securities exchange.
Currency Swaps. Currency swaps require maintenance of a segregated account
described under "Asset Coverage for Derivative Investments" below. The Portfolio
will not enter into any currency swap unless the credit quality of the unsecured
senior debt or the claims-paying ability of the other party thereto is
considered to be investment grade by Lloyd George Investment Management
(Bermuda) Limited ("Lloyd George" or an "Adviser"). If there is a default by the
other party to such a transaction, the Portfolio will have contractual remedies
pursuant to the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid in
comparison with the markets for other similar instruments which are traded in
the interbank market.
Forward Foreign Currency Exchange Transactions. The Portfolio may enter into
forward foreign currency exchange contracts in several circumstances. First,
when the Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, or when the Portfolio anticipates the receipt
in a foreign currency of dividend or interest payments on such a security which
it holds, the Portfolio may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest payment, as
the case may be. By entering into a forward contract for the purchase or sale,
for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying transactions, the Portfolio will attempt to protect itself against an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date on which the security is
purchased or sold, or on which the dividend or interest payment is declared, and
the date on which such payments are made or received.
Additionally, when management of the Portfolio believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the securities held by the Portfolio denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of the Portfolio's
foreign assets.
Special Risks Associated With Currency Transactions. Transactions in forward
contracts, as well as futures and options on foreign currencies, are subject to
the risk of governmental actions affecting trading in or the prices of
currencies underlying such contracts, which could restrict or eliminate trading
and could have a substantial adverse effect on the value of positions held by
the Portfolio. In addition, the value of such positions could be adversely
affected by a number of other complex political and economic factors applicable
to the countries issuing the underlying currencies.
Furthermore, unlike trading in most other types of instruments, there is no
systematic reporting of last sale information with respect to the foreign
currencies underlying forward contracts, futures contracts and options. As a
result, the available information on which the Portfolio's trading systems will
be based may not be as complete as the comparable data on which the Portfolio
makes investment and trading decisions in connection with securities and other
transactions. Moreover, because the foreign currency market is a global,
twenty-four hour market, events could occur on that market which will not be
reflected in the forward, futures or options markets until the following day,
thereby preventing the Portfolio form responding to such events in a timely
manner.
Settlements of over-the-counter forward contracts or of the exercise of
foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires parties to such contracts to accept
or make delivery of such currencies in conformity with any United States or
foreign restrictions and regulations regarding the maintenance of foreign
banking relationships, fees, taxes or other charges.
Unlike currency futures contracts and exchange-traded options, options on
foreign currencies and forward contracts are not traded on contract markets
regulated by the Commodity Futures Trading Commission ("CFTC") or (with the
exception of certain foreign currency options) the Securities and Exchange
Commission ("Commission"). To the contrary, such instruments are traded through
financial institutions acting as market-makers. (Foreign currency options are
also traded on the Philadelphia Stock Exchange subject to Commission
regulation). In an over-the-counter trading environment, many of the protections
associated with transactions on exchanges will not be available. For example,
there are no daily price fluctuation limits, and adverse market movements could
therefore continue to an unlimited extent over a period of time. Although the
purchaser of an option cannot lose more than the amount of the premium plus
related transaction costs, this entire amount could be lost. Moreover, an option
writer could lose amounts substantially in excess of its initial investment due
to the margin and collateral requirements associated with such option positions.
Similarly, there is no limit on the amount of potential losses on forward
contracts to which the Portfolio is a party.
In addition, over-the-counter transactions can only be entered into with a
financial institution willing to take the opposite side, as principal, of the
Portfolio's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Portfolio.
Where no such counterparty is available, it will not be possible to enter into a
desired transaction. There also may be no liquid secondary market in the trading
of over-the-counter contacts, and the Portfolio may be unable to close out
options purchased or written, or forward contracts entered into, until their
exercise, expiration or maturity. This in turn could limit the Portfolio's
ability to realize profits or to reduce losses on open positions and could
result in greater losses.
Furthermore, over-the-counter transactions are not backed by the guarantee
of an exchange's clearing corporation. The Portfolio will therefore be subject
to the risk of default by, or the bankruptcy of, the financial institution
serving as its counterparty. One or more of such institutions also may decide to
discontinue its role as market-maker in a particular currency, thereby
restricting the Portfolio's ability to enter into desired hedging transactions.
The Portfolio will enter into over-the-counter transactions only with parties
whose creditworthiness has been reviewed and found satisfactory by an Adviser.
The purchase and sale of exchange-traded foreign currency options, however,
are subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effect of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the Options Clearing Corporation ("OCC"), which has established banking
relationships in applicable foreign countries for this purpose. As a result, the
OCC may, if it determines that foreign governmental restrictions or taxes would
prevent the orderly settlement of foreign currency option exercises, or would
result in undue burdens on the OCC or its clearing member, impose special
procedures for exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar settlement prices or
prohibitions on exercise.
Risks Associated With Derivative Instruments. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of the
initial investment made or the premium received by the Portfolio. Derivative
instruments may sometimes increase or leverage the Portfolio's exposure to a
particular market risk. Leverage enhances the Portfolio's exposure to the price
volatility of derivative instruments it holds. The Portfolio's success in using
derivative instruments to hedge portfolio assets depends on the degree of price
correlation between the derivative instruments and the hedged asset. Imperfect
correlation may be caused by several factors, including temporary price
disparities among the trading markets for the derivative instrument, the assets
underlying the derivative instrument and the Portfolio assets. Over-the-counter
("OTC") derivative instruments involve an enhanced risk that the issuer or
counterparty will fail to perform its contractual obligations. Some derivative
instruments are not readily marketable or may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit trading in an exchange-traded derivative
instrument, which may make the contract temporarily illiquid and difficult to
price. Commodity exchanges may also establish daily limits on the amount that
the price of a futures contract or futures option can vary from the previous
day's settlement price. Once the daily limit is reached, no trades may be made
that day at a price beyond the limit. This may prevent the Portfolio from
closing out positions and limiting its losses. The staff of the Commission takes
the position that purchased OTC options, and assets used as cover for written
OTC options, are subject to the Portfolio's 15% limit on illiquid investments.
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 Portfolio's ability to terminate OTC
derivative instruments may depend on the cooperation of the counterparties to
such contracts. For thinly traded derivative instruments, the only source of
price quotations may be the selling dealer or counterparty. In addition, certain
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), limit
the extent to which the Portfolio may purchase and sell derivative instruments.
The Portfolio will engage in transactions in futures contracts and related
options only to the extent such transactions are consistent with the
requirements of the Code for maintaining the qualification of the Fund as a
regulated investment company for Federal income tax purposes.
See "Taxes."
Asset Coverage for Derivative Instruments. Transactions using forward contracts,
futures contracts and options (other than options that the Portfolio has
purchased) expose the Portfolio to an obligation to another party. The Portfolio
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, currencies, or other options or
futures contracts or forward contracts, or (2) cash, receivables, and short-term
debt securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Portfolio will comply with
Commission guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. Government securities or other
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding forward contract, futures contract or option
is open, unless they are replaced with other appropriate assets. As a result,
the commitment of a large portion of the Portfolio's assets to cover or
segregated accounts could impede portfolio management or the Portfolio's ability
to met redemption requests or other current obligations.
Limitations on Futures Contracts and Options. If the Portfolio has not complied
with the 5% CFTC test set forth in the Fund's prospectus, to evidence its
hedging intent, the Portfolio expects that, on 75% or more of the occasions on
which it takes a long futures or option on futures position, it will have
purchased or will be in the process of purchasing, equivalent amounts of related
securities at the time when the futures or options position is closed out.
However, in particular cases, when it is economically advantageous for the
Portfolio to do so, a long futures or options position may be terminated (or an
option may expire) without a corresponding purchase of securities.
The Portfolio may enter into futures contracts, and options on futures
contracts, traded on an exchange regulated by the CFTC and on foreign exchanges,
but, with respect to foreign exchange-traded futures contracts and options on
such futures contracts, only if Lloyd George determines that trading on each
such foreign exchange does not subject the Portfolio to risks, including credit
and liquidity risks, that are materially greater than the risks associated with
trading on CFTC-regulated exchanges.
In order to hedge its current or anticipated portfolio positions, the
Portfolio may use futures contracts on securities held in its Portfolio or on
securities with characteristics similar to those of the securities held by the
Portfolio. If, in the opinion of an Adviser, there is a sufficient degree of
correlation between price trends for the securities held by the Portfolio and
futures contracts based on other financial instruments, securities indices or
other indices, the Portfolio may also enter into such futures contracts as part
of its hedging strategy.
All call and put options on securities written by the Portfolio will be
covered. This means that, in the case of call option, the Portfolio will own the
securities subject to the call option or an offsetting call option so long as
the call option is outstanding. In the case of a put option, the Portfolio will
own an offsetting put option or will have deposited with its custodian cash or
liquid, high-grade debt securities with a value at least equal to the exercise
price of the put option. The Portfolio may only write a put option on a security
that it intends to acquire for its investment portfolio.
Repurchase Agreements. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promise to sell that same security back
to the seller at a higher price. At no time will the Portfolio commit more than
15% of its net assets to repurchase agreements which mature in more than seven
days and other illiquid securities. The Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreement
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement, and will be marked to market daily.
Reverse Repurchase Agreements. The Portfolio may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, the Portfolio temporarily
transfers possession of a portfolio instrument to another party, such as a bank
or broker-dealer, in return for cash. At the same time, the Portfolio agrees to
repurchase the instrument at an agreed upon time (normally within seven days)
and price, which reflects an interest payment. The Portfolio expects that it
will enter into reverse repurchase agreements when it is able to invest the cash
so acquired at a rate higher than the cost of the agreement, which would
increase the income earned by the Portfolio. The Portfolio could also enter into
reverse repurchase agreements as a means of raising cash to satisfy redemption
requests without the necessity of selling portfolio assets.
When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to another
party or the securities in which the proceeds may be invested would affect the
market value of the Portfolio's assets. As a result, such transactions may
increase fluctuations in the market value of the Portfolio's assets. While there
is a risk that large fluctuations in the market value of the Portfolio's assets
could affect the Portfolio's net asset value, this risk is not significantly
increased by entering into reverse repurchase agreements, in the opinion of an
Adviser. Because reverse repurchase agreements may be considered to be the
practical equivalent of borrowing funds, they constitute a form of leverage. If
the Portfolio reinvests the proceeds of a reverse repurchase agreement at a rate
lower than the cost of the agreement, entering into the agreement will lower the
Portfolio's yield.
At all times that a reverse repurchase agreement is outstanding, the
Portfolio will maintain cash or high grade liquid securities in a segregated
account at its custodian bank with a value at least equal to its obligation
under the agreement. Securities and other assets held in the segregated account
may not be sold while the reverse repurchase agreement is outstanding, unless
other suitable assets are substituted. While an Adviser does not consider
reverse repurchase agreements to involve a traditional borrowing of money,
reverse repurchase agreements will be included within the aggregate limitation
on "borrowings" contained in the Portfolio's investment restriction (1) set
forth below.
Portfolio Turnover. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity of
one year or less). A 100% annual turnover rate would occur, for example, if all
the securities in the portfolio were replaced once in a period of one year. A
high turnover rate (100% or more) necessarily involves greater expenses to the
Portfolio. The Portfolio engages in portfolio trading (including short-term
trading) if it believes that a transaction including all costs will help in
achieving its investment objective either by increasing income or by enhancing
the Portfolio's net asset value. High portfolio turnover may also result in the
realization of substantial net short-term capital gains. In order for the Fund
to continue to qualify as a regulated investment company for Federal tax
purposes, less than 30% of the annual gross income of the Fund must be derived
from the sale of securities (including its share of gains from the sale of
securities held by the Portfolio) held for less than three months.
Lending Portfolio Securities. If an Adviser decides to make securities loans,
the Portfolio may seek to increase its income by lending portfolio securities to
broker-dealers or other institutional borrowers. Under present regulatory
policies of the Commission, such loans are required to be secured continuously
by collateral in cash, cash equivalents or U.S. Government securities held by
the Portfolio's custodian and maintained on a current basis at an amount at
least equal to market value of the securities loaned, which will be marked to
market daily. Cash equivalents include certificates of deposit, commercial paper
and other short-term money market instruments. The financial condition of the
borrower will be monitored by an Adviser on an ongoing basis. The Portfolio
would continue to receive the equivalent of the interest or dividends paid by
the issuer on the securities loaned and would also receive a fee, or all or a
portion of the interest on investment of the collateral. The Portfolio would
have the right to call a loan and obtain the securities loaned at any time on up
to five business days' notice. The Portfolio would not have the right to vote
any securities having voting rights during the existence of a loan, but could
call the loan in anticipation of an important vote to be taken among holder of
the securities or the giving or holding of their consent on a material matter
affecting the investment. If an Adviser decides to make securities loans, it is
intended that the value of the securities loaned would not exceed 1/3 of the
Portfolio's total assets.
INVESTMENT RESTRICTIONS
Whenever an investment policy or investment restriction set forth in the
Prospectus or this Statement of Additional Information states a maximum
percentage of assets that may be invested in any security or other asset or
describes a policy regarding quality standards, such percentage limitation or
standard shall be determined immediately after and as a result of the Fund's or
the Portfolio's acquisition of such security or other asset. Accordingly, any
later increase or decrease resulting from a change in values, assets or other
circumstances, other than a subsequent rating change below investment grade made
by a rating service, will not compel the Fund or the Portfolio, as the case may
be, to dispose of such security or other asset.
The Fund and the Portfolio have each adopted the following investment
restrictions which may not be changed without the approval by the holders of a
majority of the outstanding voting securities of the Fund or the Portfolio, as
the case may be, which as used in this Statement of Additional Information means
the lesser of (a) 67% or more of the outstanding voting securities of the Fund
or the Portfolio, as the case may be, present or represented by proxy at a
meeting if the holders of more than 50% of the outstanding voting securities of
the Fund or the Portfolio are present or represented at the meeting or (b) more
than 50% of the outstanding voting securities of the Fund or the Portfolio.
Neither the Fund nor the Portfolio may:
(1) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(2) Purchase any securities on margin (but the Fund and the Portfolio may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities);
(3) Underwrite securities of other issuers;
(4) Invest in real estate including interests in real estate limited
partnerships (although it may purchase and sell securities which are secured by
real estate and securities of companies which invest or deal in real estate) or
in commodities or commodity contacts for the purchase or sale of physical
commodities;
(5) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities;
(6) With respect to 75% of its total assets, invest more than 5% of its
total assets (taken at current value) in the securities of any one issuer, or
invest in more than 10% of the outstanding voting securities of any one issuer,
except obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment companies; or
(7) Concentrate its investments in any particular industry, but, if deemed
appropriate for the Fund's objective, up to 25% of the value of its assets may
be invested in securities of companies in any one industry (although more than
25% may be invested in securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities).
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund. Notwithstanding the investment policies and restrictions of the Portfolio,
the Portfolio may invest part of its assets in another investment company
consistent with the Investment Company Act of 1940 (the "1940 Act").
The Fund and the Portfolio have each adopted the following investment
policies which may be changed without shareholder or investor approval. Neither
the Fund nor the Portfolio may invest more than 15% of its net assets in
investments which are not readily marketable, including restricted securities
and repurchase agreements with a maturity longer than seven days. Restricted
securities for the purposes of this limitation do not include securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933 that
the Board of Trustees of the Trust or the Portfolio, or their delegate,
determines to be liquid. Factors taken into account in reaching liquidity
decisions include, but are not limited to: (i) the frequency of trading in the
security; (ii) the number of dealers who provide quotes for the security; (iii)
the number of dealers who have undertaken to make a market in the security; (iv)
the number of other potential purchasers; and (v) the nature of the security and
how trading is effected (e.g., the time needed to sell the security, how offers
are solicited, and the mechanics of transfer). An Adviser will monitor the
liquidity of the Portfolio's securities and report periodically on such
decisions to the Board of Trustees of the Portfolio. Neither the Fund nor the
Portfolio intends to make short sales of securities during the coming year.
Except for obligations issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, neither the Fund nor the Portfolio will knowingly
purchase a security issued by a company (including predecessors) with less than
three years operating history (unless such security is rated at least B or a
comparable rating at the time of purchase by a least one nationally recognized
rating service) if, as a result of such purchase, more than 5% of the
Portfolio's or the Fund's total assets, as the case may be (taken at current
value), would be invested in such securities. Neither the Fund nor the Portfolio
will purchase warrants if, as a result of such purchase, more than 5% of the
Portfolio's or the Fund's net assets, as the case may be (taken at current
value), would be invested in warrants, and the value of such warrants which are
not listed on the New York or American Stock Exchange may not exceed 2% of the
Portfolio's or the Fund's net assets; this policy does not apply to or restrict
warrants acquired by the Portfolio or the Fund in units or attached to
securities, inasmuch as such warrants are deemed to be without value. Neither
the Fund nor the Portfolio will purchase oil, gas or other mineral leases or
purchase partnership interests in oil, gas or other mineral exploration or
development programs. Neither the Fund nor the Portfolio will purchase or retain
in its portfolio any securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the Trust or
is a member, officer, director or trustee of any investment adviser of the Trust
or the Portfolio if after the purchase of the securities of such issuer by the
Fund or the Portfolio one or more of such persons owns beneficially more than
1/2 of 1% of the shares or securities or both (all taken at market value) of
such issuer and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or securities
or both (all taken at market value).
In order to permit the sale of shares of the Fund in certain states, the
Fund and the Portfolio may make commitments more restrictive than the
fundamental policies described above. Should the Fund determine that any such
commitment is no longer in the best interests of the Fund and its shareholders,
it will revoke the commitment by terminating sales of its shares in the state(s)
involved.
Although permissible under the Fund's investment restrictions, the Fund has
no present intention during the coming fiscal year to: borrow money; pledge its
assets; or make loans to other persons.
TRUSTEES AND OFFICERS
The Trust's Trustees and officers are listed below. Except as indicated,
each individual has held the office shown or other offices in the same company
for the last five years. Unless otherwise noted, the business address of each
Trustee and officer is 24 Federal Street, Boston, Massachusetts 02110, which is
also the address of the Fund's sponsor and manager, Eaton Vance Management
("Eaton Vance"); of Eaton Vance's wholly-owned subsidiary, Boston Management and
Research ("BMR"); of Eaton Vance's parent, Eaton Vance Corp. ("EVC"); and of
Eaton Vance's trustee, Eaton Vance, Inc. ("EV"). Eaton Vance and EV are both
wholly-owned subsidiaries of EVC. Those Trustees who are "interested persons" of
the Trust, Eaton Vance, BMR, EVC or EV as defined in the 1940 Act by virtue of
their affiliation with any one or more of the Trust, Eaton Vance, BMR, EVC or
EV, are indicated by an asterisk(*).
OFFICERS AND TRUSTEES OF THE TRUST
JAMES B. HAWKES (53), President and Trustee*
Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director of EVC
and EV. Director or Trustee and officer of various investment companies
managed by Eaton Vance or BMR.
LANDON T. CLAY (69), Vice President and Trustee*
Chairman of Eaton Vance, BMR, EVC and EV and a Director of EVC and EV. Director
or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
DONALD R. DWIGHT (64), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (60), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (59), Trustee
President and Director, United Asset Management Corporation, (a holding company
owning institutional investment management firms); Chairman, President and
Director, The Regis Fund, Inc. (mutual fund). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (68), Trustee
Director, Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (65), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS
WILLIAM D. BURT (57), Vice President
Vice President of Eaton Vance since November, 1994. Vice President of The
Boston Company prior thereto.
M. DOZIER GARDNER (61), Vice President
President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.
BARCLAY TITTMANN (63), Vice President
Vice President of Eaton Vance since September, 1993. Vice President of INVESCO
prior thereto.
JAMES L. O'CONNOR (50), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
WILLIAM J. AUSTIN, JR. (43), Assistant Treasurer
Assistant Vice President of BMR, Eaton Vance and EV. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Austin was elected
Assistant Treasurer of the Trust on December 16, 1991.
THOMAS OTIS (63), Secretary
Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (59), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (32), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993) and Registration Specialist, Fidelity Management
& Research Co. (1986-1991). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Trust on March 27, 1995.
ERIC G. WOODBURY (38), Assistant Secretary
Vice President of Eaton Vance since February 1993; formerly, associate at
Dechert, Price & Rhoads and Gaston & Snow.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the Special
Committee of the Board of Trustees of the Trust. The Special Committee's
functions include a continuous review of the Fund's management contract with
Eaton Vance, making recommendations to the Board of Trustees regarding the
compensation of those Trustees who are not members of the Eaton Vance
organization, and making recommendations to the Board of Trustees regarding
candidates to fill vacancies, as and when they occur, in the ranks of those
Trustees who are not "interested persons" of the Trust, the Portfolio, or the
Eaton Vance organization.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees. The Audit Committee's functions include making
recommendations to the Board of Trustees regarding the selection of the
independent certified public accountants, and reviewing with such accountants
and the Treasurer of the Trust matters relative to accounting and auditing
practices and procedures, accounting records, internal accounting controls, and
the functions performed by the custodian, transfer agent and dividend disbursing
agent of the Trust.
Trustees of the Portfolio who are not affiliated with an Adviser may elect
to defer receipt of all or a percentage of their annual fees in accordance with
the terms of a Trustees Deferred Compensation Plan (the "Plan"). Under the Plan,
an eligible Trustee may elect to have his deferred fees invested by the
Portfolio in the shares of one or more funds in the Eaton Vance Family of Funds,
and the amount paid to the Trustees under the Plan will be determined based upon
the performance of such investments. Deferral of Trustees' fees in accordance
with the Plan will have a negligible effect on the Portfolio's assets,
liabilities, and net income per share, and will not obligate the Portfolio to
retain the services of any Trustee or obligate the Portfolio to pay any
particular level of compensation to the Trustee. For information concerning the
compensation earned by the Trustees of the Trust, see "Fees and Expenses" in
Part II of this Statement of Additional Information.
OFFICERS AND TRUSTEES OF THE PORTFOLIO
The Portfolio's Trustees and officers are listed below. Except as indicated,
each individual has held the office shown or other offices in the same company
for the last five years. The business address of Lloyd George is 3808 One
Exchange Square, Central, Hong Kong. Those Trustees who are "interested persons"
of the Portfolio, an Adviser, Eaton Vance, EVC or EV as defined in the 1940 Act
by virtue of their affiliation with any one or more of the Portfolio, an
Adviser, Eaton Vance, EVC or EV, are indicated by an asterisk(*).
TRUSTEES
JAMES B. HAWKES (53), President and Trustee*
Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director of EVC
and EV. Director or Trustee and officer of various investment companies
managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
DONALD R. DWIGHT (64), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988; Chairman of the Board of Newspapers of New
England, Inc. since 1983; Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (60), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (59), Trustee
President and Director, United Asset Management Corporation, (a holding company
owning institutional investment management firms); Chairman, President and
Director, The Regis Fund, Inc. (mutual fund). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (68), Trustee
Director, Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (65), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS
WILLIAM CHISHOLM (35), Vice President
Senior Trust Officer of The Bank of Nova Scotia Trust Company (Cayman)
Limited.
Address: The Bank of Nova Scotia Trust Company (Cayman) Ltd., The Bank of Nova
Scotia Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands,
British West Indies.
MICHEL NORMANDEAU (43), Vice President
Assistant Manager - Trust Services, The Bank of Nova Scotia Trust Company
(Cayman) Limited.
Address: The Bank of Nova Scotia Trust Company (Cayman) Ltd., The Bank of Nova
Scotia Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands,
British West Indies.
RAYMOND O'NEILL (33), Vice President
Managing Director of IBT Trust and Custodian Services (Ireland) Limited since
January, 1995. Vice President, Atlantic Corporate Management Limited,
Warwick, Bermuda (1991-1994). Officer, The Bank of Bermuda Limited,
Hamilton, Bermuda (1987-1991).
Address: Earlsfort Terrace, Dublin 2, Ireland.
HON. ROBERT LLOYD GEORGE (42), Vice President
Chairman and Chief Executive of Lloyd George Management (B.V.I.) Limited.
Chairman and Chief Executive Officer of Lloyd George. Managing Director of
Indosuez Asia Investment Services, Ltd. from 1984 to 1991.
Address: 3808 One Exchange Square, Central, Hong Kong
DUNCAN W. RICHARDSON (37), Vice President
Vice President of Eaton Vance and EV Since January 19, 1990 and of BMR since
August 11, 1992. Officer of various investment companies managed by Eaton
Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
PETER F. KIELY (58), Vice President
Vice President of Eaton Vance, BMR and EV. Director or Trustee and officer of
various investment companies managed by Eaton Vance or BMR. Mr. Kiely was
elected Trustee of the Trust on December 16, 1991.
JAMES L. O'CONNOR (50), Treasurer
Vice President of Eaton Vance, BMR, and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
THOMAS OTIS (63), Secretary
Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
JANET E. SANDERS (59), Assistant Secretary and Assistant Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
A. JOHN MURPHY (32), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993) and Registration Specialist, Fidelity Management &
Research Co. (1986-1991). Officer of various investment companies managed by
Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
JAMES F. ALBAN (33), Assistant Treasurer
Assistant Vice President of BMR since August 11, 1992, and of Eaton Vance and EV
since January 17, 1992, and an employee of Eaton Vance since September 23,
1991. Tax Consultant and Audit Senior with Deloitte & Touche (1987- 1991).
Officer of various investment companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
ERIC G. WOODBURY (38), Assistant Secretary
Vice President of Eaton Vance since February 1993; formerly, associate at
Dechert, Price & Rhoads and Gaston & Snow.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
Lloyd George Investment Management (Bermuda) Limited ("Lloyd George") is a
subsidiary of Lloyd George Management (B.V.I.) Limited, which is ultimately
controlled by the Hon. Robert J.D. Lloyd George, Vice President of the
Portfolio and Chairman and Chief Executive Officer of Lloyd George. Mr. Hawkes
is a Trustee and officer of the Trust and the Portfolio and an officer of the
Fund's sponsor and manager and of BMR. Mr. Hayes is a Trustee of the Trust and
the Portfolio.
The fees and expenses of those Trustees of the Portfolio who are not members
of the Lloyd George or Eaton Vance organizations (the noninterested Trustees)
are paid by the Portfolio. For information concerning the compensation received
by the noninterested Trustees of the Portfolio, see "Fees and Expenses" in Part
II of this Statement of Additional Information.
While the Portfolio is a New York trust, Lloyd George, together with the
Hon. Robert Lloyd George, are not residents of the United States and
substantially all of their respective assets may be located outside of the
United States. It may be difficult for investors to effect service of process
within the United States upon the individual identified above, or to realize
judgments of courts of the United States predicated upon civil liabilities of
Lloyd George and such individual under the Federal securities laws of the United
States. The Portfolio has been advised that there is substantial doubt as to the
enforceability in the countries in which Lloyd George and such individual reside
of such civil remedies and criminal penalties as are afforded by the Federal
securities laws of the United States.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
Eaton Vance acts as the sponsor and manager of the Fund and the
administrator of the Portfolio. The Portfolio has engaged Boston Management and
Research, a wholly-owned subsidiary of Eaton Vance, and Lloyd George
(collectively, the "Advisers") as its investment advisers.
THE ADVISERS
As investment advisers to the Portfolio, the Advisers manage the Portfolio's
investments, subject to the supervision of the Board of Trustees of the
Portfolio. The Advisers are also responsible for effecting all security
transactions on behalf of the Portfolio, including the allocation of principal
transactions and portfolio brokerage and the negotiation of commissions. See
"Portfolio Security Transactions." Under the investment advisory agreement, the
Advisers receive a monthly advisory fee, to be divided equally between the
Advisers, computed by applying the annual asset rate applicable to that portion
of the average daily net assets of the Portfolio throughout the month in each
Category as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
- ---------- ------------------------ ----------
1 less than $500 million ............................... 0.75%
2 $500 million but less than $1 billion ................ 0.70
3 $1 billion but less than $1.5 billion ................ 0.65
4 $1.5 billion but less than $2 billion ................ 0.60
5 $2 billion but less than $3 billion .................. 0.55
6 $3 billion and over .................................. 0.50
For additional information about the Investment Advisory Agreement,
including the net assets of the Portfolio and the investment advisory fees that
the Portfolio paid the Advisers under the Investment Advisory Agreement, see
"Fees and Expenses" in Part II of this Statement of Additional Information.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of their clients. The
fixed-income division focuses on all kinds of taxable investment- grade and
high-yield securities, tax-exempt investment-grade and high-yield securities,
and U.S. Government securities. The equity division, with a staff of
approximately 30 professionals, covers stocks ranging from blue chip to emerging
growth companies. Eaton Vance manages more than 140 mutual funds, as well as
retirement plans, pension funds and endowments.
LGM specialize 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 eleven 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, Vice President of the Portfolio and Chairman and Chief
Executive Officer of the Lloyd George. LGM's only business is portfolio
management. Eaton Vance's parent is a shareholder of LGM.
Lloyd George and LGM have adopted a conservative management style, providing
a blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, Lloyd George and LGM maintain a network of international
contacts in order to monitor international economic and stock market trends and
offer clients a global management service.
The directors of Lloyd George are the Honorable Robert J. D. Lloyd George,
William Walter Raleigh Kerr, M. F. Tang and Scobie Dickinson Ward. The Hon.
Robert J. D. Lloyd George is Chairman and Chief Executive Officer of Lloyd
George and Mr. Kerr is an officer of Lloyd George. The business address of
these individuals is 3808 One Exchange Square, Central, Hong Kong.
Mr. Lloyd George was born in London in 1952 and educated at Eton College,
where he was a King's Scholar, and at Oxford University. Prior to founding LGM,
Mr. Lloyd George was Managing Director of Indosuez Asia Investment Services Ltd.
In 1983 Mr. Lloyd George launched and managed the Henderson Japan Special
Situations Trust. Prior to that he spent four years with the Fiduciary Trust
Company of New York researching international securities, in the United States
and Europe, for the United Nations Pension Fund. 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).
Eaton Vance and Lloyd George follow a common investment philosophy, striving
to identify companies with outstanding management and earnings growth potential
by following a disciplined management style, adhering to the most rigorous
international standards of fundamental security analysis, placing heavy emphasis
on research, visiting every company owned, and closely monitoring political and
economic developments.
The Portfolio's investment advisory agreement with the Advisers remains in
effect until February 28, 1996; it may be continued indefinitely thereafter so
long as such continuance after February 28, 1996 is approved at least annually
(i) by the vote a majority of the Trustees of the Portfolio who are not
interested persons of the Portfolio cast in person at a meeting specifically
called for the purpose of voting on such approval and (ii) by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio. The agreement may be terminated at any time without
penalty on sixty days' written notice by the Board of Trustees of either party
or by vote of the majority of the outstanding voting securities of the
Portfolio, and the agreement will terminate automatically in the event of its
assignment. The agreement provides that the Advisers may render services to
others. The agreement also provides that, in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties under
the agreement on the part of an Adviser, the Advisers shall not be liable to the
Portfolio or to any shareholder for any act or omission in the course of or
connected with rendering services or for any losses sustained in the purchase,
holding or sale of any security.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Fund and the Portfolio" in the Prospectus for a
description of the services Eaton Vance performs as the manager and sponsor of
the Fund and the administrator of the Portfolio. Under Eaton Vance's management
contract with the Fund and administration agreement with the Portfolio, Eaton
Vance receives a monthly management fee from the Fund and a monthly
administration fee from the Portfolio. Each fee is computed by applying the
annual asset rate applicable to that portion of the average daily net assets of
the Fund or the Portfolio throughout the month in each Category as indicated
below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
- ---------- ------------------------ ----------
1 less than $500 million ............................... 0.25%
2 $500 million but less than $1 billion ................ 0.23333
3 $1 billion but less than $1.5 billion ................ 0.21667
4 $1.5 billion but less than $2 billion ................ 0.20
5 $2 billion but less than $3 billion .................. 0.18333
6 $3 billion and over .................................. 0.1667
For the administration and the management fees that the Portfolio and the
Fund paid to Eaton Vance, see "Fees and Expenses" in Part II of this Statement
of Additional Information.
Eaton Vance's management contract with the Fund will remain in effect until
February 28, 1996, and its administration agreement with the Portfolio will
remain in effect until February 28, 1996. Each agreement may be continued from
year to year after February 28, 1996, so long as such continuance is approved
annually by the vote of a majority of the Trustees of the Trust or the
Portfolio, as the case may be. Each agreement may be terminated at any time
without penalty on sixty days' written notice by the Board of Trustees of either
party thereto, or by a vote of a majority of the outstanding voting securities
of the Fund or the Portfolio, as the case may be. Each agreement will terminate
automatically in the event of its assignment. Each agreement provides that, in
the absence of Eaton Vance's willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations or duties to the Fund or the Portfolio
under such contract or agreement, Eaton Vance will not be liable to the Fund or
the Portfolio for any loss incurred. Each agreement was initially approved by
the Trustees, including the non-interested Trustees, of the Trust or the
Portfolio which is a party thereto at meetings held June 19, 1995 of the Trust
and the Portfolio.
To the extent necessary to comply with U.S. tax law, Eaton Vance has
employed The Bank of Nova Scotia Trust Company (Cayman) Ltd. to serve as the
sub-administrator of the Portfolio. The sub-administrator maintains the
Portfolio's principal office and certain of its records and provides
administrative assistance in connection with meetings of the Portfolio's
Trustees and interestholders.
The Fund and the Portfolio, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
an Adviser under the investment advisory agreement, by Eaton Vance under the
management contract or the administration agreement, or by EVD under the
distribution agreement. Such costs and expenses to be borne by each of the Fund
or the Portfolio, as the case may be, include, without limitation: custody and
transfer agency fees and expenses, including those incurred for determining net
asset value and keeping accounting books and records; expenses of pricing and
valuation services; the cost of share certificates; membership dues in
investment company organizations; brokerage commissions and fees; fees and
expenses of registering under the securities laws; expenses of reports to
shareholders and investors; proxy statements, and other expenses of
shareholders' or investors' meetings; insurance premiums, printing and mailing
expenses; interest, taxes and corporate fees; legal and accounting expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance or an
Adviser; distribution and service fees payable by the Fund under its Rule 12b- 1
distribution plan; and investment advisory, management and administration fees.
The Fund and the Portfolio, as the case may be, will also each bear expenses
incurred in connection with litigation in which the Fund or the Portfolio, as
the case may be, is a party and any legal obligation to indemnify its respective
officers and Trustees with respect thereto.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR. The
Directors of EV are Landon T. Clay, H. Day Brigham, Jr., M. Dozier Gardner,
James B. Hawkes and Benjamin A. Rowland, Jr. The Directors of EVC consist of the
same persons and John G.L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman and
Mr. Gardner is president and chief executive officer of EVC, Eaton Vance, BMR
and EV. All of the issued and outstanding shares of Eaton Vance and of EV are
owned by EVC. All of the issued and outstanding shares of BMR are owned by Eaton
Vance. All shares of the outstanding Voting Common Stock of EVC are deposited in
a Voting Trust which expires December 31, 1996, the Voting Trustees of which are
Messrs. Brigham, Clay, Gardner, Hawkes and Rowland. The Voting Trustees have
unrestricted voting rights for the election of Directors of EVC. All of the
outstanding voting trust receipts issued under said Voting Trust are owned by
certain of the officers of Eaton Vance and BMR who are also officers and
Directors of EVC and EV. As of July 31, 1995, Messrs. Clay, Gardner and Hawkes
each owned 24% of such voting trust receipts and Messrs. Rowland and Brigham
owned 15% and 13%, respectively, of such voting trust receipts. Messrs. Clay,
Gardner, Hawkes and Otis, who are officers or Trustees of the Trust and/or the
Portfolio, are members of the EVC, Eaton Vance, BMR and EV organizations.
Messrs. Alban, Austin, Murphy, O'Connor, Richardson and Woodbury and Ms. Sanders
are officers of the Trust and/or the Portfolio, and are also members of the
Eaton Vance, BMR and/or EV organizations. Eaton Vance will receive the fees paid
under the management agreement and its wholly-owned subsidiary, Eaton Vance
Distributors, Inc., as Principal Underwriter, will receive its portion of the
sales charge on shares of the Fund sold through investment dealers.
Eaton Vance owns all of the stock of Energex Corporation, which is engaged
in oil and gas operations. EVC owns all of the stock of Marblehead Energy Corp.
(which engages in oil and gas operations) and 77.3% of the stock of Investors
Bank & Trust Company, the custodian of the Fund and the Portfolio, which
provides custodial, trustee and other fiduciary services to investors, including
individuals, employee benefit plans, corporations, investment companies, savings
banks and other institutions. In addition, Eaton Vance owns all the stock of
Northeast Properties, Inc., which is engaged in real estate investment,
consulting and management. EVC owns all the stock of Fulcrum Management, Inc.
and MinVen, Inc., which are engaged in the development of precious metal
properties. EVC also owns 21% of the Class A shares issued by the parent of
Lloyd George. EVC, Eaton Vance, BMR and EV may also enter into other businesses.
EVC and its affiliates and its officers and employees form time to time have
transactions with various banks, including the custodian of the Fund and the
Portfolio, Investors Bank & Trust Company. It is Eaton Vance's opinion that the
terms and conditions of such transactions will not be influenced by existing or
potential custodial or other relationships between the Fund and such banks.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 24 Federal Street, Boston,
Massachusetts (a 77.3% owned subsidiary of EVC), acts as custodian for the Fund
and the Portfolio. IBT has the custody of all cash and securities of the Fund
and all securities of the Portfolio purchased in the United States, and its
subsidiary, IBT Fund Services (Canada) Inc., 1 First Canadian Place, King Street
West, Toronto, Ontario, Canada, maintains the Fund's and the Portfolio's general
ledger and computes the daily net asset value of interests in the Portfolio and
the net asset value of shares of the Fund. In such capacities, IBT attends to
details in connection with the sale, exchange, substitution, transfer or other
dealings with the Fund's and the Portfolio's respective investments, receives
and disburses all funds, and performs various other ministerial duties upon
receipt of proper instructions from the Fund and the Portfolio, respectively.
Portfolio securities, if any, purchased by the Portfolio in the U.S. are
maintained in the custody of IBT or of other domestic banks or depositories.
Portfolio securities purchased outside of the U.S. are maintained in the custody
of foreign banks and trust companies that are member of IBT's Global Custody
Network, or foreign depositories used by such foreign banks and trust companies.
Each of the domestic and foreign custodial institutions holding portfolio
securities has been approved by the Board of Trustees of the Portfolio in
accordance with regulations under the 1940 Act.
IBT charge fees which are competitive within the industry. These fees for
the Portfolio relate to (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill auction
rate applied to the Portfolio's average daily collected balances. The portion of
the fee for the Fund related to bookkeeping and pricing services is based upon a
percentage of the Fund's net assets and the portion of the fee related to
financial statement preparation is a fixed amount.
In view of the ownership of EVC in IBT, the Portfolio is treated as a
self-custodian pursuant to Rule 17f-2 under the 1940 Act, and the Portfolio's
investments held by IBT as custodian are thus subject to the additional
examinations by the Portfolio's independent certified public accountants as
called for by such Rule.
For information on the custody fees that the Portfolio and the Fund paid to
IBT, see "Fees and Expenses" in Part II of this Statement of Additional
Information.
SERVICE FOR WITHDRAWAL
By a standard agreement, the Fund's transfer agent will send to the
shareholder regular monthly or quarterly payments of any permitted amount
designated by the shareholder (see "Eaton Vance Shareholder Services -
Withdrawal Plan" in the Fund's current Prospectus) based upon the value of the
shares held. The checks will be drawn from share redemptions and hence are a
return of principal. Income dividends and capital gain distributions in
connection with withdrawal accounts will be credited at net asset value as of
the record date for each distribution. Continued withdrawals in excess of
current income will eventually use up principal, particularly in a period of
declining market prices.
To use this service, at least $5,000 in cash or shares at the public
offering price will have to be deposited with the transfer agent. The
maintenance of a withdrawal plan concurrently with purchases of additional Fund
shares would be disadvantageous if a sales charge is included in such purchase.
A shareholder may not have a withdrawal plan in effect at the same time he or
she has authorized Bank Automated Investing or is otherwise making regular
purchases of Fund shares. Either the shareholder, the Fund's transfer agent or
the Principal Underwriter will be able to terminate the withdrawal plan at any
time without penalty.
DETERMINATION OF NET ASSET VALUE
The Fund and Portfolio will be closed for business and will not price their
shares on the following business holidays: New Year's Day, Presidents' Day, Good
Friday, (a New York Stock Exchange holiday), Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
The Trustees of the Portfolio have established the following procedures for
the fair valuation of the Portfolio's assets under normal market conditions.
Marketable securities listed on foreign or U.S. securities exchanges or in the
NASDAQ National Market System generally are valued at closing sale prices or, if
there were no sales, at the mean between the closing bid and asked prices
therefor on the exchange where such securities are principally traded or on such
National Market System. Unlisted or listed securities for which closing sale
prices are not available are valued at the mean between the latest bid and asked
prices. An option is valued at the last sale price as quoted on the principal
exchange or board of trade on which such option or contract is traded, or in the
absence of a sale, at the mean between the last bid and asked prices. Futures
positions on securities or currencies are generally valued at closing settlement
prices. All other securities are valued at fair value as determined in good
faith by or pursuant to procedures established by the Trustees.
Short-term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If securities were acquired with a remaining maturity
of more than 60 days, their amortized cost value will based on their value on
the sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading as of the close of regular trading on the
Exchange. The value of each investor's interest in the Portfolio will be
determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate interests in the Portfolio. Any additions or withdrawals, which
are to be effected on that day, will then be effected. Each investor's
percentage of the aggregate interests in the Portfolio will then be recomputed
as the percentage equal to a fraction (i) the numerator of which is the value of
such investor's investment in the Portfolio as of the close of regular trading
on the Exchange (normally 4:00 p.m., New York time), on such day plus or minus,
as the case may be, that amount of any additions to or withdrawals from the
investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
close of such trading on such day plus or minus, as the case may be, the amount
of the net additions to or withdrawals from the aggregate investment in the
Portfolio by all investors in the Portfolio. The percentage so determined will
then be applied to determine the value of the investor's interest in the
Portfolio.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's share are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio' net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be made
and reflected in such computation). Foreign securities and currency held by the
Portfolio will be valued in U.S. dollars; such values will be computed by the
custodian based on foreign currency exchange rate quotations supplied by Reuters
Information Service.
INVESTMENT PERFORMANCE
The average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and distributions paid and
reinvested) for the stated period and annualizing the result. The calculation
assumes that all distributions are reinvested at net asset value on the
reinvestment dates during the period. For information concerning the total
return of the Fund, see "Performance Information" in Part II of this Statement
of Additional Information.
The Fund's total return may be compared to the Consumer Price Index and
various domestic and foreign securities indices, for example: Standard & Poor's
Index of 400 Common Stocks, Standard & Poor's Index of 500 Common Stocks,
Merrill Lynch U.S. Treasury (15-year plus) Index, Lehman Brothers
Government/Corporate Bond Index, the Dow Jones Industrial Average and Morgan
Stanley Global Equity. In addition, the Fund's total return may be compared to
Lipper Global Fund category and Lipper Science & Technology Fund category, which
indices are available through Lipper Analytical Services, Inc. The Fund's total
return and comparisons with these indices may be used in advertisements and in
information furnished to present or prospective shareholders. The Fund's
performance may differ from that of other investors in the Portfolio, including
the other investment companies.
Information used in advertisements and in materials furnished to present or
prospective shareholders may include statistics, data and performance studies
prepared by independent organizations (e.g. Ibbotson Associates, Standard &
Poor's Ratings Group, Merrill Lynch Private Client Group, Bloomberg, L.P., Dow
Jones & Company, Inc., and the Federal Reserve Board) or included in various
publications (e.g. The Wall Street Journal, Barron's and The Decade: Wealth of
Investments in U.S. Stocks, Bonds, Bills & Inflation) reflecting the investment
performance or return achieved by various classes and types of investments (e.g.
common stocks, small company stocks, long-term corporate bonds, long-term
government bonds, intermediate-term government bonds, U.S. Treasury bills) over
various periods of time. This information may be used to illustrate the benefits
of long-term investments in common stocks. Such information may also include
descriptions of and editorial comments concerning information age companies and
the various information age industries (i.e., the semi-conductor, cellular
telephone, entertainment and computer industries), as well as statistics, data
and performance information about these companies and industries.
From time to time, information about the allocation and holdings of
investments in the Portfolio may be included in advertisements and other
material furnished to present and prospective shareholders.
From time to time, evaluations of the Fund's performance made by independent
sources, such as Lipper Analytical Services, Inc., CDA/ Weisenberger and
Morningstar, Inc. may be used in advertisements and in information furnished to
present or prospective shareholders. The Fund's performance may differ from that
of other investors in the Portfolio, including the other investment companies.
Information used in advertisements and materials furnished to present or
prospective shareholders may include examples and performance illustrations of
the cumulative change in various levels of investments in the Fund for various
periods of time and at various prices per share. Such examples and illustrations
may assume that all dividends and capital gain distributions are reinvested in
additional shares and may also show separately the value of shares acquired form
such reinvestments as well as the total value of all shares acquired for such
investments and reinvestments. Such information may also include statements or
illustration relating to the appropriateness of types of securities and/or
mutual funds which may be employed to meet specific financial goals, such as (1)
funding retirement, (2) paying for children's education, and (3) financially
supporting aging parents. These three financial goals may be referred to in such
advertisements or materials as the "Triple Squeeze".
From time to time the Fund may provide investors with information on global
investing, which may include descriptions, comparisons, charts and/or
illustrations of: foreign and domestic equity market capitalizations; returns
obtained by foreign and domestic securities; and the effects of globally
diversifying an investment portfolio (including volatility analysis and
performance information). Such information may be provided for a variety of
countries over varying time periods.
For additional information, charts and illustrations relating to the Fund's
investment performance, see "Performance Information" in Part II of this
Statement of Additional Information.
TAXES
See also "Distribution and Taxes" in the Fund's current prospectus.
The Fund, as a series of a Massachusetts business trust, will be treated as
a separate entity for accounting and tax purposes. The Fund intends to elect to
be treated, and to qualify each year as a regulated investment company ("RIC")
under the Code. Accordingly, the Fund intends to satisfy certain requirements
relating to sources of its income and diversification of its assets and to
distribute all of its net investment income and net realized capital gains in
accordance with the timing requirements imposed by the Code, so as to avoid any
Federal income or excise tax on the Fund. Because the Fund invests its assets in
the Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements in order for the Fund to satisfy them.
The Portfolio will allocate at least annually among its investors, including the
Fund, each investor's distributive share of the Portfolio's net investment
income, net realized capital gains, and any other items of income, gain, loss,
deduction or credit. The Portfolio will make allocations to the Fund in
accordance with the Code and applicable regulations and will make moneys
available for withdrawal at appropriate times and in sufficient amounts to
enable the Fund to satisfy the tax distribution requirements that apply to the
Fund and that must be satisfied in order to avoid Federal income and/or excise
tax on the Fund. For purposes of applying the requirements of the Code regarding
qualification as a RIC, the Fund will be deemed (i) to own its proportionate
share of each of the assets of the Portfolio and (ii) to be entitled to the
gross income of the Portfolio attributable to such share.
In order to avoid Federal excise tax, the Code requires that the Fund
distribute (or be deemed to have distributed) by December 31 of each calendar
year at least 98% of its ordinary income (not including tax-exempt income) for
such year, at least 98% of the excess of its realized capital gains over its
realized capital losses, generally computed on the basis of the one-year period
ending on October 31 of such year, after reduction by any available capital loss
carryforwards, and 100% of any income and capital gains from the prior year (as
previously computed) that was not paid out during such year and on which the
Fund was not taxed. Further, under current law, provided that the Fund qualifies
as a RIC for Federal income tax purposes and the Portfolio is treated as a
partnership for Massachusetts and Federal tax purposes, neither the Fund nor the
Portfolio is liable for any income, corporate excise or franchise tax in the
Commonwealth of Massachusetts.
Foreign exchange gains and losses realized by the Portfolio and allocated to
the Fund in connection with the Portfolio's investments in foreign securities
and certain options, futures or forward contracts or foreign currency may be
treated as ordinary income and losses under special tax rules. Certain options,
futures or forward contracts of the Portfolio may be required to be marked to
market (i.e., treated as if closed out) on the last day of each taxable year,
and any gain or loss realized with respect to these contracts may be required to
be treated as 60% long-term and 40% short-term gain or loss. Positions of the
Portfolio in securities and offsetting options, futures or forward contracts may
be treated as "straddles" and be subject to other special rules that may, upon
allocation of the Portfolio's income, gain or loss to the Fund, affect the
amount, timing and character of the Fund's distributions to shareholders.
Certain uses of foreign currency and foreign currency derivatives such as
options, futures, forward contracts and swaps and investment by the Portfolio in
certain "passive foreign investment companies" may be limited or a tax election
may be made, if available, in order to preserve the Fund's qualification as a
RIC or avoid imposition of a tax on the Fund.
The Portfolio anticipates that it will be subject to foreign taxes on its
income (including, in some cases, capital gains) from foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. If more than 50% of the Fund's total assets, taking into account its
allocable share of the Portfolio's total assets, at the close of any taxable
year of the Fund consists of stock or securities of foreign corporations, the
Fund may file an election with the Internal Revenue Service pursuant to which
shareholders of the Fund will be required to (i) include in ordinary gross
income (in addition to taxable dividends actually received) their pro rata
shares of foreign income taxes paid by the Portfolio and allocated to the Fund
even though not actually received, and (ii) treat such respective pro rata
portions as foreign income taxes paid by them. Shareholders may then deduct such
pro rata portions of foreign income taxes in computing their taxable incomes,
or, alternatively, use them as foreign tax credits, subject to applicable
limitations, against their U.S. income taxes. Shareholders who do not itemize
deductions for Federal income tax purposes will not, however, be able to deduct
their pro rata portion of foreign taxes deemed paid by the Fund, although such
shareholders will be required to include their shares of such taxes in gross
income. Shareholders who claim a foreign tax credit for such foreign taxes may
be required to treat a portion of dividends received from the Fund as separate
category income for purposes of computing the limitations on the foreign tax
credit. Tax-exempt shareholders will ordinarily not benefit from this election.
Each year that the Fund files the election described above, its shareholders
will be notified of the amount of (i) each shareholder's pro rata share of
foreign income taxes paid by the Portfolio and allocated to the Fund and (ii)
the portion of Fund dividends which represents income from each foreign country.
If the Fund does not make this election, it may deduct its allocated share of
such taxes in computing its investment company taxable income.
The Portfolio will allocate at least annually to the Fund and its other
investors their respective distributive shares of any net investment income and
net capital gains which have been recognized for Federal income tax purposes
(including unrealized gains at the end of the Portfolio's fiscal year on certain
options and futures transactions that are required to be marked-to- market).
Such amounts will be distributed by the Fund to its shareholders in cash or
additional shares, as they elect. Shareholders of the Fund will be advised of
the nature of the distributions.
Distributions by the Fund of the excess of net long-term capital gains over
short-term capital losses earned by the Portfolio and allocated to the Fund,
taking into account any capital loss carryforwards that may be available to the
Fund in years after its first taxable year, are taxable to shareholders of the
Fund as long-term capital gains, whether received in cash or in additional
shares and regardless of the length of time their shares have been held. Certain
distributions, if declared in October, November or December and paid the
following January, will be taxed to shareholders as if received on December 31
of the year in which they are declared.
Any loss realized upon the redemption or exchange of shares with a tax
holding period of 6 months or less will be treated as a long-term capital loss
to the extent of any distribution of net long-term capital gains with respect to
such shares. All or a portion of a loss realized upon a taxable disposition of
Fund shares may be disallowed under "wash sale" rules if other Fund shares are
purchased (whether through reinvestment of dividends or otherwise) within 30
days before or after the disposition. Any disallowed loss will result in an
adjustment to the shareholder's tax basis in some or all of the other shares
acquired.
The Fund will not be subject to Massachusetts income, corporate excise or
franchise taxation as long as it qualifies as a RIC under the Code.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and
shareholders investing through IRAs should consult their tax advisers for more
information. Amounts paid by the Fund to individuals and certain other
shareholders who have not provided the Fund with their correct taxpayer
identification number and certain required certifications, as well as
shareholders with respect to whom the Fund has received notification from the
Internal Revenue Service or a broker, may be subject to "backup" withholding of
Federal income tax from the Fund's dividends and distributions and the proceeds
of redemptions (including repurchases and exchanges) at a rate of 31%. An
individual's taxpayer identification number is generally his or her social
security number.
Non-resident alien individuals and certain foreign corporations and other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax treaty. Distributions from the
excess of the Fund's net long-term capital gain over its net short-term capital
loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. Federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisers regarding the U.S. and foreign tax consequences of an investment in the
Fund.
The foregoing discussion does not describe many of the tax rules applicable
to IRAs nor does it address the special tax rules applicable to certain other
classes of investors, such as other retirement plans, tax-exempt entities,
insurance companies and financial institutions. Shareholders should consult
their own tax advisers with respect to these or other special tax rules that may
apply in their particular situations, as well as the state, local or foreign tax
consequences of investing in the Fund.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions by the
Portfolio, including the selection of the market and the broker-dealer firm, are
made by an Adviser.
An Adviser places the portfolio security transactions of the Portfolio and
of certain other accounts managed by the Advisers for execution with many
broker-dealer firms. An Adviser uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Portfolio and
(when a disclosed commission is being charged) at reasonably competitive
commission rates. In seeking such execution, an Adviser will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the size and type of
the transaction, the general execution and operational capabilities of the
broker-dealer, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition of
the broker-dealer, the value and quality of services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission,
if any. Transactions on stock exchanges and other agency transactions involve
the payment by the Portfolio of negotiated brokerage commissions. Such
commissions vary among different broker-dealer firms, and a particular
broker-dealer may charge different commissions according to such factors as the
difficulty and size of the transaction and the volume of business done with such
broker-dealer. Transactions in foreign securities usually involve the payment of
fixed brokerage commissions, which are generally higher than those in the United
States. There is generally no stated commission in the case of securities traded
in the over-the-counter markets, but the price paid or received by the Portfolio
usually includes an undisclosed dealer markup or markdown. In an underwritten
offering the price paid by the Portfolio includes a disclosed fixed commission
or discount retained by the underwriter or dealer. Although commissions paid on
portfolio transactions will, in the judgment of an Adviser, be reasonable in
relation to the value of the services provided, commissions exceeding those
which another firm might charge may be paid to broker-dealers who were selected
to execute transactions on behalf of the Portfolio and an Adviser's other
clients in part for providing brokerage and research services to an Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if an Adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided. This determination may be
made on the basis of either that particular transaction or on the basis of
overall responsibilities which an Adviser and its affiliates have for accounts
over which it exercises investment discretion. In making any such determination,
an Adviser will not attempt to place a specific dollar value on the brokerage
and research services provided or to determine what portion of the commission
should be related to such services. Brokerage and research services may include
advice as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.
It is a common practice of the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealers which
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, an Adviser may receive Research Services from broker-dealer firms with
which the Adviser places the portfolio transactions of the Portfolio and from
third parties with which these broker-dealers have arrangements. These Research
Services may include such matters as general economic and market reviews,
industry and company reviews, evaluations of securities and portfolio strategies
and transactions and recommendations as to the purchase and sale of securities
and other portfolio transactions, financial, industry and trade publications,
news and information services, pricing and quotation equipment and services, and
research oriented computer hardware, software, data bases and services. Any
particular Research Service obtained through a broker-dealer may be used by an
Adviser in connection with client accounts other than those accounts which pay
commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to an Adviser in rendering investment advisory services to
all or a significant portion of its clients, or may be relevant and useful for
the management of only one client's account or of a few clients' accounts, or
may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid commissions to
the broker-dealer through which such Research Service was obtained. The advisory
fee paid by the Portfolio is not reduced because an Adviser receives such
Research Services. An Adviser evaluates the nature and quality of the various
Research Services obtained through broker-dealer firms and attempts to allocate
sufficient commissions to such firms to ensure the continued receipt of Research
Services which the Adviser believes are useful or of value to it in rendering
investment advisory services to its clients.
Subject to the requirement that an Adviser shall use its best efforts to
seek to execute portfolio security transactions of the Portfolio at advantageous
prices and at reasonably competitive commission rates or spreads, an Adviser is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom Portfolio orders may be placed the fact that such firm has sold or is
selling shares of the Fund or of other investment companies sponsored by Eaton
Vance. This policy is not inconsistent with a rule of the National Association
of Securities Dealers, Inc., which rule provides that no firm which is a member
of the Association shall favor or disfavor the distribution of shares of any
particular investment company or group of investment companies on the basis of
brokerage commissions received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by an Adviser or its
affiliates. An Adviser will attempt to allocate equitably portfolio transactions
among the Portfolio and the portfolios of its other investment accounts whenever
decisions are made to purchase or sell securities by the Portfolio and one or
more of such other accounts simultaneously. In making such allocations, the main
factors to be considered are the respective investment objectives of the
Portfolio and such other accounts, the relative size of portfolio holdings of
the same or comparable securities, the availability of cash for investment by
the Portfolio and such accounts, the size of investment commitments generally
held by the Portfolio and such accounts and the opinions of the persons
responsible for recommending investments to the Portfolio and such accounts.
While this procedure could have a detrimental effect on the price or amount of
the securities available to the Portfolio from time to time, it is the opinion
of the Trustees of the Portfolio that the benefits available from an Adviser's
organization outweigh any disadvantage that may arise from exposure to
simultaneous transactions. For the brokerage commissions paid by the Portfolio
on portfolio transactions, see "Fees and Expenses" in Part II of this Statement
of Additional Information.
OTHER INFORMATION
On August 18, 1992 the Trust changed its name from Eaton Growth Fund to
Eaton Vance Growth Trust. The Trust is a Massachusetts business trust
established in 1989 as the successor to Eaton Vance Growth Fund, Inc., a
Massachusetts corporation which changed its name from Vance, Sanders Common
Stock Fund, Inc. on November 16, 1981. Such name was changed from Boston Common
Stock Fund, Inc. on December 29, 1972. It was originally organized as a Canadian
corporation in 1954, at which time it was known as Canada General Fund Limited.
Eaton Vance, pursuant to its agreement with the Trust, controls the use of the
words "Eaton Vance" in the Trust's name and may use the words "Eaton Vance" in
other connections and for other purposes.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by a majority of the outstanding voting securities of the Trust
affected by the amendment. The Trustees may also amend the Declaration of Trust
without the vote or consent of shareholders to change the name of the Trust or
any series or to make such other changes as do not have a materially adverse
effect on the rights or interests of shareholders or if they deem it necessary
to conform the Declaration to the requirements of Federal laws or regulations.
The Trust's by-laws provide that the Fund will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with any
litigation or proceeding in which they may be involved because of their offices
with the Trust. However, no indemnification will be provided to any Trustee or
officer for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders, and the Trust's
By-Laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. Moreover, the Trust's By-laws also provide for indemnification out
of the property of the Fund of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising
from such liability. The assets of the Fund are readily marketable and will
ordinarily substantially exceed its liabilities. In light of the nature of the
Fund's business and the nature of its assets, management believes that the
possibility of the Fund's liability exceeding its assets, and therefore the
shareholders's risk of personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholder's meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-Laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-Laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Securities and Exchange Commission,
or during any emergency as determined by the Commission which makes it
impracticable for the Portfolio to dispose of its securities or value its
assets, or during any other period permitted by order of the Commission for the
protection of investors.
INDEPENDENT ACCOUNTANTS
On August 7, 1995, the Trustees appointed Coopers & Lybrand L.L.P., One Post
Office Square, Boston, Massachusetts, as the independent accountants of the
Fund, providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission. The change in auditors was not due to disagreement on any
matter of accounting principles or practices or financial statement disclosures.
Coopers & Lybrand Chartered Accountants, Toronto, Canada, are the independent
accountants for the Portfolio.
For the financial statements of the Portfolio see "Financial Statements" in
Part II of this Statement of Additional Information.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV MARATHON INFORMATION AGE FUND.
The Fund became a series of the Trust on June 19, 1995.
FEES AND EXPENSES
ADVISER
No fees paid to date.
MANAGER AND ADMINISTRATOR
No fees paid to date.
DISTRIBUTION PLAN
The Fund has not made any sales commission payments to the Principal
Underwriter under the Plan to date. The Fund expects to begin making service
fee payments during the quarter ending September 30, 1996.
PRINCIPAL UNDERWRITER
No fees paid to date.
CUSTODIAN
No fees paid to date.
BROKERAGE
No fees paid to date.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested
Trustees) are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) For the fiscal year ending August 31, 1996, it is estimated
that the noninterested Trustees of the Trust and the Portfolio will receive
the following compensation in their capacities as Trustees of the Trust and
the Portfolio and, during the first quarter ended March 31, 1995, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees of the other funds in the Eaton
Vance fund complex(1):
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
---- ------------ -------------- ------------
Donald R. Dwight .......... $50 $2,500 $33,750(2)
Samuel L. Hayes, III ...... 50 2,500 41,250(3)
Norton H. Reamer .......... 50 2,500 33,750
John L. Thorndike ......... 50 2,500 35,000
Jack L. Treynor ........... 50 2,500 35,000
(1)The Eaton Vance fund complex consists of 205 registered investment companies
or series thereof.
(2)Includes $8,750 of deferred compensation.
(3)Includes $24,886 of deferred compensation.
PRINCIPAL UNDERWRITER
The Principal Underwriter is a wholly-owned subsidiary of Eaton Vance.
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to financial service firms ("Authorized Firms") or
investors and other selling literature and of advertising is borne by the
Principal Underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of the Fund and its shares under
Federal and states securities laws is borne by the Fund. In addition, the Fund
makes payments to the Principal Underwriter pursuant to its Distribution Plan
as described in the Fund's current prospectus; the provisions of the plan
relating to such payments are included in the Distribution Agreement. The
Distribution Agreement is renewable annually by the Trust's Board of Trustees
(including a majority of its Trustees who are not interested persons of the
Trust and who have no direct or indirect financial interest in the operation
of the Fund's Distribution Plan or the Distribution Agreement), may be
terminated on sixty days' notice either by such Trustees or by vote of a
majority of the outstanding voting securities of the Fund or on six months'
notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Fund shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold. The Fund reserves the right to suspend or limit the offering
of shares to the public at any time.
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares and will pay the Principal Underwriter $2.50 for each
repurchase transaction handled by the Principal Underwriter. The Principal
Underwriter estimates that the expenses incurred by it in acting as repurchase
agent for the Fund will exceed the amounts paid therefor by the Fund.
DISTRIBUTION PLAN
The Distribution Plan (the "Plan") is described in the Prospectus and is
designed to meet the requirements of Rule 12b-1 under the 1940 Act and the
sales charge rule of the National Association of Securities Dealers, Inc. (the
"NASD Rule"). The purpose of the Plan is to compensate the Principal
Underwriter for its distribution services and facilities provided to the Fund
by paying the Principal Underwriter sales commissions and a separate
distribution fee in connection with sales of Fund shares. The following
supplements the discussion of the Plan contained in the Fund's Prospectus.
The amount payable by the Fund to the Principal Underwriter pursuant to
the Plan as sales commissions and distribution fees with respect to each day
will be accrued on such day as a liability of the Fund and will accordingly
reduce the Fund's net assets upon such accrual, all in accordance with
generally accepted accounting principles. The amount payable on each day is
limited to 1/365 of .75% of the Fund's net assets on such day. The level of
the Fund's net assets changes each day and depends upon the amount of sales
and redemptions of Fund shares, the changes in the value of the investments
held by the Portfolio, the expenses of the Fund and the Portfolio accrued and
allocated to the Fund on such day, income on portfolio investments of the
Portfolio accrued and allocated to the Fund on such day, and any dividends and
distributions declared on Fund shares. The Fund does not accrue possible
future payments as a liability of the Fund or reduce the Fund's current net
assets in respect of unknown amounts which may become payable under the Plan
in the future because the standards for accrual of such a liability under
accounting principles have not been satisfied.
The Plan provides that the Fund will receive all contingent deferred sales
charges and will make no payments to the Principal Underwriter in respect of
any day on which there are no outstanding Uncovered Distribution Charges of
the Principal Underwriter. Contingent deferred sales charges and accrued
amounts will be paid by the Fund to the Principal Underwriter whenever there
exist Uncovered Distributions Charges under the Plan.
Periods with a high level of sales of Fund shares accompanied by a low
level of early redemptions of Fund shares resulting in the imposition of
contingent deferred sales charges will tend to increase the time during which
there will exist Uncovered Distribution Charges of the Principal Underwriter.
Conversely, periods with a low level of sales of Fund shares accompanied by a
high level of early redemptions of Fund shares resulting in the imposition of
contingent deferred sales charges will tend to reduce the time during which
there will exist Uncovered Distribution Charges of the Principal Underwriter.
In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions
and distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled
to be paid under the Plan since its inception. Payments theretofore paid or
payable under the Plan by the Fund to the Principal Underwriter and contingent
deferred sales charges theretofore paid or payable to the Principal
Underwriter will be subtracted from such distribution charges; if the result
of such subtraction is positive, a distribution fee (computed at 1% over the
prime rate then reported in The Wall Street Journal) will be computed on such
amount and added thereto, with the resulting sum constituting the amount of
uncovered distribution charges with respect to such day. The amount of
outstanding uncovered distribution charges of the Principal Underwriter
calculated on any day does not constitute a liability recorded on the
financial statements of the Fund.
The amount of uncovered distribution charges of the Principal Underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of Fund shares, the nature of such sales (i.e.
whether they result from exchange transactions, reinvestments or from cash
sales through Authorized Firms), the level and timing of redemptions of Fund
shares upon which a contingent deferred sales charge will be imposed, the
level and timing of redemptions of Fund shares upon which no contingent
deferred sales charge will be imposed (including redemptions involving
exchanges of Fund shares for shares of another fund in the Eaton Vance
Marathon Group of Funds which result in a reduction of uncovered distribution
charges), changes in the level of the net assets of the Fund, and changes in
the interest rate used in the calculation of the distribution fee under the
Plan.
As currently implemented by the Trustees, the Plan authorizes payments of
sales commissions and distribution fees to the Principal Underwriter and
service fees to the Principal Underwriter and Authorized Firms which may be
equivalent, on an aggregate basis during any fiscal year of the Fund, to 1% of
the Fund's average daily net assets for such year. For the sales commission
and service fee payments made by the Fund and the outstanding uncovered
distribution charges of the Principal Underwriter, see "Fees and Expenses --
Distribution Plan" in this Part II. The Fund believes that the combined rate
of all these payments may be higher than the rate of payments made under
distribution plans adopted by many other investment companies pursuant to Rule
12b-1. Although the Principal Underwriter will use its own funds (which may be
borrowed from banks) to pay sales commissions at the time of sale, it is
anticipated that the Eaton Vance organization will profit by reason of the
operation of the Plan through an increase in the Fund's assets (thereby
increasing the management fee payable to Eaton Vance by the Fund and the
administration fee payable to Eaton Vance by the Portfolio) resulting from
sale of Fund shares and through the sales commissions and distribution fees
and contingent deferred sales charges paid to the Principal Underwriter. The
Eaton Vance organization may be considered to have realized a profit in
distributing shares of the Fund if at any point in time the aggregate amounts
theretofore received by the Principal Underwriter from the Fund pursuant to
the Plan and from contingent deferred sales charges have exceeded the total
expenses theretofore incurred by such organization in distributing shares of
the Fund. Total expenses for this purpose will include an allocable portion of
the overhead costs of such organization and its branch offices, which costs
will include without limitation leasing expense, depreciation of building and
equipment, utilities, communication and postage expense, compensation and
benefits of personnel, travel and promotional expense, stationery and
supplies, literature and sales aids, interest expense, data processing fees,
consulting and temporary help costs, insurance, taxes other than income taxes,
legal and auditing expense and other miscellaneous overhead items. Overhead is
calculated and allocated for such purpose by the Eaton Vance organization in a
manner deemed equitable to the Fund.
The provisions of the Plan relating to payments of sales commissions and
distribution fees to the Principal Underwriter are also included in the
Distribution Agreement between the Trust on behalf of the Fund and the
Principal Underwriter. Pursuant to Rule 12b-1, the Plan has been approved by
the Fund's initial sole shareholder (Eaton Vance Management) and by the Board
of Trustees of the Trust as required by Rule 12b-1. The Plan provides that it
shall continue in effect through and including April 28, 1996, and shall
continue in effect indefinitely thereafter for so long as such continuance is
approved at least annually by the vote of both a majority of (i) the Trustees
of the Trust who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to the Plan (the "Rule 12b-1 Trustees") and (ii) all of the
Trustees then in office, and the Distribution Agreement contains a similar
provision. The Plan and the Distribution Agreement may each be terminated at
any time by vote of a majority of the Rule 12b-1 Trustees, or by a vote of a
majority of the outstanding voting securities of the Fund. Under the Plan the
President or a Vice President of the Trust shall provide to the Trustees for
their review, and the Trustees shall review at lease quarterly, a written
report of the amount expended under the Plan and the purposes for which such
expenditures were made. The Plan may not be amended to increase materially the
payments described therein without approval of the shareholders of the Fund,
and all material amendments of the Plan must also be approved by the Trustees
as required by Rule 12b-1. So long as the Plan is in effect, the selection and
nomination of Trustees who are not interested persons of the Trust shall be
committed to the discretion of the Trustees who are not such interested
persons.
The Trustees of the Trust believe that the Plan will be a significant
factor in the expected growth of the Fund's assets, and will result in
increased investment flexibility and advantages which will benefit the Fund
and its shareholders. Payments for sales commissions and distribution fees
made to the Principal Underwriter under the Plan will compensate the Principal
Underwriter for its services and expenses in distributing shares of the Fund.
Service fee payments made to Authorized Firms under the Plan would provide
incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the Principal
Underwriter and Authorized Firms, the Plan is expected to result in the
maintenance of, and possible future growth in, the assets of the Fund. Based
on the foregoing and other relevant factors, the Trustees of the Trust have
determined that in their judgment there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of July 31, 1995, Eaton Vance owned one share of the Fund, being the
only share of the Fund outstanding on such date. Eaton Vance is a
Massachusetts business trust and a wholly-owned subsidiary of EVC.
<PAGE>
FINANCIAL STATEMENTS
INFORMATION AGE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 2, 1995
ASSETS:
Cash ........................................................... $100,010
Deferred organization expenses ................................. 6,250
--------
Total assets ............................................... $106,260
LIABILITIES:
Accrued organization expenses ...................................... 6,250
--------
NET ASSETS ......................................................... $100,010
--------
NOTES:
(1) Information Age Portfolio (the "Portfolio") was organized as a New York
Trust on June 1, 1995 and has been inactive since that date, except for
matters relating to its organization and registration as an investment
company under the Investment Company Act of 1940 and the sale of interests
therein at the purchase price of $100,000 to Eaton Vance Management and
the sale of interest therein at the purchase price of $10 to Boston
Management & Research (the "Initial Interests").
(2) Organization expenses are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years, commencing on
the effective date of the Portfolio's initial offering of its interests.
The amount paid by the Portfolio on any withdrawal by the holders of the
Initial Interests of any of the respective Initial Interests will be
reduced by a portion of any unamortized organization expenses, determined
by the proportion of the amount of the Initial Interests withdrawn to the
Initial Interests then outstanding.
(3) At 4:00 p.m., New York City time, on each business day of the Portfolio,
the value of an investor's interest in the Portfolio is equal to the
product of (1) the aggregate net asset value of the Portfolio multiplied
by (ii) the percentage representing that investor's share of the aggregate
interest in the Portfolio effective for that day.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of Information Age Portfolio:
We have audited the accompanying statement of assets and liabilities of
Information Age Portfolio (a New York Trust) as of June 2, 1995. This
financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such statement of assets and liabilities presents fairly,
in all material respects, the financial position of Information Age Portfolio
as of June 2, 1995, in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Boston, Massachusetts
June 5, 1995
<PAGE>
EV MARATHON
INFORMATION
AGE FUND
STATEMENT OF
ADDITIONAL INFORMATION
AUGUST 23, 1995
EV MARATHON INFORMATION
AGE FUND
24 FEDERAL STREET
BOSTON, MA 02110
SPONSOR AND MANAGER OF EV MARATHON INFORMATION AGE FUND
ADMINISTRATOR OF INFORMATION AGE PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
CO-ADVISERS OF INFORMATION AGE PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 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
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
M-IASAI
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
August 23, 1995
EV TRADITIONAL INFORMATION AGE FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Traditional Information Age Fund (the "Fund") and
certain other series of Eaton Vance Growth Trust (the "Trust"). Part II provides
information solely about the Fund. As described in the Prospectus, the Fund
invests its assets in Information Age Portfolio (the "Portfolio"), a separate
registered investment company with the same investment objective and policies as
the Fund. Where appropriate, Part I includes cross-references to the relevant
sections of Part II.
TABLE OF CONTENTS
Page
PART I
Additional Information About Investment Policies ........................ 1
Investment Restrictions ................................................. 5
Trustees and Officers ................................................... 7
Management of the Fund and the Portfolio ................................ 10
Custodian ............................................................... 13
Service for Withdrawal .................................................. 13
Determination of Net Asset Value ........................................ 14
Investment Performance .................................................. 15
Taxes ................................................................... 15
Portfolio Security Transactions ......................................... 17
Other Information ....................................................... 19
Independent Certified Public Accountants ................................ 20
PART II
Fees and Expenses ....................................................... a-1
Services for Accumulation ............................................... a-1
Principal Underwriter ................................................... a-2
Distribution Plan ....................................................... a-3
Control Persons and Principal Holders of Securities ..................... a-3
Financial Statements .................................................... a-4
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED AUGUST 23, 1995, AS SUPPLEMENTED FROM
TIME TO TIME. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE
BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE
BACK COVER FOR ADDRESS AND PHONE NUMBER).
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART I
This Part I provides information about the Fund, certain other series of the
Trust and the Portfolio. Capitalized terms used in this Statement of Additional
Information and not otherwise defined have the meanings given them in the Fund's
Prospectus. The Fund is subject to the same investment policies as those of the
Portfolio. The Fund currently seeks to achieve its objective by investing in the
Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
Foreign Investments. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the U.S. securities
laws. Foreign issuers are generally not bound by uniform accounting, auditing,
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Investments in foreign securities also
involve the risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the removal
of funds or other assets of the Portfolio, political or financial instability or
diplomatic and other developments which could affect such investments. Further,
economies of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the United States. It is anticipated that in
most cases the best available market for foreign securities will be on exchanges
or in over-the-counter markets located outside of the United States. Foreign
stock markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In addition, foreign
brokerage commissions are generally higher than commissions on securities traded
in the United States and may be non-negotiable. In general, there is less
overall governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the United States.
Foreign Currency Transactions. Because investments in companies whose principal
business activities are located outside of the United States will frequently
involve currencies of foreign countries, and because assets of the Portfolio may
temporarily be held in bank deposits in foreign currencies during the completion
of investment programs, the value of the assets of the Portfolio as measured in
U.S. dollars may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations. Currency exchange
rates can also be affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the U.S. or abroad. The Portfolio may
conduct its foreign currency exchange transactions on a spot (i.e., cash) basis
at the spot rate prevailing in the foreign currency exchange market or through
entering into swaps, forward contracts, options or futures on currency. On spot
transactions, foreign exchange dealers do not charge a fee for conversion, but
they do realize a profit based on the difference (the "spread") between the
prices at which they are buying and selling various currencies. Thus, a dealer
may offer to sell a foreign currency to the Portfolio at one rate, while
offering a lesser rate of exchange should the Portfolio desire to resell that
currency to the dealer.
Emerging Companies. The investment risk associated with emerging companies is
higher than that normally associated with larger, older companies due to the
greater business risks associated with small size, the relative age of the
company, limited product lines, distribution channels and financial and
managerial resources. Further, there is typically less publicly available
information concerning smaller companies than for larger, more established ones.
The securities of small companies are often traded only over-the-counter and may
not be traded in the volumes typical of trading on a national securities
exchange. As a result, in order to sell this type of holding, the Portfolio may
need to discount the securities from recent prices or dispose of the securities
over a long period of time. The prices of this type of security may be more
volatile than those of larger companies which are often traded on a national
securities exchange.
Currency Swaps. Currency swaps require maintenance of a segregated account
described under "Asset Coverage for Derivative Investments" below. The Portfolio
will not enter into any currency swap unless the credit quality of the unsecured
senior debt or the claims-paying ability of the other party thereto is
considered to be investment grade by Lloyd George Investment Management
(Bermuda) Limited ("Lloyd George" or an "Adviser"). If there is a default by the
other party to such a transaction, the Portfolio will have contractual remedies
pursuant to the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid in
comparison with the markets for other similar instruments which are traded in
the interbank market.
Forward Foreign Currency Exchange Transactions. The Portfolio may enter into
forward foreign currency exchange contracts in several circumstances. First,
when the Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, or when the Portfolio anticipates the receipt
in a foreign currency of dividend or interest payments on such a security which
it holds, the Portfolio may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest payment, as
the case may be. By entering into a forward contract for the purchase or sale,
for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying transactions, the Portfolio will attempt to protect itself against an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date on which the security is
purchased or sold, or on which the dividend or interest payment is declared, and
the date on which such payments are made or received.
Additionally, when management of the Portfolio believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the securities held by the Portfolio denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of the Portfolio's
foreign assets.
Special Risks Associated With Currency Transactions. Transactions in forward
contracts, as well as futures and options on foreign currencies, are subject to
the risk of governmental actions affecting trading in or the prices of
currencies underlying such contracts, which could restrict or eliminate trading
and could have a substantial adverse effect on the value of positions held by
the Portfolio. In addition, the value of such positions could be adversely
affected by a number of other complex political and economic factors applicable
to the countries issuing the underlying currencies.
Furthermore, unlike trading in most other types of instruments, there is no
systematic reporting of last sale information with respect to the foreign
currencies underlying forward contracts, futures contracts and options. As a
result, the available information on which the Portfolio's trading systems will
be based may not be as complete as the comparable data on which the Portfolio
makes investment and trading decisions in connection with securities and other
transactions. Moreover, because the foreign currency market is a global,
twenty-four hour market, events could occur on that market which will not be
reflected in the forward, futures or options markets until the following day,
thereby preventing the Portfolio form responding to such events in a timely
manner.
Settlements of over-the-counter forward contracts or of the exercise of
foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires parties to such contracts to accept
or make delivery of such currencies in conformity with any United States or
foreign restrictions and regulations regarding the maintenance of foreign
banking relationships, fees, taxes or other charges.
Unlike currency futures contracts and exchange-traded options, options on
foreign currencies and forward contracts are not traded on contract markets
regulated by the Commodity Futures Trading Commission ("CFTC") or (with the
exception of certain foreign currency options) the Securities and Exchange
Commission ("Commission"). To the contrary, such instruments are traded through
financial institutions acting as market-makers. (Foreign currency options are
also traded on the Philadelphia Stock Exchange subject to Commission
regulation). In an over-the-counter trading environment, many of the protections
associated with transactions on exchanges will not be available. For example,
there are no daily price fluctuation limits, and adverse market movements could
therefore continue to an unlimited extent over a period of time. Although the
purchaser of an option cannot lose more than the amount of the premium plus
related transaction costs, this entire amount could be lost. Moreover, an option
writer could lose amounts substantially in excess of its initial investment due
to the margin and collateral requirements associated with such option positions.
Similarly, there is no limit on the amount of potential losses on forward
contracts to which the Portfolio is a party.
In addition, over-the-counter transactions can only be entered into with a
financial institution willing to take the opposite side, as principal, of the
Portfolio's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Portfolio.
Where no such counterparty is available, it will not be possible to enter into a
desired transaction. There also may be no liquid secondary market in the trading
of over-the-counter contacts, and the Portfolio may be unable to close out
options purchased or written, or forward contracts entered into, until their
exercise, expiration or maturity. This in turn could limit the Portfolio's
ability to realize profits or to reduce losses on open positions and could
result in greater losses.
Furthermore, over-the-counter transactions are not backed by the guarantee
of an exchange's clearing corporation. The Portfolio will therefore be subject
to the risk of default by, or the bankruptcy of, the financial institution
serving as its counterparty. One or more of such institutions also may decide to
discontinue its role as market-maker in a particular currency, thereby
restricting the Portfolio's ability to enter into desired hedging transactions.
The Portfolio will enter into over-the-counter transactions only with parties
whose creditworthiness has been reviewed and found satisfactory by an Adviser.
The purchase and sale of exchange-traded foreign currency options, however,
are subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effect of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the Options Clearing Corporation ("OCC"), which has established banking
relationships in applicable foreign countries for this purpose. As a result, the
OCC may, if it determines that foreign governmental restrictions or taxes would
prevent the orderly settlement of foreign currency option exercises, or would
result in undue burdens on the OCC or its clearing member, impose special
procedures for exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar settlement prices or
prohibitions on exercise.
Risks Associated With Derivative Instruments. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of the
initial investment made or the premium received by the Portfolio. Derivative
instruments may sometimes increase or leverage the Portfolio's exposure to a
particular market risk. Leverage enhances the Portfolio's exposure to the price
volatility of derivative instruments it holds. The Portfolio's success in using
derivative instruments to hedge portfolio assets depends on the degree of price
correlation between the derivative instruments and the hedged asset. Imperfect
correlation may be caused by several factors, including temporary price
disparities among the trading markets for the derivative instrument, the assets
underlying the derivative instrument and the Portfolio assets. Over-the-counter
("OTC") derivative instruments involve an enhanced risk that the issuer or
counterparty will fail to perform its contractual obligations. Some derivative
instruments are not readily marketable or may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit trading in an exchange-traded derivative
instrument, which may make the contract temporarily illiquid and difficult to
price. Commodity exchanges may also establish daily limits on the amount that
the price of a futures contract or futures option can vary from the previous
day's settlement price. Once the daily limit is reached, no trades may be made
that day at a price beyond the limit. This may prevent the Portfolio from
closing out positions and limiting its losses. The staff of the Commission takes
the position that purchased OTC options, and assets used as cover for written
OTC options, are subject to the Portfolio's 15% limit on illiquid investments.
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 Portfolio's ability to terminate OTC
derivative instruments may depend on the cooperation of the counterparties to
such contracts. For thinly traded derivative instruments, the only source of
price quotations may be the selling dealer or counterparty. In addition, certain
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), limit
the extent to which the Portfolio may purchase and sell derivative instruments.
The Portfolio will engage in transactions in futures contracts and related
options only to the extent such transactions are consistent with the
requirements of the Code for maintaining the qualification of the Fund as a
regulated investment company for Federal income tax purposes.
See "Taxes."
Asset Coverage for Derivative Instruments. Transactions using forward contracts,
futures contracts and options (other than options that the Portfolio has
purchased) expose the Portfolio to an obligation to another party. The Portfolio
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, currencies, or other options or
futures contracts or forward contracts, or (2) cash, receivables, and short-term
debt securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Portfolio will comply with
Commission guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. Government securities or other
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding forward contract, futures contract or option
is open, unless they are replaced with other appropriate assets. As a result,
the commitment of a large portion of the Portfolio's assets to cover or
segregated accounts could impede portfolio management or the Portfolio's ability
to met redemption requests or other current obligations.
Limitations on Futures Contracts and Options. If the Portfolio has not complied
with the 5% CFTC test set forth in the Fund's prospectus, to evidence its
hedging intent, the Portfolio expects that, on 75% or more of the occasions on
which it takes a long futures or option on futures position, it will have
purchased or will be in the process of purchasing, equivalent amounts of related
securities at the time when the futures or options position is closed out.
However, in particular cases, when it is economically advantageous for the
Portfolio to do so, a long futures or options position may be terminated (or an
option may expire) without a corresponding purchase of securities.
The Portfolio may enter into futures contracts, and options on futures
contracts, traded on an exchange regulated by the CFTC and on foreign exchanges,
but, with respect to foreign exchange-traded futures contracts and options on
such futures contracts, only if Lloyd George determines that trading on each
such foreign exchange does not subject the Portfolio to risks, including credit
and liquidity risks, that are materially greater than the risks associated with
trading on CFTC-regulated exchanges.
In order to hedge its current or anticipated portfolio positions, the
Portfolio may use futures contracts on securities held in its Portfolio or on
securities with characteristics similar to those of the securities held by the
Portfolio. If, in the opinion of an Adviser, there is a sufficient degree of
correlation between price trends for the securities held by the Portfolio and
futures contracts based on other financial instruments, securities indices or
other indices, the Portfolio may also enter into such futures contracts as part
of its hedging strategy.
All call and put options on securities written by the Portfolio will be
covered. This means that, in the case of call option, the Portfolio will own the
securities subject to the call option or an offsetting call option so long as
the call option is outstanding. In the case of a put option, the Portfolio will
own an offsetting put option or will have deposited with its custodian cash or
liquid, high-grade debt securities with a value at least equal to the exercise
price of the put option. The Portfolio may only write a put option on a security
that it intends to acquire for its investment portfolio.
Repurchase Agreements. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promise to sell that same security back
to the seller at a higher price. At no time will the Portfolio commit more than
15% of its net assets to repurchase agreements which mature in more than seven
days and other illiquid securities. The Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreement
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement, and will be marked to market daily.
Reverse Repurchase Agreements. The Portfolio may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, the Portfolio temporarily
transfers possession of a portfolio instrument to another party, such as a bank
or broker-dealer, in return for cash. At the same time, the Portfolio agrees to
repurchase the instrument at an agreed upon time (normally within seven days)
and price, which reflects an interest payment. The Portfolio expects that it
will enter into reverse repurchase agreements when it is able to invest the cash
so acquired at a rate higher than the cost of the agreement, which would
increase the income earned by the Portfolio. The Portfolio could also enter into
reverse repurchase agreements as a means of raising cash to satisfy redemption
requests without the necessity of selling portfolio assets.
When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to another
party or the securities in which the proceeds may be invested would affect the
market value of the Portfolio's assets. As a result, such transactions may
increase fluctuations in the market value of the Portfolio's assets. While there
is a risk that large fluctuations in the market value of the Portfolio's assets
could affect the Portfolio's net asset value, this risk is not significantly
increased by entering into reverse repurchase agreements, in the opinion of an
Adviser. Because reverse repurchase agreements may be considered to be the
practical equivalent of borrowing funds, they constitute a form of leverage. If
the Portfolio reinvests the proceeds of a reverse repurchase agreement at a rate
lower than the cost of the agreement, entering into the agreement will lower the
Portfolio's yield.
At all times that a reverse repurchase agreement is outstanding, the
Portfolio will maintain cash or high grade liquid securities in a segregated
account at its custodian bank with a value at least equal to its obligation
under the agreement. Securities and other assets held in the segregated account
may not be sold while the reverse repurchase agreement is outstanding, unless
other suitable assets are substituted. While an Adviser does not consider
reverse repurchase agreements to involve a traditional borrowing of money,
reverse repurchase agreements will be included within the aggregate limitation
on "borrowings" contained in the Portfolio's investment restriction (1) set
forth below.
Portfolio Turnover. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity of
one year or less). A 100% annual turnover rate would occur, for example, if all
the securities in the portfolio were replaced once in a period of one year. A
high turnover rate (100% or more) necessarily involves greater expenses to the
Portfolio. The Portfolio engages in portfolio trading (including short-term
trading) if it believes that a transaction including all costs will help in
achieving its investment objective either by increasing income or by enhancing
the Portfolio's net asset value. High portfolio turnover may also result in the
realization of substantial net short-term capital gains. In order for the Fund
to continue to qualify as a regulated investment company for Federal tax
purposes, less than 30% of the annual gross income of the Fund must be derived
from the sale of securities (including its share of gains from the sale of
securities held by the Portfolio) held for less than three months.
Lending Portfolio Securities. If an Adviser decides to make securities loans,
the Portfolio may seek to increase its income by lending portfolio securities to
broker-dealers or other institutional borrowers. Under present regulatory
policies of the Commission, such loans are required to be secured continuously
by collateral in cash, cash equivalents or U.S. Government securities held by
the Portfolio's custodian and maintained on a current basis at an amount at
least equal to market value of the securities loaned, which will be marked to
market daily. Cash equivalents include certificates of deposit, commercial paper
and other short-term money market instruments. The financial condition of the
borrower will be monitored by an Adviser on an ongoing basis. The Portfolio
would continue to receive the equivalent of the interest or dividends paid by
the issuer on the securities loaned and would also receive a fee, or all or a
portion of the interest on investment of the collateral. The Portfolio would
have the right to call a loan and obtain the securities loaned at any time on up
to five business days' notice. The Portfolio would not have the right to vote
any securities having voting rights during the existence of a loan, but could
call the loan in anticipation of an important vote to be taken among holder of
the securities or the giving or holding of their consent on a material matter
affecting the investment. If an Adviser decides to make securities loans, it is
intended that the value of the securities loaned would not exceed 1/3 of the
Portfolio's total assets.
INVESTMENT RESTRICTIONS
Whenever an investment policy or investment restriction set forth in the
Prospectus or this Statement of Additional Information states a maximum
percentage of assets that may be invested in any security or other asset or
describes a policy regarding quality standards, such percentage limitation or
standard shall be determined immediately after and as a result of the Fund's or
the Portfolio's acquisition of such security or other asset. Accordingly, any
later increase or decrease resulting from a change in values, assets or other
circumstances, other than a subsequent rating change below investment grade made
by a rating service, will not compel the Fund or the Portfolio, as the case may
be, to dispose of such security or other asset.
The Fund and the Portfolio have each adopted the following investment
restrictions which may not be changed without the approval by the holders of a
majority of the outstanding voting securities of the Fund or the Portfolio, as
the case may be, which as used in this Statement of Additional Information means
the lesser of (a) 67% or more of the outstanding voting securities of the Fund
or the Portfolio, as the case may be, present or represented by proxy at a
meeting if the holders of more than 50% of the outstanding voting securities of
the Fund or the Portfolio are present or represented at the meeting or (b) more
than 50% of the outstanding voting securities of the Fund or the Portfolio.
Neither the Fund nor the Portfolio may:
(1) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(2) Purchase any securities on margin (but the Fund and the Portfolio may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities);
(3) Underwrite securities of other issuers;
(4) Invest in real estate including interests in real estate limited
partnerships (although it may purchase and sell securities which are secured by
real estate and securities of companies which invest or deal in real estate) or
in commodities or commodity contacts for the purchase or sale of physical
commodities;
(5) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities;
(6) With respect to 75% of its total assets, invest more than 5% of its
total assets (taken at current value) in the securities of any one issuer, or
invest in more than 10% of the outstanding voting securities of any one issuer,
except obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment companies; or
(7) Concentrate its investments in any particular industry, but, if deemed
appropriate for the Fund's objective, up to 25% of the value of its assets may
be invested in securities of companies in any one industry (although more than
25% may be invested in securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities).
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund. Notwithstanding the investment policies and restrictions of the Portfolio,
the Portfolio may invest part of its assets in another investment company
consistent with the Investment Company Act of 1940 (the "1940 Act").
The Fund and the Portfolio have each adopted the following investment
policies which may be changed without shareholder or investor approval. Neither
the Fund nor the Portfolio may invest more than 15% of its net assets in
investments which are not readily marketable, including restricted securities
and repurchase agreements with a maturity longer than seven days. Restricted
securities for the purposes of this limitation do not include securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933 that
the Board of Trustees of the Trust or the Portfolio, or their delegate,
determines to be liquid. Factors taken into account in reaching liquidity
decisions include, but are not limited to: (i) the frequency of trading in the
security; (ii) the number of dealers who provide quotes for the security; (iii)
the number of dealers who have undertaken to make a market in the security; (iv)
the number of other potential purchasers; and (v) the nature of the security and
how trading is effected (e.g., the time needed to sell the security, how offers
are solicited, and the mechanics of transfer). An Adviser will monitor the
liquidity of the Portfolio's securities and report periodically on such
decisions to the Board of Trustees of the Portfolio. Neither the Fund nor the
Portfolio intends to make short sales of securities during the coming year.
Except for obligations issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, neither the Fund nor the Portfolio will knowingly
purchase a security issued by a company (including predecessors) with less than
three years operating history (unless such security is rated at least B or a
comparable rating at the time of purchase by a least one nationally recognized
rating service) if, as a result of such purchase, more than 5% of the
Portfolio's or the Fund's total assets, as the case may be (taken at current
value), would be invested in such securities. Neither the Fund nor the Portfolio
will purchase warrants if, as a result of such purchase, more than 5% of the
Portfolio's or the Fund's net assets, as the case may be (taken at current
value), would be invested in warrants, and the value of such warrants which are
not listed on the New York or American Stock Exchange may not exceed 2% of the
Portfolio's or the Fund's net assets; this policy does not apply to or restrict
warrants acquired by the Portfolio or the Fund in units or attached to
securities, inasmuch as such warrants are deemed to be without value. Neither
the Fund nor the Portfolio will purchase oil, gas or other mineral leases or
purchase partnership interests in oil, gas or other mineral exploration or
development programs. Neither the Fund nor the Portfolio will purchase or retain
in its portfolio any securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the Trust or
is a member, officer, director or trustee of any investment adviser of the Trust
or the Portfolio if after the purchase of the securities of such issuer by the
Fund or the Portfolio one or more of such persons owns beneficially more than
1/2 of 1% of the shares or securities or both (all taken at market value) of
such issuer and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or securities
or both (all taken at market value).
In order to permit the sale of shares of the Fund in certain states, the
Fund and the Portfolio may make commitments more restrictive than the
fundamental policies described above. Should the Fund determine that any such
commitment is no longer in the best interests of the Fund and its shareholders,
it will revoke the commitment by terminating sales of its shares in the state(s)
involved.
Although permissible under the Fund's investment restrictions, the Fund has
no present intention during the coming fiscal year to: borrow money; pledge its
assets; or make loans to other persons.
TRUSTEES AND OFFICERS
The Trust's Trustees and officers are listed below. Except as indicated,
each individual has held the office shown or other offices in the same company
for the last five years. Unless otherwise noted, the business address of each
Trustee and officer is 24 Federal Street, Boston, Massachusetts 02110, which is
also the address of the Fund's sponsor and manager, Eaton Vance Management
("Eaton Vance"); of Eaton Vance's wholly-owned subsidiary, Boston Management and
Research ("BMR"); of Eaton Vance's parent, Eaton Vance Corp. ("EVC"); and of
Eaton Vance's trustee, Eaton Vance, Inc. ("EV"). Eaton Vance and EV are both
wholly-owned subsidiaries of EVC. Those Trustees who are "interested persons" of
the Trust, Eaton Vance, BMR, EVC or EV as defined in the 1940 Act by virtue of
their affiliation with any one or more of the Trust, Eaton Vance, BMR, EVC or
EV, are indicated by an asterisk(*).
OFFICERS AND TRUSTEES OF THE TRUST
JAMES B. HAWKES (53), President and Trustee*
Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director of EVC
and EV. Director or Trustee and officer of various investment companies
managed by Eaton Vance or BMR.
LANDON T. CLAY (69), Vice President and Trustee*
Chairman of Eaton Vance, BMR, EVC and EV and a Director of EVC and EV. Director
or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
DONALD R. DWIGHT (64), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (60), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (59), Trustee
President and Director, United Asset Management Corporation, (a holding company
owning institutional investment management firms); Chairman, President and
Director, The Regis Fund, Inc. (mutual fund). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (68), Trustee
Director, Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (65), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS
WILLIAM D. BURT (57), Vice President
Vice President of Eaton Vance since November, 1994. Vice President of The
Boston Company prior thereto.
M. DOZIER GARDNER (61), Vice President
President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.
BARCLAY TITTMANN (63), Vice President
Vice President of Eaton Vance since September, 1993. Vice President of INVESCO
prior thereto.
JAMES L. O'CONNOR (50), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
WILLIAM J. AUSTIN, JR. (43), Assistant Treasurer
Assistant Vice President of BMR, Eaton Vance and EV. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Austin was elected
Assistant Treasurer of the Trust on December 16, 1991.
THOMAS OTIS (63), Secretary
Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (59), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (32), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993) and Registration Specialist, Fidelity Management
& Research Co. (1986-1991). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Trust on March 27, 1995.
ERIC G. WOODBURY (38), Assistant Secretary
Vice President of Eaton Vance since February 1993; formerly, associate at
Dechert, Price & Rhoads and Gaston & Snow.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the Special
Committee of the Board of Trustees of the Trust. The Special Committee's
functions include a continuous review of the Fund's management contract with
Eaton Vance, making recommendations to the Board of Trustees regarding the
compensation of those Trustees who are not members of the Eaton Vance
organization, and making recommendations to the Board of Trustees regarding
candidates to fill vacancies, as and when they occur, in the ranks of those
Trustees who are not "interested persons" of the Trust, the Portfolio, or the
Eaton Vance organization.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees. The Audit Committee's functions include making
recommendations to the Board of Trustees regarding the selection of the
independent certified public accountants, and reviewing with such accountants
and the Treasurer of the Trust matters relative to accounting and auditing
practices and procedures, accounting records, internal accounting controls, and
the functions performed by the custodian, transfer agent and dividend disbursing
agent of the Trust.
Trustees of the Portfolio who are not affiliated with an Adviser may elect
to defer receipt of all or a percentage of their annual fees in accordance with
the terms of a Trustees Deferred Compensation Plan (the "Plan"). Under the Plan,
an eligible Trustee may elect to have his deferred fees invested by the
Portfolio in the shares of one or more funds in the Eaton Vance Family of Funds,
and the amount paid to the Trustees under the Plan will be determined based upon
the performance of such investments. Deferral of Trustees' fees in accordance
with the Plan will have a negligible effect on the Portfolio's assets,
liabilities, and net income per share, and will not obligate the Portfolio to
retain the services of any Trustee or obligate the Portfolio to pay any
particular level of compensation to the Trustee. For information concerning the
compensation earned by the Trustees of the Trust, see "Fees and Expenses" in
Part II of this Statement of Additional Information.
OFFICERS AND TRUSTEES OF THE PORTFOLIO
The Portfolio's Trustees and officers are listed below. Except as indicated,
each individual has held the office shown or other offices in the same company
for the last five years. The business address of Lloyd George is 3808 One
Exchange Square, Central, Hong Kong. Those Trustees who are "interested persons"
of the Portfolio, an Adviser, Eaton Vance, EVC or EV as defined in the 1940 Act
by virtue of their affiliation with any one or more of the Portfolio, an
Adviser, Eaton Vance, EVC or EV, are indicated by an asterisk(*).
TRUSTEES
JAMES B. HAWKES (53), President and Trustee*
Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director of EVC
and EV. Director or Trustee and officer of various investment companies
managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
DONALD R. DWIGHT (64), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988; Chairman of the Board of Newspapers of New
England, Inc. since 1983; Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (60), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (59), Trustee
President and Director, United Asset Management Corporation, (a holding company
owning institutional investment management firms); Chairman, President and
Director, The Regis Fund, Inc. (mutual fund). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (68), Trustee
Director, Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (65), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS
WILLIAM CHISHOLM (35), Vice President
Senior Trust Officer of The Bank of Nova Scotia Trust Company (Cayman)
Limited.
Address: The Bank of Nova Scotia Trust Company (Cayman) Ltd., The Bank of Nova
Scotia Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands,
British West Indies.
MICHEL NORMANDEAU (43), Vice President
Assistant Manager - Trust Services, The Bank of Nova Scotia Trust Company
(Cayman) Limited.
Address: The Bank of Nova Scotia Trust Company (Cayman) Ltd., The Bank of Nova
Scotia Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands,
British West Indies.
RAYMOND O'NEILL (33), Vice President
Managing Director of IBT Trust and Custodian Services (Ireland) Limited since
January, 1995. Vice President, Atlantic Corporate Management Limited,
Warwick, Bermuda (1991-1994). Officer, The Bank of Bermuda Limited,
Hamilton, Bermuda (1987-1991).
Address: Earlsfort Terrace, Dublin 2, Ireland.
HON. ROBERT LLOYD GEORGE (42), Vice President
Chairman and Chief Executive of Lloyd George Management (B.V.I.) Limited.
Chairman and Chief Executive Officer of Lloyd George. Managing Director of
Indosuez Asia Investment Services, Ltd. from 1984 to 1991.
Address: 3808 One Exchange Square, Central, Hong Kong
DUNCAN W. RICHARDSON (37), Vice President
Vice President of Eaton Vance and EV Since January 19, 1990 and of BMR since
August 11, 1992. Officer of various investment companies managed by Eaton
Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
PETER F. KIELY (58), Vice President
Vice President of Eaton Vance, BMR and EV. Director or Trustee and officer of
various investment companies managed by Eaton Vance or BMR. Mr. Kiely was
elected Trustee of the Trust on December 16, 1991.
JAMES L. O'CONNOR (50), Treasurer
Vice President of Eaton Vance, BMR, and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
THOMAS OTIS (63), Secretary
Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
JANET E. SANDERS (59), Assistant Secretary and Assistant Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
A. JOHN MURPHY (32), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993) and Registration Specialist, Fidelity Management &
Research Co. (1986-1991). Officer of various investment companies managed by
Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
JAMES F. ALBAN (33), Assistant Treasurer
Assistant Vice President of BMR since August 11, 1992, and of Eaton Vance and EV
since January 17, 1992, and an employee of Eaton Vance since September 23,
1991. Tax Consultant and Audit Senior with Deloitte & Touche (1987- 1991).
Officer of various investment companies managed by Eaton Vance or BMR.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
ERIC G. WOODBURY (38), Assistant Secretary
Vice President of Eaton Vance since February 1993; formerly, associate at
Dechert, Price & Rhoads and Gaston & Snow.
Address: Eaton Vance Management, 24 Federal Street, Boston, Massachusetts
02110
Lloyd George Investment Management (Bermuda) Limited ("Lloyd George") is a
subsidiary of Lloyd George Management (B.V.I.) Limited, which is ultimately
controlled by the Hon. Robert J.D. Lloyd George, Vice President of the
Portfolio and Chairman and Chief Executive Officer of Lloyd George. Mr. Hawkes
is a Trustee and officer of the Trust and the Portfolio and an officer of the
Fund's sponsor and manager and of BMR. Mr. Hayes is a Trustee of the Trust and
the Portfolio.
The fees and expenses of those Trustees of the Portfolio who are not members
of the Lloyd George or Eaton Vance organizations (the noninterested Trustees)
are paid by the Portfolio. For information concerning the compensation received
by the noninterested Trustees of the Portfolio, see "Fees and Expenses" in Part
II of this Statement of Additional Information.
While the Portfolio is a New York trust, Lloyd George, together with the
Hon. Robert Lloyd George, are not residents of the United States and
substantially all of their respective assets may be located outside of the
United States. It may be difficult for investors to effect service of process
within the United States upon the individual identified above, or to realize
judgments of courts of the United States predicated upon civil liabilities of
Lloyd George and such individual under the Federal securities laws of the United
States. The Portfolio has been advised that there is substantial doubt as to the
enforceability in the countries in which Lloyd George and such individual reside
of such civil remedies and criminal penalties as are afforded by the Federal
securities laws of the United States.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
Eaton Vance acts as the sponsor and manager of the Fund and the
administrator of the Portfolio. The Portfolio has engaged Boston Management and
Research, a wholly-owned subsidiary of Eaton Vance, and Lloyd George
(collectively, the "Advisers") as its investment advisers.
THE ADVISERS
As investment advisers to the Portfolio, the Advisers manage the Portfolio's
investments, subject to the supervision of the Board of Trustees of the
Portfolio. The Advisers are also responsible for effecting all security
transactions on behalf of the Portfolio, including the allocation of principal
transactions and portfolio brokerage and the negotiation of commissions. See
"Portfolio Security Transactions." Under the investment advisory agreement, the
Advisers receive a monthly advisory fee, to be divided equally between the
Advisers, computed by applying the annual asset rate applicable to that portion
of the average daily net assets of the Portfolio throughout the month in each
Category as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
- ---------- ------------------------ ----------
1 less than $500 million ............................... 0.75%
2 $500 million but less than $1 billion ................ 0.70
3 $1 billion but less than $1.5 billion ................ 0.65
4 $1.5 billion but less than $2 billion ................ 0.60
5 $2 billion but less than $3 billion .................. 0.55
6 $3 billion and over .................................. 0.50
For additional information about the Investment Advisory Agreement,
including the net assets of the Portfolio and the investment advisory fees that
the Portfolio paid the Advisers under the Investment Advisory Agreement, see
"Fees and Expenses" in Part II of this Statement of Additional Information.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of their clients. The
fixed-income division focuses on all kinds of taxable investment- grade and
high-yield securities, tax-exempt investment-grade and high-yield securities,
and U.S. Government securities. The equity division, with a staff of
approximately 30 professionals, covers stocks ranging from blue chip to emerging
growth companies. Eaton Vance manages more than 140 mutual funds, as well as
retirement plans, pension funds and endowments.
LGM specialize 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 eleven 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, Vice President of the Portfolio and Chairman and Chief
Executive Officer of the Lloyd George. LGM's only business is portfolio
management. Eaton Vance's parent is a shareholder of LGM.
Lloyd George and LGM have adopted a conservative management style, providing
a blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, Lloyd George and LGM maintain a network of international
contacts in order to monitor international economic and stock market trends and
offer clients a global management service.
The directors of Lloyd George are the Honorable Robert J. D. Lloyd George,
William Walter Raleigh Kerr, M. F. Tang and Scobie Dickinson Ward. The Hon.
Robert J. D. Lloyd George is Chairman and Chief Executive Officer of Lloyd
George and Mr. Kerr is an officer of Lloyd George. The business address of
these individuals is 3808 One Exchange Square, Central, Hong Kong.
Mr. Lloyd George was born in London in 1952 and educated at Eton College,
where he was a King's Scholar, and at Oxford University. Prior to founding LGM,
Mr. Lloyd George was Managing Director of Indosuez Asia Investment Services Ltd.
In 1983 Mr. Lloyd George launched and managed the Henderson Japan Special
Situations Trust. Prior to that he spent four years with the Fiduciary Trust
Company of New York researching international securities, in the United States
and Europe, for the United Nations Pension Fund. 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).
Eaton Vance and Lloyd George follow a common investment philosophy, striving
to identify companies with outstanding management and earnings growth potential
by following a disciplined management style, adhering to the most rigorous
international standards of fundamental security analysis, placing heavy emphasis
on research, visiting every company owned, and closely monitoring political and
economic developments.
The Portfolio's investment advisory agreement with the Advisers remains in
effect until February 28, 1996; it may be continued indefinitely thereafter so
long as such continuance after February 28, 1996 is approved at least annually
(i) by the vote a majority of the Trustees of the Portfolio who are not
interested persons of the Portfolio cast in person at a meeting specifically
called for the purpose of voting on such approval and (ii) by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio. The agreement may be terminated at any time without
penalty on sixty days' written notice by the Board of Trustees of either party
or by vote of the majority of the outstanding voting securities of the
Portfolio, and the agreement will terminate automatically in the event of its
assignment. The agreement provides that the Advisers may render services to
others. The agreement also provides that, in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties under
the agreement on the part of an Adviser, the Advisers shall not be liable to the
Portfolio or to any shareholder for any act or omission in the course of or
connected with rendering services or for any losses sustained in the purchase,
holding or sale of any security.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Fund and the Portfolio" in the Prospectus for a
description of the services Eaton Vance performs as the manager and sponsor of
the Fund and the administrator of the Portfolio. Under Eaton Vance's management
contract with the Fund and administration agreement with the Portfolio, Eaton
Vance receives a monthly management fee from the Fund and a monthly
administration fee from the Portfolio. Each fee is computed by applying the
annual asset rate applicable to that portion of the average daily net assets of
the Fund or the Portfolio throughout the month in each Category as indicated
below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
- ---------- ------------------------ ----------
1 less than $500 million ............................... 0.25%
2 $500 million but less than $1 billion ................ 0.23333
3 $1 billion but less than $1.5 billion ................ 0.21667
4 $1.5 billion but less than $2 billion ................ 0.20
5 $2 billion but less than $3 billion .................. 0.18333
6 $3 billion and over .................................. 0.1667
For the administration and the management fees that the Portfolio and the
Fund paid to Eaton Vance, see "Fees and Expenses" in Part II of this Statement
of Additional Information.
Eaton Vance's management contract with the Fund will remain in effect until
February 28, 1996, and its administration agreement with the Portfolio will
remain in effect until February 28, 1996. Each agreement may be continued from
year to year after February 28, 1996, so long as such continuance is approved
annually by the vote of a majority of the Trustees of the Trust or the
Portfolio, as the case may be. Each agreement may be terminated at any time
without penalty on sixty days' written notice by the Board of Trustees of either
party thereto, or by a vote of a majority of the outstanding voting securities
of the Fund or the Portfolio, as the case may be. Each agreement will terminate
automatically in the event of its assignment. Each agreement provides that, in
the absence of Eaton Vance's willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations or duties to the Fund or the Portfolio
under such contract or agreement, Eaton Vance will not be liable to the Fund or
the Portfolio for any loss incurred. Each agreement was initially approved by
the Trustees, including the non-interested Trustees, of the Trust or the
Portfolio which is a party thereto at meetings held June 19, 1995 of the Trust
and the Portfolio.
To the extent necessary to comply with U.S. tax law, Eaton Vance has
employed The Bank of Nova Scotia Trust Company (Cayman) Ltd. to serve as the
sub-administrator of the Portfolio. The sub-administrator maintains the
Portfolio's principal office and certain of its records and provides
administrative assistance in connection with meetings of the Portfolio's
Trustees and interestholders.
The Fund and the Portfolio, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
an Adviser under the investment advisory agreement, by Eaton Vance under the
management contract or the administration agreement, or by EVD under the
distribution agreement. Such costs and expenses to be borne by each of the Fund
or the Portfolio, as the case may be, include, without limitation: custody and
transfer agency fees and expenses, including those incurred for determining net
asset value and keeping accounting books and records; expenses of pricing and
valuation services; the cost of share certificates; membership dues in
investment company organizations; brokerage commissions and fees; fees and
expenses of registering under the securities laws; expenses of reports to
shareholders and investors; proxy statements, and other expenses of
shareholders' or investors' meetings; insurance premiums, printing and mailing
expenses; interest, taxes and corporate fees; legal and accounting expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance or an
Adviser; distribution and service fees payable by the Fund under its Rule 12b- 1
distribution plan; and investment advisory, management and administration fees.
The Fund and the Portfolio, as the case may be, will also each bear expenses
incurred in connection with litigation in which the Fund or the Portfolio, as
the case may be, is a party and any legal obligation to indemnify its respective
officers and Trustees with respect thereto.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR. The
Directors of EV are Landon T. Clay, H. Day Brigham, Jr., M. Dozier Gardner,
James B. Hawkes and Benjamin A. Rowland, Jr. The Directors of EVC consist of the
same persons and John G.L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman and
Mr. Gardner is president and chief executive officer of EVC, Eaton Vance, BMR
and EV. All of the issued and outstanding shares of Eaton Vance and of EV are
owned by EVC. All of the issued and outstanding shares of BMR are owned by Eaton
Vance. All shares of the outstanding Voting Common Stock of EVC are deposited in
a Voting Trust which expires December 31, 1996, the Voting Trustees of which are
Messrs. Brigham, Clay, Gardner, Hawkes and Rowland. The Voting Trustees have
unrestricted voting rights for the election of Directors of EVC. All of the
outstanding voting trust receipts issued under said Voting Trust are owned by
certain of the officers of Eaton Vance and BMR who are also officers and
Directors of EVC and EV. As of July 31, 1995, Messrs. Clay, Gardner and Hawkes
each owned 24% of such voting trust receipts and Messrs. Rowland and Brigham
owned 15% and 13%, respectively, of such voting trust receipts. Messrs. Clay,
Gardner, Hawkes and Otis, who are officers or Trustees of the Trust and/or the
Portfolio, are members of the EVC, Eaton Vance, BMR and EV organizations.
Messrs. Alban, Austin, Murphy, O'Connor, Richardson and Woodbury and Ms. Sanders
are officers of the Trust and/or the Portfolio, and are also members of the
Eaton Vance, BMR and/or EV organizations. Eaton Vance will receive the fees paid
under the management agreement and its wholly-owned subsidiary, Eaton Vance
Distributors, Inc., as Principal Underwriter, will receive its portion of the
sales charge on shares of the Fund sold through investment dealers.
Eaton Vance owns all of the stock of Energex Corporation, which is engaged
in oil and gas operations. EVC owns all of the stock of Marblehead Energy Corp.
(which engages in oil and gas operations) and 77.3% of the stock of Investors
Bank & Trust Company, the custodian of the Fund and the Portfolio, which
provides custodial, trustee and other fiduciary services to investors, including
individuals, employee benefit plans, corporations, investment companies, savings
banks and other institutions. In addition, Eaton Vance owns all the stock of
Northeast Properties, Inc., which is engaged in real estate investment,
consulting and management. EVC owns all the stock of Fulcrum Management, Inc.
and MinVen, Inc., which are engaged in the development of precious metal
properties. EVC also owns 21% of the Class A shares issued by the parent of
Lloyd George. EVC, Eaton Vance, BMR and EV may also enter into other businesses.
EVC and its affiliates and its officers and employees form time to time have
transactions with various banks, including the custodian of the Fund and the
Portfolio, Investors Bank & Trust Company. It is Eaton Vance's opinion that the
terms and conditions of such transactions will not be influenced by existing or
potential custodial or other relationships between the Fund and such banks.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 24 Federal Street, Boston,
Massachusetts (a 77.3% owned subsidiary of EVC), acts as custodian for the Fund
and the Portfolio. IBT has the custody of all cash and securities of the Fund
and all securities of the Portfolio purchased in the United States, and its
subsidiary, IBT Fund Services (Canada) Inc., 1 First Canadian Place, King Street
West, Toronto, Ontario, Canada, maintains the Fund's and the Portfolio's general
ledger and computes the daily net asset value of interests in the Portfolio and
the net asset value of shares of the Fund. In such capacities, IBT attends to
details in connection with the sale, exchange, substitution, transfer or other
dealings with the Fund's and the Portfolio's respective investments, receives
and disburses all funds, and performs various other ministerial duties upon
receipt of proper instructions from the Fund and the Portfolio, respectively.
Portfolio securities, if any, purchased by the Portfolio in the U.S. are
maintained in the custody of IBT or of other domestic banks or depositories.
Portfolio securities purchased outside of the U.S. are maintained in the custody
of foreign banks and trust companies that are member of IBT's Global Custody
Network, or foreign depositories used by such foreign banks and trust companies.
Each of the domestic and foreign custodial institutions holding portfolio
securities has been approved by the Board of Trustees of the Portfolio in
accordance with regulations under the 1940 Act.
IBT charge fees which are competitive within the industry. These fees for
the Portfolio relate to (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill auction
rate applied to the Portfolio's average daily collected balances. The portion of
the fee for the Fund related to bookkeeping and pricing services is based upon a
percentage of the Fund's net assets and the portion of the fee related to
financial statement preparation is a fixed amount.
In view of the ownership of EVC in IBT, the Portfolio is treated as a
self-custodian pursuant to Rule 17f-2 under the 1940 Act, and the Portfolio's
investments held by IBT as custodian are thus subject to the additional
examinations by the Portfolio's independent certified public accountants as
called for by such Rule.
For information on the custody fees that the Portfolio and the Fund paid to
IBT, see "Fees and Expenses" in Part II of this Statement of Additional
Information.
SERVICE FOR WITHDRAWAL
By a standard agreement, the Fund's transfer agent will send to the
shareholder regular monthly or quarterly payments of any permitted amount
designated by the shareholder (see "Eaton Vance Shareholder Services -
Withdrawal Plan" in the Fund's current Prospectus) based upon the value of the
shares held. The checks will be drawn from share redemptions and hence are a
return of principal. Income dividends and capital gain distributions in
connection with withdrawal accounts will be credited at net asset value as of
the record date for each distribution. Continued withdrawals in excess of
current income will eventually use up principal, particularly in a period of
declining market prices.
To use this service, at least $5,000 in cash or shares at the public
offering price will have to be deposited with the transfer agent. The
maintenance of a withdrawal plan concurrently with purchases of additional Fund
shares would be disadvantageous if a sales charge is included in such purchase.
A shareholder may not have a withdrawal plan in effect at the same time he or
she has authorized Bank Automated Investing or is otherwise making regular
purchases of Fund shares. Either the shareholder, the Fund's transfer agent or
the Principal Underwriter will be able to terminate the withdrawal plan at any
time without penalty.
DETERMINATION OF NET ASSET VALUE
The Fund and Portfolio will be closed for business and will not price their
shares on the following business holidays: New Year's Day, Presidents' Day, Good
Friday, (a New York Stock Exchange holiday), Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
The Trustees of the Portfolio have established the following procedures for
the fair valuation of the Portfolio's assets under normal market conditions.
Marketable securities listed on foreign or U.S. securities exchanges or in the
NASDAQ National Market System generally are valued at closing sale prices or, if
there were no sales, at the mean between the closing bid and asked prices
therefor on the exchange where such securities are principally traded or on such
National Market System. Unlisted or listed securities for which closing sale
prices are not available are valued at the mean between the latest bid and asked
prices. An option is valued at the last sale price as quoted on the principal
exchange or board of trade on which such option or contract is traded, or in the
absence of a sale, at the mean between the last bid and asked prices. Futures
positions on securities or currencies are generally valued at closing settlement
prices. All other securities are valued at fair value as determined in good
faith by or pursuant to procedures established by the Trustees.
Short-term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If securities were acquired with a remaining maturity
of more than 60 days, their amortized cost value will based on their value on
the sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading as of the close of regular trading on the
Exchange. The value of each investor's interest in the Portfolio will be
determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate interests in the Portfolio. Any additions or withdrawals, which
are to be effected on that day, will then be effected. Each investor's
percentage of the aggregate interests in the Portfolio will then be recomputed
as the percentage equal to a fraction (i) the numerator of which is the value of
such investor's investment in the Portfolio as of the close of regular trading
on the Exchange (normally 4:00 p.m., New York time), on such day plus or minus,
as the case may be, that amount of any additions to or withdrawals from the
investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
close of such trading on such day plus or minus, as the case may be, the amount
of the net additions to or withdrawals from the aggregate investment in the
Portfolio by all investors in the Portfolio. The percentage so determined will
then be applied to determine the value of the investor's interest in the
Portfolio.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's share are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio' net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be made
and reflected in such computation). Foreign securities and currency held by the
Portfolio will be valued in U.S. dollars; such values will be computed by the
custodian based on foreign currency exchange rate quotations supplied by Reuters
Information Service.
INVESTMENT PERFORMANCE
The average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and distributions paid and
reinvested) for the stated period and annualizing the result. The calculation
assumes that all distributions are reinvested at net asset value on the
reinvestment dates during the period. For information concerning the total
return of the Fund, see "Performance Information" in Part II of this Statement
of Additional Information.
The Fund's total return may be compared to the Consumer Price Index and
various domestic and foreign securities indices, for example: Standard & Poor's
Index of 400 Common Stocks, Standard & Poor's Index of 500 Common Stocks,
Merrill Lynch U.S. Treasury (15-year plus) Index, Lehman Brothers
Government/Corporate Bond Index, the Dow Jones Industrial Average and Morgan
Stanley Global Equity. In addition, the Fund's total return may be compared to
Lipper Global Fund category and Lipper Science & Technology Fund category, which
indices are available through Lipper Analytical Services, Inc. The Fund's total
return and comparisons with these indices may be used in advertisements and in
information furnished to present or prospective shareholders. The Fund's
performance may differ from that of other investors in the Portfolio, including
the other investment companies.
Information used in advertisements and in materials furnished to present or
prospective shareholders may include statistics, data and performance studies
prepared by independent organizations (e.g. Ibbotson Associates, Standard &
Poor's Ratings Group, Merrill Lynch Private Client Group, Bloomberg, L.P., Dow
Jones & Company, Inc., and the Federal Reserve Board) or included in various
publications (e.g. The Wall Street Journal, Barron's and The Decade: Wealth of
Investments in U.S. Stocks, Bonds, Bills & Inflation) reflecting the investment
performance or return achieved by various classes and types of investments (e.g.
common stocks, small company stocks, long-term corporate bonds, long-term
government bonds, intermediate-term government bonds, U.S. Treasury bills) over
various periods of time. This information may be used to illustrate the benefits
of long-term investments in common stocks. Such information may also include
descriptions of and editorial comments concerning information age companies and
the various information age industries (i.e., the semi-conductor, cellular
telephone, entertainment and computer industries), as well as statistics, data
and performance information about these companies and industries.
From time to time, information about the allocation and holdings of
investments in the Portfolio may be included in advertisements and other
material furnished to present and prospective shareholders.
From time to time, evaluations of the Fund's performance made by independent
sources, such as Lipper Analytical Services, Inc., CDA/ Weisenberger and
Morningstar, Inc. may be used in advertisements and in information furnished to
present or prospective shareholders. The Fund's performance may differ from that
of other investors in the Portfolio, including the other investment companies.
Information used in advertisements and materials furnished to present or
prospective shareholders may include examples and performance illustrations of
the cumulative change in various levels of investments in the Fund for various
periods of time and at various prices per share. Such examples and illustrations
may assume that all dividends and capital gain distributions are reinvested in
additional shares and may also show separately the value of shares acquired form
such reinvestments as well as the total value of all shares acquired for such
investments and reinvestments. Such information may also include statements or
illustration relating to the appropriateness of types of securities and/or
mutual funds which may be employed to meet specific financial goals, such as (1)
funding retirement, (2) paying for children's education, and (3) financially
supporting aging parents. These three financial goals may be referred to in such
advertisements or materials as the "Triple Squeeze".
From time to time the Fund may provide investors with information on global
investing, which may include descriptions, comparisons, charts and/or
illustrations of: foreign and domestic equity market capitalizations; returns
obtained by foreign and domestic securities; and the effects of globally
diversifying an investment portfolio (including volatility analysis and
performance information). Such information may be provided for a variety of
countries over varying time periods.
For additional information, charts and illustrations relating to the Fund's
investment performance, see "Performance Information" in Part II of this
Statement of Additional Information.
TAXES
See also "Distribution and Taxes" in the Fund's current prospectus.
The Fund, as a series of a Massachusetts business trust, will be treated as
a separate entity for accounting and tax purposes. The Fund intends to elect to
be treated, and to qualify each year as a regulated investment company ("RIC")
under the Code. Accordingly, the Fund intends to satisfy certain requirements
relating to sources of its income and diversification of its assets and to
distribute all of its net investment income and net realized capital gains in
accordance with the timing requirements imposed by the Code, so as to avoid any
Federal income or excise tax on the Fund. Because the Fund invests its assets in
the Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements in order for the Fund to satisfy them.
The Portfolio will allocate at least annually among its investors, including the
Fund, each investor's distributive share of the Portfolio's net investment
income, net realized capital gains, and any other items of income, gain, loss,
deduction or credit. The Portfolio will make allocations to the Fund in
accordance with the Code and applicable regulations and will make moneys
available for withdrawal at appropriate times and in sufficient amounts to
enable the Fund to satisfy the tax distribution requirements that apply to the
Fund and that must be satisfied in order to avoid Federal income and/or excise
tax on the Fund. For purposes of applying the requirements of the Code regarding
qualification as a RIC, the Fund will be deemed (i) to own its proportionate
share of each of the assets of the Portfolio and (ii) to be entitled to the
gross income of the Portfolio attributable to such share.
In order to avoid Federal excise tax, the Code requires that the Fund
distribute (or be deemed to have distributed) by December 31 of each calendar
year at least 98% of its ordinary income (not including tax-exempt income) for
such year, at least 98% of the excess of its realized capital gains over its
realized capital losses, generally computed on the basis of the one-year period
ending on October 31 of such year, after reduction by any available capital loss
carryforwards, and 100% of any income and capital gains from the prior year (as
previously computed) that was not paid out during such year and on which the
Fund was not taxed. Further, under current law, provided that the Fund qualifies
as a RIC for Federal income tax purposes and the Portfolio is treated as a
partnership for Massachusetts and Federal tax purposes, neither the Fund nor the
Portfolio is liable for any income, corporate excise or franchise tax in the
Commonwealth of Massachusetts.
Foreign exchange gains and losses realized by the Portfolio and allocated to
the Fund in connection with the Portfolio's investments in foreign securities
and certain options, futures or forward contracts or foreign currency may be
treated as ordinary income and losses under special tax rules. Certain options,
futures or forward contracts of the Portfolio may be required to be marked to
market (i.e., treated as if closed out) on the last day of each taxable year,
and any gain or loss realized with respect to these contracts may be required to
be treated as 60% long-term and 40% short-term gain or loss. Positions of the
Portfolio in securities and offsetting options, futures or forward contracts may
be treated as "straddles" and be subject to other special rules that may, upon
allocation of the Portfolio's income, gain or loss to the Fund, affect the
amount, timing and character of the Fund's distributions to shareholders.
Certain uses of foreign currency and foreign currency derivatives such as
options, futures, forward contracts and swaps and investment by the Portfolio in
certain "passive foreign investment companies" may be limited or a tax election
may be made, if available, in order to preserve the Fund's qualification as a
RIC or avoid imposition of a tax on the Fund.
The Portfolio anticipates that it will be subject to foreign taxes on its
income (including, in some cases, capital gains) from foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. If more than 50% of the Fund's total assets, taking into account its
allocable share of the Portfolio's total assets, at the close of any taxable
year of the Fund consists of stock or securities of foreign corporations, the
Fund may file an election with the Internal Revenue Service pursuant to which
shareholders of the Fund will be required to (i) include in ordinary gross
income (in addition to taxable dividends actually received) their pro rata
shares of foreign income taxes paid by the Portfolio and allocated to the Fund
even though not actually received, and (ii) treat such respective pro rata
portions as foreign income taxes paid by them. Shareholders may then deduct such
pro rata portions of foreign income taxes in computing their taxable incomes,
or, alternatively, use them as foreign tax credits, subject to applicable
limitations, against their U.S. income taxes. Shareholders who do not itemize
deductions for Federal income tax purposes will not, however, be able to deduct
their pro rata portion of foreign taxes deemed paid by the Fund, although such
shareholders will be required to include their shares of such taxes in gross
income. Shareholders who claim a foreign tax credit for such foreign taxes may
be required to treat a portion of dividends received from the Fund as separate
category income for purposes of computing the limitations on the foreign tax
credit. Tax-exempt shareholders will ordinarily not benefit from this election.
Each year that the Fund files the election described above, its shareholders
will be notified of the amount of (i) each shareholder's pro rata share of
foreign income taxes paid by the Portfolio and allocated to the Fund and (ii)
the portion of Fund dividends which represents income from each foreign country.
If the Fund does not make this election, it may deduct its allocated share of
such taxes in computing its investment company taxable income.
The Portfolio will allocate at least annually to the Fund and its other
investors their respective distributive shares of any net investment income and
net capital gains which have been recognized for Federal income tax purposes
(including unrealized gains at the end of the Portfolio's fiscal year on certain
options and futures transactions that are required to be marked-to- market).
Such amounts will be distributed by the Fund to its shareholders in cash or
additional shares, as they elect. Shareholders of the Fund will be advised of
the nature of the distributions.
Distributions by the Fund of the excess of net long-term capital gains over
short-term capital losses earned by the Portfolio and allocated to the Fund,
taking into account any capital loss carryforwards that may be available to the
Fund in years after its first taxable year, are taxable to shareholders of the
Fund as long-term capital gains, whether received in cash or in additional
shares and regardless of the length of time their shares have been held. Certain
distributions, if declared in October, November or December and paid the
following January, will be taxed to shareholders as if received on December 31
of the year in which they are declared.
Any loss realized upon the redemption or exchange of shares with a tax
holding period of 6 months or less will be treated as a long-term capital loss
to the extent of any distribution of net long-term capital gains with respect to
such shares. All or a portion of a loss realized upon a taxable disposition of
Fund shares may be disallowed under "wash sale" rules if other Fund shares are
purchased (whether through reinvestment of dividends or otherwise) within 30
days before or after the disposition. Any disallowed loss will result in an
adjustment to the shareholder's tax basis in some or all of the other shares
acquired.
The Fund will not be subject to Massachusetts income, corporate excise or
franchise taxation as long as it qualifies as a RIC under the Code.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and
shareholders investing through IRAs should consult their tax advisers for more
information. Amounts paid by the Fund to individuals and certain other
shareholders who have not provided the Fund with their correct taxpayer
identification number and certain required certifications, as well as
shareholders with respect to whom the Fund has received notification from the
Internal Revenue Service or a broker, may be subject to "backup" withholding of
Federal income tax from the Fund's dividends and distributions and the proceeds
of redemptions (including repurchases and exchanges) at a rate of 31%. An
individual's taxpayer identification number is generally his or her social
security number.
Non-resident alien individuals and certain foreign corporations and other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax treaty. Distributions from the
excess of the Fund's net long-term capital gain over its net short-term capital
loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. Federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisers regarding the U.S. and foreign tax consequences of an investment in the
Fund.
The foregoing discussion does not describe many of the tax rules applicable
to IRAs nor does it address the special tax rules applicable to certain other
classes of investors, such as other retirement plans, tax-exempt entities,
insurance companies and financial institutions. Shareholders should consult
their own tax advisers with respect to these or other special tax rules that may
apply in their particular situations, as well as the state, local or foreign tax
consequences of investing in the Fund.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions by the
Portfolio, including the selection of the market and the broker-dealer firm, are
made by an Adviser.
An Adviser places the portfolio security transactions of the Portfolio and
of certain other accounts managed by the Advisers for execution with many
broker-dealer firms. An Adviser uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Portfolio and
(when a disclosed commission is being charged) at reasonably competitive
commission rates. In seeking such execution, an Adviser will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the size and type of
the transaction, the general execution and operational capabilities of the
broker-dealer, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition of
the broker-dealer, the value and quality of services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission,
if any. Transactions on stock exchanges and other agency transactions involve
the payment by the Portfolio of negotiated brokerage commissions. Such
commissions vary among different broker-dealer firms, and a particular
broker-dealer may charge different commissions according to such factors as the
difficulty and size of the transaction and the volume of business done with such
broker-dealer. Transactions in foreign securities usually involve the payment of
fixed brokerage commissions, which are generally higher than those in the United
States. There is generally no stated commission in the case of securities traded
in the over-the-counter markets, but the price paid or received by the Portfolio
usually includes an undisclosed dealer markup or markdown. In an underwritten
offering the price paid by the Portfolio includes a disclosed fixed commission
or discount retained by the underwriter or dealer. Although commissions paid on
portfolio transactions will, in the judgment of an Adviser, be reasonable in
relation to the value of the services provided, commissions exceeding those
which another firm might charge may be paid to broker-dealers who were selected
to execute transactions on behalf of the Portfolio and an Adviser's other
clients in part for providing brokerage and research services to an Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if an Adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided. This determination may be
made on the basis of either that particular transaction or on the basis of
overall responsibilities which an Adviser and its affiliates have for accounts
over which it exercises investment discretion. In making any such determination,
an Adviser will not attempt to place a specific dollar value on the brokerage
and research services provided or to determine what portion of the commission
should be related to such services. Brokerage and research services may include
advice as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.
It is a common practice of the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealers which
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, an Adviser may receive Research Services from broker-dealer firms with
which the Adviser places the portfolio transactions of the Portfolio and from
third parties with which these broker-dealers have arrangements. These Research
Services may include such matters as general economic and market reviews,
industry and company reviews, evaluations of securities and portfolio strategies
and transactions and recommendations as to the purchase and sale of securities
and other portfolio transactions, financial, industry and trade publications,
news and information services, pricing and quotation equipment and services, and
research oriented computer hardware, software, data bases and services. Any
particular Research Service obtained through a broker-dealer may be used by an
Adviser in connection with client accounts other than those accounts which pay
commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to an Adviser in rendering investment advisory services to
all or a significant portion of its clients, or may be relevant and useful for
the management of only one client's account or of a few clients' accounts, or
may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid commissions to
the broker-dealer through which such Research Service was obtained. The advisory
fee paid by the Portfolio is not reduced because an Adviser receives such
Research Services. An Adviser evaluates the nature and quality of the various
Research Services obtained through broker-dealer firms and attempts to allocate
sufficient commissions to such firms to ensure the continued receipt of Research
Services which the Adviser believes are useful or of value to it in rendering
investment advisory services to its clients.
Subject to the requirement that an Adviser shall use its best efforts to
seek to execute portfolio security transactions of the Portfolio at advantageous
prices and at reasonably competitive commission rates or spreads, an Adviser is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom Portfolio orders may be placed the fact that such firm has sold or is
selling shares of the Fund or of other investment companies sponsored by Eaton
Vance. This policy is not inconsistent with a rule of the National Association
of Securities Dealers, Inc., which rule provides that no firm which is a member
of the Association shall favor or disfavor the distribution of shares of any
particular investment company or group of investment companies on the basis of
brokerage commissions received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by an Adviser or its
affiliates. An Adviser will attempt to allocate equitably portfolio transactions
among the Portfolio and the portfolios of its other investment accounts whenever
decisions are made to purchase or sell securities by the Portfolio and one or
more of such other accounts simultaneously. In making such allocations, the main
factors to be considered are the respective investment objectives of the
Portfolio and such other accounts, the relative size of portfolio holdings of
the same or comparable securities, the availability of cash for investment by
the Portfolio and such accounts, the size of investment commitments generally
held by the Portfolio and such accounts and the opinions of the persons
responsible for recommending investments to the Portfolio and such accounts.
While this procedure could have a detrimental effect on the price or amount of
the securities available to the Portfolio from time to time, it is the opinion
of the Trustees of the Portfolio that the benefits available from an Adviser's
organization outweigh any disadvantage that may arise from exposure to
simultaneous transactions. For the brokerage commissions paid by the Portfolio
on portfolio transactions, see "Fees and Expenses" in Part II of this Statement
of Additional Information.
OTHER INFORMATION
On August 18, 1992 the Trust changed its name from Eaton Growth Fund to
Eaton Vance Growth Trust. The Trust is a Massachusetts business trust
established in 1989 as the successor to Eaton Vance Growth Fund, Inc., a
Massachusetts corporation which changed its name from Vance, Sanders Common
Stock Fund, Inc. on November 16, 1981. Such name was changed from Boston Common
Stock Fund, Inc. on December 29, 1972. It was originally organized as a Canadian
corporation in 1954, at which time it was known as Canada General Fund Limited.
Eaton Vance, pursuant to its agreement with the Trust, controls the use of the
words "Eaton Vance" in the Trust's name and may use the words "Eaton Vance" in
other connections and for other purposes.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by a majority of the outstanding voting securities of the Trust
affected by the amendment. The Trustees may also amend the Declaration of Trust
without the vote or consent of shareholders to change the name of the Trust or
any series or to make such other changes as do not have a materially adverse
effect on the rights or interests of shareholders or if they deem it necessary
to conform the Declaration to the requirements of Federal laws or regulations.
The Trust's by-laws provide that the Fund will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with any
litigation or proceeding in which they may be involved because of their offices
with the Trust. However, no indemnification will be provided to any Trustee or
officer for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders, and the Trust's
By-Laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. Moreover, the Trust's By-laws also provide for indemnification out
of the property of the Fund of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising
from such liability. The assets of the Fund are readily marketable and will
ordinarily substantially exceed its liabilities. In light of the nature of the
Fund's business and the nature of its assets, management believes that the
possibility of the Fund's liability exceeding its assets, and therefore the
shareholders's risk of personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholder's meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-Laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-Laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Securities and Exchange Commission,
or during any emergency as determined by the Commission which makes it
impracticable for the Portfolio to dispose of its securities or value its
assets, or during any other period permitted by order of the Commission for the
protection of investors.
INDEPENDENT ACCOUNTANTS
On August 7, 1995, the Trustees appointed Coopers & Lybrand L.L.P., One Post
Office Square, Boston, Massachusetts, as the independent accountants of the
Fund, providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission. The change in auditors was not due to disagreement on any
matter of accounting principles or practices or financial statement disclosures.
Coopers & Lybrand Chartered Accountants, Toronto, Canada, are the independent
accountants for the Portfolio.
For the financial statements of the Portfolio see "Financial Statements" in
Part II of this Statement of Additional Information.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV TRADITIONAL INFORMATION AGE FUND.
The Fund became a series of the Trust on June 19, 1995.
FEES AND EXPENSES
ADVISER No fees paid to date.
MANAGER AND ADMINISTRATOR No fees paid to date.
DISTRIBUTION PLAN
The Fund has not made any sales commission payments to the Principal
Underwriter under the Plan to date. The Fund expects to begin making service fee
payments during the quarter ending September 30, 1996.
PRINCIPAL UNDERWRITER No fees paid to date.
CUSTODIAN No fees paid to date.
BROKERAGE No fees paid to date.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Trust or the
Portfolio.) For the fiscal year ending August 31, 1996, it is estimated that the
noninterested Trustees of the Trust and the Portfolio will receive the following
compensation in their capacities as Trustees of the Trust and the Portfolio and,
during the first quarter ended March 31, 1995, the noninterested Trustees of the
Trust and the Portfolio earned the following compensation in their capacities as
Trustees of the other funds in the Eaton Vance fund complex(1):
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
---- ------------ -------------- ------------------
Donald R. Dwight .......... $50 $2,500 $33,750(2)
Samuel L. Hayes, III ...... 50 2,500 41,250(3)
Norton H. Reamer .......... 50 2,500 33,750
John L. Thorndike ......... 50 2,500 35,000
Jack L. Treynor ........... 50 2,500 35,000
- ------------
(1) The Eaton Vance fund complex consists of 205 registered investment companies
or series thereof.
(2) Includes $8,750 of deferred compensation.
(3) Includes $24,886 of deferred compensation.
SERVICES FOR ACCUMULATION
The following services are voluntary, involve no extra charge, other than
the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.
INTENDED QUANTITY INVESTMENT -- STATEMENT OF INTENTION.If it is anticipated
that $100,000 or more of Fund shares and shares of the other continuously
offered open-end funds listed under "The Eaton Vance Exchange Privilege" in the
Prospectus will be purchased within a 13-month period, a Statement of Intention
should be signed so that shares may be obtained at the same reduced sales charge
as though the total quantity were invested in one lump sum. Shares held under
the Right of Accumulation (see below) as of the date of the Statement will be
included toward the completion of the Statement. The Statement authorizes the
Transfer Agent to hold in escrow sufficient shares (5% of the dollar amount
specified in the Statement) which can be redeemed to make up any difference in
sales charge on the amount intended to be invested and the amount actually
invested. Execution of a Statement does not obligate the shareholder to purchase
or the Fund to sell the full amount indicated in the Statement, and should the
amount actually purchased during the 13-month period be more or less than that
indicated on the Statement, price adjustments will be made accordingly. For
sales charges and other information on quantity purchases, see "How to Buy Fund
Shares" in the Prospectus. Any investor considering signing a Statement of
Intention should read it carefully.
RIGHT OF ACCUMULATION -- CUMULATIVE QUANTITY DISCOUNT.The applicable sales
charge level for the purchase of Fund shares is calculated by taking the dollar
amount of the current purchase and adding it to the value (calculated at the
maximum current offering price) of the shares the shareholder owns in his or her
account(s) in the Fund and in the other continuously offered open-end funds
listed under "The Eaton Vance Exchange Privilege" in the Prospectus. The sales
charge on the shares being purchase will then be at the rate applicable to the
aggregate amount. For example, if the shareholder owned shares valued at $80,000
of the Fund and purchased an additional $20,000 of Fund shares, the sales charge
for the $20,000 purchase would be at the rate of 3.75% of the offering price
(3.90% of the net amount invested), which is the rate applicable to single
transactions of $100,000. For sales charges on quantity purchases, see "How to
Buy Fund Shares" in the Prospectus. Shares purchased (i) by an individual, his
or her spouse and their children under the age of twenty-one and (ii) by a
trustee, guardian or other fiduciary of a single trust estate or a single
fiduciary account, will be combined for the purpose of determining whether a
purchase will qualify for the Right of Accumulation and if qualifying, the
applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or any financial service firm ("Authorized Firm") which has an
agreement with Eaton Vance Distributors, Inc. (the "Principal Underwriter") must
provide the Principal Underwriter (in the case of a purchase made through an
Authorized Firm) or the Transfer Agent (in the case of an investment made by
mail) with sufficient information to permit verification that the purchase order
qualifies for the accumulation privilege. Confirmation of the order is subject
to such verification. The Right of Accumulation privilege may be amended or
terminated at any time as to purchases occurring thereafter.
PRINCIPAL UNDERWRITER
Shares of the Fund may be continuously purchased at the public offering
price through Authorized Firms. The Principal Underwriter is a wholly-owned
subsidiary of Eaton Vance. The public offering price is the net asset value next
computed after receipt of the order, plus, where applicable, a variable
percentage sales charge depending upon the amount of purchase as indicated by
the sales charge table set forth in the Prospectus. Such table is applicable to
purchases of the Fund alone or in combination with purchases of certain other
funds offered by the Principal Underwriter, made at a single time by (i) an
individual, or an individual, his or her spouse and their children under the age
of twenty-one, purchasing shares for his or her or their own account; and (ii) a
trustee or other fiduciary purchasing shares for a single trust estate or a
single fiduciary account. The table is also presently applicable to (1)
purchases of Fund shares, alone or in combination with purchases of any of the
other funds offered by the Principal Underwriter through one dealer aggregating
$100,000 or more made by any of the persons enumerated above within a
thirteen-month period starting with the first purchase pursuant to a written
Statement of Intention, in the form provided by the Principal Underwriter, which
includes provisions for a price adjustment depending upon the amount actually
purchased within such period (a purchase not made pursuant to such Statement may
be included thereunder if the Statement if filed within 90 days of such
purchase); or (2) purchases of the Fund pursuant to the Right of Accumulation
and declared as such at the time of purchase.
Subject to the applicable provisions of the 1940 Act, the Fund may issue
shares at net asset value in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is merged
or consolidated with or acquired by the Fund. Normally no sales charges will be
paid in connection with an exchange of Fund shares for the assets of such
investment company.
Shares may be sold at net asset value to any officer, director, trustee,
general partner or employee of the Fund, the Portfolio or any investment company
for which Eaton Vance or BMR acts as investment adviser, any investment
advisory, agency, custodial or trust account managed or administered by Eaton
Vance or by any parent, subsidiary or other affiliate of Eaton Vance, or any
officer, director, trustee or employee of any parent, subsidiary or other
affiliate of Eaton Vance. The terms "officer," "director," "trustee," "general
partner" or "employee" as used in this paragraph include any such person's
spouse and minor children, and also retired officers, directors, trustees,
general partners and employees and their spouses and minor children. Shares may
also be sold at net asset value to registered representatives and employees of
certain investment dealers and to such person's spouses and children under the
age of 21 and their beneficial accounts.
The Fund reserves the right to suspend or limit the offering of shares to
the public at any time.
The Principal Underwriter acts as principal in selling shares of the Fund
under the distribution agreement with the Fund. The distribution agreement is
renewable annually by the Trust's Board of Trustees (including a majority of its
Trustees who are not interested persons of the Principal Underwriter or the
Trust), may be terminated on six months' notice by either party, and is
automatically terminated upon assignment. The Principal Underwriter distributes
Fund shares on a "best efforts" basis under which it is required to take and pay
for only such shares as may be sold. The Principal Underwriter allows Authorized
Firms discounts from the applicable public offering price which are alike for
all Authorized Firms. See "How to Buy Fund Shares" in the Prospectus for the
discounts allowed to Authorized Firms. The Principal Underwriter may allow, upon
notice to all Authorized Firms, discounts up to the full sales charge during the
periods specified in the notice. During periods when the discount includes the
full sales charge, such Authorized Firms may be deemed to be underwriters as
that term is defined in the Securities Act of 1933.
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares and will pay the Principal Underwriter $2.50 for each
repurchase transaction handled by the Principal Underwriter. The Principal
Underwriter estimates that the expenses incurred by it in acting as repurchase
agent for the Fund will exceed the amounts paid therefor by the Fund.
DISTRIBUTION PLAN
As described in the Prospectus, in addition to the fees and expenses
described herein, the Fund finances distribution activities and bears expenses
associated with the distribution of its shares and the provision of certain
personal and account maintenance services to shareholders pursuant to a
distribution plan (the "Plan") designed to meet the requirements of Rule 12b-1
under the 1940 Act.
Pursuant to such Rule, the Plan has been approved by the initial sole
shareholder of the Fund and by the Board of Trustees of the Trust (including a
majority of those Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan).
Under the Plan, the President or a Vice President of the Trust shall provide to
the Trustees for their review, and the Trustees shall review at least quarterly,
a written report of the amounts expended under the Plan and the purposes for
which such expenditures were made. The Plan remains in effect from year to year
provided such continuance is approved at least annually by a vote of the Board
of Trustees and by a majority of those Trustees who are not interested persons
of the Trust and who have no direct or indirect financial interest in the
operation of the Plan. The Plan may not be amended to increase materially the
payments described therein without approval of the shareholders of the Fund, and
all material amendments of the Plan must also be approved by the Trustees in the
manner described above. The Plan may be terminated at any time by vote of a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan or by
a vote of a majority of the outstanding voting securities of the Fund. 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. So long as the Plan is in
effect, the selection and nomination of Trustees who are not interested persons
of the Trust shall be committed to the discretion of the Trustees who are not
such interested persons. The Trustees have determined that in their judgment
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
The Plan is intended to compensate the Principal Underwriter for its
distribution services to the Fund by paying the Principal Underwriter monthly
distribution fees in connection with the sale of shares of the Fund. The
quarterly service fee paid by the Fund under the Plan is intended to compensate
the Principal Underwriter for its personal and account maintenance services and
for the payment by the Principal Underwriter of service fees to Authorized
Firms.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES As of July 31,
1995, Eaton Vance owned one share of the Fund, being the
only share of the Fund outstanding on such date. Eaton Vance is a Massachusetts
business trust and a wholly-owned subsidiary of EVC.
<PAGE>
FINANCIAL STATEMENTS
INFORMATION AGE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 2, 1995
ASSETS:
Cash .......................................................... $100,010
Deferred organization expenses ................................ 6,250
--------
Total assets .............................................. $106,260
LIABILITIES:
Accrued organization expenses ................................. 6,250
-------
NET ASSETS ........................................................ $100,010
========
NOTES:
(1) Information Age Portfolio (the "Portfolio") was organized as a New York
Trust on June 1, 1995 and has been inactive since that date, except for
matters relating to its organization and registration as an investment
company under the Investment Company Act of 1940 and the sale of interests
therein at the purchase price of $100,000 to Eaton Vance Management and the
sale of interest therein at the purchase price of $10 to Boston Management &
Research (the "Initial Interests").
(2) Organization expenses are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years, commencing on
the effective date of the Portfolio's initial offering of its interests. The
amount paid by the Portfolio on any withdrawal by the holders of the Initial
Interests of any of the respective Initial Interests will be reduced by a
portion of any unamortized organization expenses, determined by the
proportion of the amount of the Initial Interests withdrawn to the Initial
Interests then outstanding.
(3) At 4:00 p.m., New York City time, on each business day of the Portfolio, the
value of an investor's interest in the Portfolio is equal to the product of
(1) the aggregate net asset value of the Portfolio multiplied by (ii) the
percentage representing that investor's share of the aggregate interest in
the Portfolio effective for that day.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of Information Age Portfolio:
We have audited the accompanying statement of assets and liabilities of
Information Age Portfolio (a New York Trust) as of June 2, 1995. This financial
statement is the responsibility of the Trust's management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such statement of assets and liabilities presents fairly, in
all material respects, the financial position of Information Age Portfolio as of
June 2, 1995, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
June 5, 1995
<PAGE>
[LOGO]
EV TRADITIONAL
INFORMATION
AGE FUND
STATEMENT OF
ADDITIONAL INFORMATION
AUGUST 23, 1995
EV TRADITIONAL INFORMATION
AGE FUND
24 FEDERAL STREET
BOSTON, MA 02110
- -------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV TRADITIONAL INFORMATION AGE FUND
ADMINISTRATOR OF INFORMATION AGE PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
CO-ADVISERS OF INFORMATION AGE PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Lloyd George Investment Management (Bermuda) Limited,
3808 One Exchange Square, Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 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
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
T-IASAI
[LOGO]
EATON VANCE
----------------
MUTUAL FUNDS
